EQS-News: Negative market environment strongly impacts 2023 earnings – implementation of performance program exceeds plan
EQS-News: Lenzing AG / Key word(s): Annual Results
Negative market environment strongly impacts 2023 earnings –
implementation of performance program exceeds plan
15.03.2024 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.
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Negative market environment strongly impacts 2023 earnings –
implementation of performance program exceeds plan
• Revenue of EUR 2.52 bn in 2023, EBITDA of EUR 303.3 mn
• EBIT and earnings after tax impacted by non-cash impairment losses of
EUR 464.9 mn
• Implementation of performance program with a focus on positive free
cash flow, stronger revenue and margin growth, as well as sustainable
cost excellence exceeds plan
• Positive free cash flow in second half of the year, liquidity up
significantly to EUR 731 mn
• Lenzing receives top ratings from CDP, EcoVadis and MSCI again
Lenzing – Very subdued demand on the one hand and the continued rise in
raw material and energy costs on the other exerted a strongly negative
impact on the earnings of the Lenzing Group, a leading global producer of
regenerated cellulosic fibers for the textile and nonwovens industries, in
the 2023 financial year. The largely absent recovery in the textile and
clothing industry had a negative impact across the entire sector.
Taking persistently low fiber prices into consideration, revenue remained
comparatively stable at EUR 2.52 bn (compared with EUR 2.57 bn in 2022).
Prices for wood-based specialty fibers were also down slightly due to
weaker demand, particularly from brands and retailers, as well as
additional market capacity. The price premium commanded by the TENCEL™,
LENZING™ ECOVERO™, and VEOCEL™ brands proved to be resilient. Revenues
generated with dissolving wood pulp as well as biorefinery and co-products
grew during the reporting year.
Earnings before interest, tax, depreciation and amortization (EBITDA) rose
by 25.4 percent year-on-year to reach EUR 303.3 mn in the reporting year.
Earnings before interest and tax (EBIT) stood at minus EUR 476.4 mn
(compared with EUR 16.5 mn in 2022) due to non-cash impairment losses of
EUR 464.9 mn as a consequence of the ongoing uncertainties in the economic
environment and higher discount rates in line with the change in the
interest rate environment. Earnings after tax amounted to minus EUR 593 mn
(compared with minus EUR 37.2 mn in 2022) and earnings per share to minus
EUR 20.02 (compared with minus EUR 2.75 in 2022).
“The anticipated recovery of markets relevant to the Lenzing Group has
failed to materialize to date. Subdued demand and the still sharply
increased raw material and energy costs have led to a result in 2023 that
we are not satisfied with,” notes Stephan Sielaff, Chief Executive Officer
of the Lenzing Group. “This makes the measures we have taken decisively
and at an early stage to keep Lenzing on track and further boost its
resilience to crises all the more significant.”
The implementation of the performance program is exceeding plan. The
program initiatives are primarily aimed at improving EBITDA and at
generating free cash flow through stronger revenue and margin growth, as
well as sustainable cost excellence. In addition to the clearly positive
effects at the revenue level, the Managing Board expects annual cost
savings in excess of EUR 100 mn, of which well over 50 percent will be
effective from the current financial year onwards.
Nico Reiner, Lenzing Group CFO, adds: “This performance program is a
powerful instrument to tackle the current economic challenges and enhance
Lenzing’s resilience to crises. We are very satisfied with how the program
has unfolded so far. The cash flow trend in the second half of the year
shows that these measures are taking effect.”
In the third and fourth quarters of 2023, Lenzing generated positive free
cash flow of EUR 27.3 mn and EUR 15.4 mn respectively (compared with minus
EUR 132.3 mn in the first quarter and minus EUR 33.1 mn in the second
quarter of 2023).
Capital expenditure on intangible assets, property, plant and equipment,
and on biological assets (CAPEX) amounted to EUR 283.6 mn in the reporting
year (compared with EUR 698.9 mn in 2022). Compared with December 31,
2022, the liquidity position was up by 61.3 percent to EUR 731 mn as of
December 31, 2023, reflecting the capital increase and the extension of
the loan terms.
