Lenzing achieves best ever half-year results

Lenzing Group generated new records figures in the first half of the 2017 financial year for both revenue and earnings.

The key underlying factors were good capacity utilization, higher selling prices and an attractive product mix, said the Austria-based cellulosic fiber producer, adding that it will continue to focus on the implementation of the group’s sCore TEN strategy and further expand the offering of specialty fibers.

Consolidated revenue increased by 11% from the first half of the previous financial year to €1.15 billion. Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) rose 38.8% to €270.7 million, corresponding to an EBITDA margin of 23.6% compared with 18.9% in the prior-year period.

Earnings before interest and tax (EBIT) increased by 57.4% to €204.2 million, resulting in a higher EBIT margin of 17.8% (H1 2016: 12.5%). The profit for the period improved by 58.9% to €150.3 million.

Lenzing registered strong demand for its fibers during the first two quarters, which led to continued high capacity utilization in all product groups. The market price index for viscose fibers was substantially higher than in the comparable period last year.

Chief executive officer Dr. Stefan Doboczky said: “Assuming that fiber market conditions remain at current levels, we expect a substantial earnings improvement in 2017 compared to 2016.”

Lenzing aims to increase the share of specialty fibers as a percentage of revenue to 50% by 2020. Following expansions at Lenzing, Heiligenkreuz (both in Austria) and Mobile, Alabama (USA), the group has chosen Thailand as the next location for a state-of-the-art facility to produce Tencel lyocell fibers.

Lenzing is establishing a subsidiary in Thailand and purchasing a commercial property in an industrial park near Bangkok. A definitive decision on constructing the new production plant will be made in the first quarter of 2018, with completion scheduled for the end of 2020.

During the first six months of 2017, Lenzing launched EcoVero, a high-performance fiber with a favorable ecological footprint, and Refibra fibers, which combine pulp from scraps of cotton clothing and pulp from wood. The company also opened new sales and marketing offices in Turkey and South Korea.

In its outlook, Lenzing believes the wood-based cellulose fiber segment will again outpace the overall fiber market. Demand for these cellulose fibers was described as “very good” in the first half of this year, with the long-term trend pointing towards further growth in viscose and, above all, specialty fibers.

On the supply side, the market is not expected to see the entry of any notable new production capacity in 2017.