From the Sector

“Hot Button Report”, the Canadian non-profit organization Canopy particularly highlights the innovative strength of the Lenzing Group, its active contribution to forest conservation and high level of transparency.

In the “Hot Button Report” issued by the Canadian non-profit organization Canopy, the Lenzing Group was once again rated number one in the world, thus confirming its role as the sustainability trailblazer in the textile industry. In this widely recognized ranking, Canopy grades the world’s 32 largest producers of wood-based fibers with respect to their success in achieving sustainable wood and pulp sourcing. Wood and the pulp derived from it are the most important raw materials underlying Lenzing’s sustainable production of cellulosic fibers.

“We are extremely proud of this top ranking. It underlines our leading position as a sustainability trailblazer in the manufacturing sector and in the fiber industry in particular. It gives our customers the confidence that we have created the right structures to prevent the sourcing and use of wood from ancient and endangered forests”, says Stefan Doboczky, CEO of the Lenzing Group. “Environmental protection and the prudent use of resources are an integral part of our responsibility to nature and society”, he adds.

Lenzing primarily convinced the non-profit organization Canopy this year thanks to its innovative strength used to promote the circular economy in the textile industry, its active contribution towards protecting the forests and preserving biodiversity as well as its high level of transparency in pulp sourcing.

Lenzing received a total of 26.5 points (up 3.5 points from the previous year) and was thus given the “light to mid green shirt” rating. This means that in using the wood-based cellulosic fibers produced by the Lenzing Group, there is only a very minimal danger that wood is derived from primeval forests and endangered forest areas. In the Wood and Pulp Policy published by Lenzing, the company confirms that it only sources wood and pulp from non-controversial sources.

Lenzing was awarded for the introduction of the blockchain technology for fiber identification as well as its achievements as a leading company and significant economic engine in the region

On November 4, 2019, Lenzing AG won the “Digital Corona” in Gold. The coveted business prize was awarded for the first time in this category. It is awarded to companies that have dynamically advanced the digitization of business processes, products, services and business models in recent years. At the premiere, Lenzing was delighted to receive the first prize for the introduction of the blockchain technology for fiber identification along the textile value chain.

“Consumers increasingly want to understand the ingredients and suppliers of the products they buy, requesting a new level of transparency and traceability. With the introduction of blockchain technology, Lenzing is pursuing the ambitious goal of creating full transparency across the value chain, driving change in an industry where less than five percent of the top 250 apparel brands can track their garments back to the fiber origin”, Stefan Doboczky, CEO of the Lenzing Group, says. Lenzing enables its customers and partners to identify TENCEL ™ branded fibers across each production and distribution step from fiber-to-retail. The technology also allows consumers to verify the garment composition and the underlying textile supply chain at the point of sale, simply by scanning the barcode with a mobile device. As a result, Lenzing also directly supports the business with its very sustainably produced TENCEL™ lyocell fibers.

partner confirms start-up date of the project in Thailand

With the recently announced plans to establish a lyocell production facility in Thailand, the Lenzing Group is taking an important step in meeting the strong demand for lyocell fibers and is further strengthening the company´s position as an industry leader in the specialty cellulosic fibers market. The proposed plant will be the largest lyocell plant in the world, with an annual capacity of 100,000 tons. The total investment volume for the first production line, including infrastructure and site development, amounts to approximately EUR 400 million. Up to four such lines can be potentially integrated and operated on the site. The project is of great importance to Lenzing as it is the first step in bringing lyocell production to Asia, featuring the largest markets, the most important customers and the most extensive growth potential in specialty fiber production.

• Organic Waste Systems and TÜV confirm fiber biodegradability also in fresh water
• All white LENZING™ Viscose, Modal and Lyocell fibers are now certified for all environments
• Global legislators aim at limiting plastic waste persisting in the environment for centuries
• EU Single-Use Plastics Directive partly regulates usage of plastic products
• Biodegradable materials such as wood-based fibers are the best alternative to single-use plastics

The Lenzing Group received confirmation of the full biodegradability of its fibers in fresh water by the independent research laboratory Organic Waste Systems (OWS). The new and existing international certifications conducted by OWS and issued by TÜV Austria verify that LENZING™ Viscose fibers, LENZING™ Modal fibers and LENZING™ Lyocell fibers are biodegradable in all natural and industrial environments: in the soil, compost as well as in fresh and in marine water.