Further progress achieved with “Better Growth”
The implementation of the “Better Growth” corporate strategy continued in
the reporting year. This strategy aims to better serve the structurally
growing demand for environmentally responsible and high-quality specialty
fibers under the TENCEL™, LENZING™ ECOVERO™, and VEOCEL™ brands, among
other objectives.
Following the successful conversion of a production line in Nanjing
(China) in the first quarter, Lenzing also completed its conversion and
modernization measures in Purwakarta (Indonesia) in the third quarter of
the reporting year, with the aim of re-equipping for specialty viscose and
of significantly reducing specific emissions. The viscose fibers produced
at the site under the LENZING™ ECOVERO™ brand, including the innovative
LENZING™ ECOVERO™ Black fibers, and VEOCEL™, are labeled with the EU
Ecolabel,[1]^[1] an internationally recognized eco label for
environmentally responsible products and services.
This enables Lenzing to generate 100 percent of its fiber revenue with
specialty fibers under the TENCEL™, LENZING™ ECOVERO™, and VEOCEL™ brands.
“Sustainability champion”
In 2023, Lenzing was once again recognized by the most renowned rating
agencies and organizations for its achievements in the sustainability
area, and the high degree of transparency in its reporting. For the third
consecutive year, Lenzing was ranked in all categories on the annual “A
list” compiled and published by CDP, a global non-profit environmental
organization. As a consequence, Lenzing is one of only ten companies
worldwide to receive a triple “A” ranking – out of over 21,000 companies
rated. Lenzing was again awarded Platinum Status in the EcoVadis CSR
rating. Lenzing thereby ranks in the top one percent of companies
worldwide rated by EcoVadis. MSCI awarded Lenzing a “AA” rating for the
third consecutive time, placing the company among the top eight percent of
rated companies in its peer group.
Lenzing also enhanced its brands’ visibility in 2023 through targeted
marketing measures. In the global awareness ranking, the TENCEL™ brand
once again achieved a strong leading position among Ingredient Brands in
the textile and clothing industry.
Outlook
Although the IMF has upgraded its growth forecast for 2024 from
2.9 percent to 3.1 percent, a number of risks for the global economy
continue to exist: potential geopolitical shocks, persistently higher
inflation, and higher key interest rates, as well as market risks
emanating from the Chinese real estate market are currently considered to
be the most relevant.
Many consumers are continuing to suffer from general inflation and
diminishing incomes in real terms, which is having a negative impact on
consumer sentiment. A recovery in the consumer clothing market, which is
important for Lenzing, will also depend on a further normalization of
stock levels.
The currency environment is expected to remain volatile in the regions
relevant to Lenzing.
In the trend-setting market for cotton, the current 2023/2024 crop season
is signaling a further 0.8 mn tonnes of stock build-up, according to
preliminary estimates, following 1.3 mn tonnes of stock build-up in the
previous season.
Earnings visibility remains limited overall.
Lenzing is ahead of schedule with the implementation of its performance
program focused on positive free cash flow, strengthened revenue and
margin growth, as well as sustainable cost excellence. The overarching
goal is to position Lenzing on an even stronger foundation, and to further
enhance its crisis resilience.
Structurally, Lenzing continues to anticipate growth in demand for
environmentally responsible fibers for the textile and clothing industry
as well as for the hygiene and medical sectors. As a consequence, Lenzing
is very well positioned with its “Better Growth” strategy and plans to
continue driving growth with specialty fibers as well as its
sustainability goals, including the transformation from a linear to a
circular economy model.
Taking the aforementioned factors into account, the Lenzing Group expects
EBITDA for the 2024 financial year to be higher than in the previous year.
