EQS-News: Lenzing implements comprehensive performance program in response to lack of market recovery
EQS-News: Lenzing implements comprehensive performance program in response to lack of market recovery
EQS-News: Lenzing AG / Key word(s): 9 Month figures
Lenzing implements comprehensive performance program in response to lack of market
recovery
03.11.2023 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.
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Lenzing implements comprehensive performance program in response to lack of market
recovery
• Revenue of EUR 1.87 bn and EBITDA of EUR 219.1 mn in the first three quarters of
2023
• Positive free cash flow of EUR 27.3 mn in the third quarter
• Implementation of performance program focusing on positive free cash flow,
strengthened sales and margin growth and sustainable cost excellence
• Modernization and conversion of Indonesian site successfully completed – EU Ecolabel
received
Lenzing – The anticipated recovery in markets relevant for the Lenzing Group, a leading
global supplier of specialty fibers for the textile and nonwovens industries, has to
date failed to materialize. The continued sharp increase in raw material and energy
costs on the one hand and very subdued demand on the other had a negative impact on
Lenzing’s business trends as well as on industry as a whole during the reporting period.
Revenue in the first three quarters of 2023 decreased by 5.3 percent year-on-year to
EUR 1.87 bn. This reduction was primarily due to lower fiber revenues, while pulp
revenues were up. The earnings trend was mainly influenced by the market environment. As
a consequence, earnings before interest, tax, depreciation and amortization (EBITDA) in
the reporting period decreased by 16.7 percent year-on-year to EUR 219.1 mn. The net
result after tax amounted to minus EUR 96.7 mn (compared with EUR 74.9 mn in the first
three quarters of 2022), while earnings per share amounted to minus EUR 4.90 (compared
with EUR 2.16 in the first three quarters of 2022).
“The recovery that has been expected for the second half of the year in the markets
relevant that are for us has so far failed to materialize. As a consequence, the
measures we took at an early stage have proved all the more correct. We already launched
an ambitious cost-cutting program at the end of 2022, which has delivered the expected
results ahead of schedule. Building on this, we are currently implementing a holistic
performance program with a focus on measures to boost profitability and cash flow
generation as well as to leverage growth potential in the fiber markets through targeted
sales activities,” comments Stephan Sielaff, Lenzing Group CEO.
Nico Reiner, Lenzing Group CFO, adds: “This performance program enables us to powerfully
tackle the current economic challenges and to strengthen Lenzing’s resilience to
crises.”
Effective measures launched
As early as the end of 2022, Lenzing successfully implemented a reorganization and cost
reduction program with a volume in excess of EUR 70 mn, while also implementing further
measures to strengthen free cash flow. In the third quarter of 2023, Lenzing generated
positive free cash flow of EUR 27.3 mn. At the same time, the balance sheet and
liquidity position were significantly strengthened through the successful capital
increase of around EUR 400 mn and the extension of the debt terms in the reporting
period.
Building on this, the Managing Board is currently implementing a comprehensive
performance program with the overriding objective of significantly enhanced long-term
resilience to crises and greater agility in the face of market changes. The program
initiatives are aimed at generating free cash flow, stronger revenue and margin growth,
and sustainable cost excellence. In addition to the positive effects on sales, the
Managing Board expects annual cost savings of more than EUR 100 mn, of which approx. 50
percent will be effective from the coming financial year.
As in past programs, some of the cost reductions will derive from a reduction in
personnel costs. It is currently assumed that global personnel costs will be reduced by
up to EUR 30 mn, or around 500 full-time equivalents (FTE), which will be achieved by
not filling positions that fall vacant due to retirements and natural attrition, as well
as by staff reductions. For the Austrian sites in Lenzing and Heiligenkreuz,
negotiations are currently underway with the works council concerning a social plan, the
implementation of which is scheduled to commence in the first quarter of 2024.
During the reporting period, Lenzing also successfully implemented a capital increase
with subscription rights for existing shareholders. The gross issue proceeds of
approximately EUR 400 mn are being deployed to strengthen the balance sheet and
liquidity position, to create additional flexibility in relation to the financing
strategy and to support the Better Growth strategy.
“Better Growth” further advanced
Implementation of the “Better Growth” corporate strategy continued in the reporting
period. This strategy is aimed, among other things, at better serving structural demand
growth for eco-friendly and high-quality specialty fibers of the TENCEL™, LENZING™
ECOVERO™ and VEOCEL™ brands. After the successful conversion of a production line in
Nanjing (China) in the first quarter of 2023, Lenzing was also able to complete its
conversion and modernization measures in Purwakarta (Indonesia) in the third quarter
with the aim of converting to specialty viscose and significantly reducing specific
emissions. Viscose fibers produced at the site under the LENZING™ ECOVERO™ and VEOCEL™
brands are marked with the EU Ecolabel,[1]^[1] an internationally recognized eco label
for environmentally responsible products and services.
Lenzing is therefore able to generate 100 percent of its fiber sales with specialty
fibers from the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands.
Outlook
According to the IMF, a full return of the global economy to pre-pandemic growth rates
appears increasingly out of reach in the coming quarters. In addition to the
consequences of the pandemic and the ongoing war in Ukraine, growth is also being
influenced by restrictive monetary policy and extreme weather events. The consequences
of the renewed military confrontation in the Middle East are not yet foreseeable.