The biodegradability of cellulosic products and the synthetic fiber polyester was tested in fresh water at OWS according to valid international standards, e.g. ISO 14851. At the end of the trial period, LENZING™ wood-based cellulosic fibers, cotton and paper pulp were shown to be fully biodegradable in fresh water in contrast to synthetic polyester fibers. The fact that synthetic materials are not biodegradable leads to major problems in wastewater treatment plants and potentially marine litter. In turn, this not only harms fish and birds living in and close to the oceans but also all marine organisms and us humans.

“The Lenzing Group operates a truly circular business model based on the renewable raw material wood to produce biodegradable fibers returning to nature after use. This complete cycle comprises the starting point of the core value of sustainability embedded in our company strategy sCore TEN and is the ‘raison d’etre’ of our company”, says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “In living up to this positioning, we not only enhance the business of our suppliers, customers and partners along the value chain but also improve the state of the entire textile and nonwovens industries.”

Both the textile and nonwovens industries face huge challenges with respect to littering. If current trends continue, the oceans could contain more plastic than fish by 2050. Therefore, legislative bodies worldwide can no longer ignore the issue and have moved towards plastics legislation aimed at limiting the vast amount of waste. In response, European lawmakers issued the Single-Use Plastics Directive currently being transposed into national legislation in the EU member states.

Conventional wet wipes and hygiene products mostly contain plastic and were thus identified as one of the product categories to be singled out. Less polluting alternatives are generally encouraged by NGOs and legislators, e.g. products made of biodegradable wood-based cellulosic fibers. Plastic waste including microplastic can persist in the environment for centuries. In contrast, biodegradable materials are the best alternative to single-use plastics because they fully convert back to nature by definition and thus do not require recycling.

• Production capacities increased to 320,000 tons p.a.
• Investments of EUR 60 mn enhance self-sufficiency and strengthen autonomy from market prices
• Project serves as a significant economic driver in the region

Lenzing AG, producer of pulp and fibers from the renewable raw material wood, has concluded its expansion and modernization drive at the pulp plant at the Lenzing site. The company invested EUR 60 mn for this purpose, increasing production capacities for dissolving pulp extracted from beech wood from 300,000 to 320,000 tons per year. The coming on stream of the additional pulp capacities over the past weeks strengthens Lenzing’s self-supply of pulp in accordance with the sCore TEN corporate strategy.

“The successful expansion brings us closer to achieving our strategic objective of increasing our self-supply of pulp to a level of 75 percent, thus making us even more resistant to price fluctuations in sourcing pulp”, says Stefan Doboczky, CEO of the Lenzing Group. “We are also pleased that this project enables us to make a further significant contribution towards strengthening the Lenzing site as well as the regional economy”, Mr. Doboczky adds.

The expansion drive was completed in less than two years. In addition to 100 Lenzing Group employees, numerous external partner companies from Upper Austria and neighboring regions were involved in implementing the project. About 40,000 working days were needed by external companies in order to install the delivered machinery on site. The Lenzing Group secured additional jobs due to the pre-production work required in the factories of these suppliers.

In line with the corporate strategy of the Lenzing Group, the self-supply of dissolving wood pulp will be successively increased in the coming years to 75 percent of consumption. At present, Lenzing’s own pulp plants in Lenzing and Paskov (Czech Republic) cover 60 percent of the Group’s pulp requirements. The Lenzing site primarily makes use of beech wood which is not suitable for producing furniture, whereas it mainly relies on spruce wood in the Czech Republic. The remaining dissolving wood pulp is sourced from a variety of hardwoods and softwoods from international partners. In this case, in the spirit of sustainability, Lenzing applies procurement rules which are just as strict as when it purchases wood for its own pulp production.

• Undergarments, pajamas and bed linens tested for months
• Moisture management of fibers reduce sweating and hence itching
• Soft and smooth fibers lead to fewer skin injuries

The Lenzing Group has been providing both financial support and textiles made of its fibers to DEBRA Austria, the patient organization for “butterfly children”. The TENCEL™ branded lyocell and modal fibers which are being used are particularly soft and smooth and therefore very skin-friendly. In turn, they help to improve the quality of life for the “butterfly children”.

