2018 good for Lenzing inspite of challenging market

The Lenzing Group’s business developed well in the 2018 financial year, despite a significantly more challenging market environment, which led to a decline in revenue, as well as earnings, compared with the record results of the previous year, the company says.

Net profit for the year after one-off effects dropped by 47.4% from EUR 281.7 million in the previous year to EUR 148.2 million. Group revenue declined by 3.7%, compared with the previous year to EUR 2.18 billion. EBITDA was down by 24% to EUR 382 million due to price increases for key raw materials and higher energy and personnel costs. The EBITDA margin dropped from 22.2% in the 2017 financial year to 17.6% in the reporting year. EBIT fell by 36% to EUR 237.6 million, leading to a lower EBIT margin of 10.9%.

“Although 2018 proved to be more challenging than the preceding years, it was, nevertheless, the fourth best year in the company’s history. We consistently worked on the strategic imperatives of our sCore TEN corporate strategy in order to raise our pulp integration, enhance customer intimacy, increase the share of specialty fibres in revenue and to invest in new technologies and business areas,” said Stefan Doboczky, CEO of the Lenzing Group.

“The very positive development of our specialty business in an expected challenging market environment for standard viscose confirms our strategic direction and our ambitious plans. Thanks to its specialty strategy and its strong brands based on innovation and sustainability, the Lenzing Group is significantly more resilient today than only a few years ago. However, we are not immune to global developments, and further efforts and investments in specialty fibres are required to become even more resistant to market fluctuations.”

Sustainability driven by innovation – The textile and nonwoven industries are faced with fundamental ecological challenges, and as a leading producer of wood-based specialty fibres, the Lenzing Group bears a special responsibility. In 2018, the company decided to continue along its ambitious path and to invest roughly EUR 100 million in sustainable manufacturing technologies and production facilities by 2022 in order to further strengthen its closed-loop model and support its customers in replacing resource-intensive and environmentally harmful solutions.

The Lenzing Group stands for ecologically responsible production of specialty fibres made from the renewable raw material wood. © Lenzing AG

With its most recent innovations, the Lenzing Group has taken important steps in this direction. After the presentation of the Refibra technology, Lenzing EcoVero branded high-performance and identifiable viscose fibres and Tencel Luxe lyocell filament yarn, Lenzing announced the successful development of the Lenzing Web Technology in 2018. This is a new technology platform with a focus on sustainable nonwoven products, which will open up new market opportunities for the industry. In a first step, 25 patent applications were filed.

Capacity expansion for specialty fibres -The Lenzing Group continued the implementation of its sCore TEN strategy in 2018. The start-up of new capacities for lyocell fibres in Heiligenkreuz, the production start of Lenzing EcoVero fibres at the Nanjing site, the acquisition of the remaining 30% of the Chinese subsidiary Lenzing (Nanjing) Fibres from the joint venture partner and the investment in another pilot plant for Tencel Luxe filaments are important steps to achieve the goal of increasing the share of specialty fibres in total revenue.

As a result of the decision to temporarily mothball the lyocell capacity expansion project in Mobile, AL, in view of the buoyant labour market in the USA and the economic tensions between the major trading blocks, the implementation of the plan for specialty fibre growth will be slowed down. The Lenzing Group will adjust its growth plan accordingly in order to meet strong market demand for its lyocell fibres. This includes an increased focus on the lyocell expansion project in Prachinburi, Thailand.

Largest dissolving wood pulp line worldwide -At the end of June, the Lenzing Group and Duratex, the largest producer of industrialised wood panels of the southern hemisphere, announced that they had agreed on the terms and conditions to form a joint venture to investigate building the largest single line dissolving wood pulp plant in the state of Minas Gerais, Brazil.

This decision supports the self-supply with dissolving wood pulp and the growth in specialty fibres. The joint venture is investigating the construction of a 450,000-ton dissolving wood pulp plant, which is expected to become the largest and most competitive single line dissolving wood pulp plant in the world.

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