The Management Board of the Lenzing Group. © Lenzing AG

The Lenzing Group continued its solid business development in the first half of 2019. Despite a significantly more challenging market environment with historically low prices for standard viscose, Lenzing recorded a slight increase in revenue.

It increased by 1.2% in the first half of 2019 and amounted to EUR 1.09 billion. The share of specialty fibres in revenue, at 48.4%, significantly exceeded the prior-year value of 44.1%. EBITDA (earnings before interest, tax, depreciation and amortization) dropped by 7% to EUR 181.2 million. This decline primarily resulted from higher production volumes and currency effects, which led to an increase in pulp costs, from an increase in personnel expenses and the market environment for standard viscose.

The EBITDA margin declined from 18.1% in the first half of 2018 to 16.6% in the reporting period. EBIT (earnings before interest and tax) fell by 17.9% to EUR 105.6 million, resulting in a lower EBIT margin of 9.7% (H1 2018: 12%). Net profit for the period decreased by 15.9% from EUR 91.3 million to EUR 76.8 million.

The Lenzing Group is substantially increasing its production of lyocell fibres. © Lenzing AG

“Fully in line with our sCore TEN strategy, our specialty fibre business is developing very positively, which has made us significantly more resilient today than a few years back. The investment in new production capacities for lyocell fibres and the focus on our Tencel and Veocel product brands will make us even more resistant to market fluctuations and strengthen our position as a leading supplier of specialty fibres. The first phase of this ambitious growth plan is the construction of a state-of-the-art lyocell plant in Thailand,” said Stefan Doboczky, CEO of the Lenzing Group. “The escalating trade conflict between the largest economies confirm our decision to temporarily mothball the Mobile, Alabama project. Lenzing will continue to monitor these developments closely and review this decision on a regular basis.”

Expansion of specialty fibre capacities

The Lenzing Group is substantially increasing its production of lyocell fibres to meet the strong demand for these products. Lenzing puts the focus on stable and profitable growth as well as an improvement of the ecological footprint of the textile and nonwovens industries by expanding the production of specialty fibres. The first expansion phase of this ambitious growth plan, the construction of a state-of-the-art production plant for lyocell fibres in Prachinburi (Thailand), was approved in the second quarter of 2019. The investment volume for the new plant, which has a capacity of 100,000 tons, totals around EUR 400 million.

Expansion of pulp capacities

Lenzing and its Brazilian partner Duratex continue to advance the planned construction of a dissolving wood pulp plant in the state of Minas Gerais (Brazil). The basic engineering, site preparation and the applications for the required permits are proceeding according to plan. The final investment decision is expected for the end of 2019.

The expansion and modernisation of the production capacities for dissolving wood pulp at the Lenzing site was successfully completed in the first half of 2019.

Transparency from wood to garment

Lenzing will use blockchain technology to support its Tencel branded fibre business, ensuring complete transparency and traceability for brands and consumers of its fibres in the finished garment. In the second quarter of 2019 Lenzing announced a cooperation with the Hong Kong based technology company TextileGenesis to accomplish this ambition. Lenzing will carry out several pilot tests involving partners along the entire value chain and expects the platform to be operational as of 2020.

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