Selected indicators of the Lenzing Group
EUR mn 2023 2022
Revenue 2,521.2 2,565.7
EBITDA (earnings before interest, tax, depreciation and 303.3 241.9
amortization)
EBITDA margin 12.0 % 9.4 %
Net result for the year -593.0 -37.2
Earnings per share in EUR -20.02 -2.75
Cash flow from operating activities 160.3 -43.2
CAPEX 283.6 698.9
31/12/2023 31/12/2022
Net financial debt^1 1,562.6 1,799.4
Adjusted equity ratio 34.7 % 37.8 %
Employees (full-time equivalents)^2 7,917 7,931
1) Since the second quarter of the 2023 financial year, net financial debt
has been presented excluding lease liabilities (see the annex to the
management report “Notes on the financial performance indicators of the
Lenzing Group”).
2) Since the third quarter of the 2023 financial year, the number of
employees has been reported on the basis of full-time equivalents. Until
the third quarter of the 2023 financial year, these figures were based on
the number of individuals.
Photo download:
[2] https://mediadb.lenzing.com/pinaccess/showpin.do?pinCode=U4hxFdYQHFnw
PIN: U4hxFdYQHFnw
Your contact for
Public Relations: Investor Relations:
Dominic Köfner Sébastien Knus
Vice President Corporate Communications & Vice President Capital Markets
Public Affairs Lenzing Aktiengesellschaft
Lenzing Aktiengesellschaft Werkstraße 2, 4860 Lenzing,
Werkstraße 2, 4860 Lenzing, Austria Austria
Phone +43 7672 701 2743 Phone +43 7672 701 3599
E-mail [3]media@lenzing.com E-mail [5]s.knus@lenzing.com
Web [4] www.lenzing.com Web [6] www.lenzing.com
About the Lenzing Group
The Lenzing Group stands for the ecologically responsible production of
specialty fibers based on cellulose and recycled material. As an
innovation leader, Lenzing is a partner of global textile and nonwoven
manufacturers and drives many new technological developments. The Lenzing
Group’s high-quality fibers are the raw material for a wide range of
textile applications – from functional, comfortable and fashionable
clothing through to durable and sustainable home textiles. Thanks to their
special properties and botanical origin, TÜV-certified biodegradable and
compostable Lenzing fibers are also ideal for demanding use in everyday
hygiene applications.
The Lenzing Group’s business model extends far beyond that of a
conventional fiber producer. Together with its customers and partners,
Lenzing develops innovative products along the value chain, creating added
value for consumers. The Lenzing Group strives for efficient utilization
and processing of all raw materials and offers solutions for the
transformation of the textile industry from the current linear economic
system to a circular economy. In order to reduce the rate of global
warming and thereby also support the goals of the Paris Agreement and the
EU Commission’s Green Deal, Lenzing has a clear, science-based climate
action plan that aims for a significant reduction in greenhouse gas
emissions by 2030, and a net-zero target (Scopes 1, 2 and 3) by 2050.
Key Facts & Figures Lenzing Group 2023
Revenue: EUR 2.52 bn
Nominal capacity (fibers): 1,110,000 tonnes
Employees (full-time equivalents): 7,917
TENCEL™, LENZING™ ECOVERO™, VEOCEL™, LENZING™, and REFIBRA™ are trademarks
of Lenzing AG.
[7]^[1] The EU Ecolabel is recognized by all member states of the European
Union as well as Norway, Liechtenstein, and Iceland. Introduced in 1992 by
EU Regulation (EEC) No. 880/92, the voluntary label has gradually
developed into a reference point for consumers who wish to contribute to a
reduced environmental impact by purchasing more environmentally
responsible products and services.
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15.03.2024 CET/CEST This Corporate News was distributed by EQS Group AG.
www.eqs.com
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Language: English
Company: Lenzing AG
4860 Lenzing
Austria
Phone: +43 7672-701-0
Fax: +43 7672-96301
E-mail: office@lenzing.com
Internet: www.lenzing.com
ISIN: AT0000644505
Indices: ATX
Listed: Vienna Stock Exchange (Official Market)
EQS News ID: 1859299
End of News EQS News Service
1859299 15.03.2024 CET/CEST
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