Overall, the IMF warns of greater risks to global financial stability, and expects the
growth rate to decrease to 3 percent this year and to 2.9 percent next year.
The currency environment is expected to remain volatile in the regions of relevance to
Lenzing.
The general market environment is continuing to weigh on the consumer climate and on
sentiment in the industries relevant to Lenzing.
In the trend-setting market for cotton, the current 2023/24 crop season is emerging as a
further 1.7 mn tonnes of inventory build-up, following 1.8 mn tonnes of inventory
build-up in the previous season.
Earnings visibility remains severely limited overall.
Lenzing is fully on track with the implementation of the reorganization and cost
reduction program and on this basis is implementing a comprehensive performance program
focused on positive free cash flow, strengthened sales and margin growth as well as
sustainable cost excellence. The overarching goal is to position Lenzing even more
strongly and to further increase its crisis resilience.
In structural terms, Lenzing continues to anticipate growth in demand for
environmentally responsible fibers for the textile and clothing industry as well as 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 trans-formation from a linear to a
circular economy model.
The successful implementation of the key projects in Thailand and Brazil as well as the
investment projects in China and Indonesia will further strengthen Lenzing’s positioning
in this respect.
Taking the aforementioned factors into consideration, the Lenzing Group continues to
expect that EBITDA for the 2023 financial year will lie in a range between EUR 270 mn
and EUR 330 mn.
Selected indicators of the Lenzing Group
EUR mn 01-09/2023 01-09/2022
Revenue 1,865.8 1,970.1
EBITDA (operating profit before depreciation and amortization) 219.1 263.0
EBITDA margin 11.7 % 13.3 %
Net profit/loss after tax -96.7 74.9
Earnings per share in EUR -4.90 2.16
Cash flow from operating activities 61.1 34.8
CAPEX^1 -199.7 -532.0
30/09/2023 31/12/2022
Net financial debt^2 1,574.1 1,799.4
Adjusted equity ratio^3 40.0 % 37.8 %
Employees (FTE) 8,025 8,169
1) Capital expenditures: Investments in intangible assets, property, plant and equipment
and in biological assets as per the consolidated statement of cash flows
2) Since the second quarter of the 2023 financial year, net financial debt is presented
excluding lease liabilities (see the supplement to the management report “Notes on the
Financial Performance Indicators of the Lenzing Group”).
3) Ratio of adjusted equity to total assets in percent
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 & Public Vice President Capital Markets
Affairs Lenzing Aktiengesellschaft
Lenzing Aktiengesellschaft Werkstraße 2, 4860 Lenzing, Austria
Werkstraße 2, 4860 Lenzing, Austria
Phone +43 664 8281576
Phone +43 7672 701 2743 E-mail [5]s.knus@lenzing.com
E-mail [3]media@lenzing.com Web [6] www.lenzing.com
Web [4] www.lenzing.com
About the Lenzing Group
The Lenzing Group stands for the ecologically responsible production of specialty fibers
made from the renewable raw material wood. As an innovation leader, Lenzing is a partner
to global textile and nonwoven manufacturers and drives many new technological
developments. The Lenzing Group’s high-quality fibers form the basis for a variety of
textile applications ranging from elegant clothing to versatile denims and
high-performance sports clothing. Due to their consistent high quality, biodegradability
and compostability, Lenzing fibers are also highly suitable for hygiene products and
agricultural applications.
The Lenzing Group’s business model extends far beyond that of a traditional fiber
producer. Together with its customers and partners, Lenzing develops innovative products
along the value chain and creates added value for consumers. The Lenzing Group strives
for the efficient utilization and processing of all raw materials and offers solutions
to help redirect the textile and nonwoven sector towards a closed loop economy. In order
to slow the rate of global warming and to accomplish the climate targets of the Paris
Agreement and the EU Commission’s “Green Deal”, Lenzing has a clear vision: Namely, to
make a zero-carbon future come true.
Lenzing Group facts & figures 2022
Revenue: EUR 2.57 bn
Nominal capacity (fibers): 1,145,000 tonnes
Employees: 8,301
TENCEL™, VEOCEL™, LENZING™, REFIBRA™, ECOVERO™, LENZING MODAL™, LENZING VISCOSE™,
MICROMODAL™ and PROMODAL™ are trademarks of Lenzing AG.
Disclaimer: The above key financial figures are derived primarily from the condensed
consolidated interim financial statements and the consolidated financial statements of
the previous year of the Lenzing Group. Additional details are provided in “Notes on the
Financial Performance Indicators of the Lenzing Group”, available at the following link
[7] https://www.lenzing.com/notes-financial-performance-indicators-lenzing-group-2023-q3,
and in the condensed consolidated interim financial statements as well as the Lenzing
Group’s prior-year consolidated financial statements. Rounding differences can occur in
the presentation of rounded amounts and percentage rates.
[8]^[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 an EU regulation (Regulation
(EEC) No. 880/92), the voluntary label has gradually become a reference for consumers
who wish to contribute to a lower environmental impact by purchasing more
environmentally responsible products and services.
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03.11.2023 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: 1764133
End of News EQS News Service
1764133 03.11.2023 CET/CEST
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