In recent months, several patients with the skin disorder Epidermolysis Bullosa (EB) have tested leggings, undergarments, pajamas, leggings, quilts and bed linens made of TENCEL™ fibers and have found them to be comfortable and skin-friendly. The skin of EB patients is fragile like the wings of a butterfly. For this reason, coarse fibers, scratching seams, buttons, zippers and fibers which hardly or do not at all absorb sweat frequently lead to additional blisters and sores and increased itching. In contrast, TENCEL™ fibers feature particularly good moisture management and thus support the nature temperature-regulating properties of the body.

• Lenzing sets net-zero CO2 emissions target by 2050
• Reduction of specific CO2 emissions by 50 percent until 2030
• Investment of more than EUR 100 mn to combat 1.3 Mt of CO2 emissions
• Commitment to follow the Science Based Targets concept

Lenzing, member of the CEO Climate Leaders Group of the World Economic Forum and a signatory to the United Nations Fashion Industry Charter for Climate Action, will drastically reduce its CO2 footprint. The Lenzing Group will invest EUR 100 mn over the coming years to reduce carbon emissions both inside its operational boundaries (scope 1+2) and in its supply chain (scope 3). Due to its ambitious CO2 emission reduction strategy, the Lenzing Group will further contribute towards helping customers to transition their business to a lower CO2 base.

A first milestone is set for 2030, when Lenzing plans to reduce CO2 emissions per ton of product by almost 50 percent (scope 1+2 and 3) compared to a 2017 baseline. The total CO2 reduction of all the planned initiatives will yield 1.3 Mt.

• Very positive development of the specialty fiber business with a 47 percent share in revenue
• Market environment for standard viscose still very tight
• Resolution on dividend: EUR 3.00 plus special dividend of EUR 2.00 per share
• Outlook confirmed: Earnings for 2019 expected at a similar level as in 2018

Lenzing – The Lenzing Group continued its solid development in the first quarter of 2019. Despite a much tighter market environment, the Lenzing Group even recorded a slight increase in revenue, proving once again that it has chosen the right path with its sCore TEN corporate strategy. The declining prices for standard viscose were largely offset in earnings.

This year’s Annual General Meeting of Lenzing AG resolved today, Thursday, April 17, 2019, to distribute a dividend of EUR 3.00 per share as well as a special dividend totaling EUR 2.00 per share. On balance, the dividend will amount to EUR 5.00 per no-par value share for the 2018 financial year (compared to EUR 5.00 per share in the previous year). The dividend payment is scheduled to take place on April 25, 2019, whereas ex-dividend day is on April 23, 2019.

The Annual General Meeting also adopted a resolution discharging the members of the Management Board and the Supervisory Board for the 2018 financial year, and also resolved upon the remuneration to be paid to the Supervisory Board members for the 2018 and 2019 financial years. KPMG Austria GmbH Wirtschaftsprüfungs- u. Steuerberatungsgesellschaft was appointed to serve as the auditor of the annual and consolidated financial statements for the 2019 financial year.

Effective at the end of this Annual General Meeting, Hanno Bästlein, the previous Chairman of the Supervisory Board, as well as Christoph Kollatz have retired from the Supervisory Board at their own request. “We would like to thank Hanno Bästlein and Christoph Kollatz for their dedicated work on the Supervisory Board of Lenzing AG. Thanks to their expertise, they made a major contribution to important strategic decisions in the company. During his four years as Chairman of the Supervisory Board, Hanno Bästlein decisively supported the strategy of the Lenzing Group and thus contributed to the enhanced resilience of the company based on the expansion with specialty fibers”, says Stefan Doboczky, Chief Executive Officer of Lenzing AG.

• Challenging market environment due to low prices for standard viscose, less favorable exchange rates and higher raw material and energy prices
• Very positive development of specialty fiber business with revenue share exceeding 45 percent
• Dividend proposal of EUR 3.00/share plus a special dividend of EUR 2.00/share
• Results for 2019 expected at about the level of 2018 despite a significantly more demanding market environment

The Lenzing Group’s business developed well in the 2018 financial year. A significantly more challenging market environment led to a decline in revenue as well as earnings compared with the record results of the previous year. This was primarily caused by lower selling prices for standard viscose, exchange rate effects as well as higher raw material and energy costs.

Group revenue declined by 3.7 percent compared with the previous year to EUR 2.18 bn. The predicted challenging market environment for standard viscose, plus less favorable exchange rates and a slight decline in sales volume were the key contributing factors. EBITDA (earnings before interest, tax, depreciation and amortization) was down by 24 percent 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 percent in the 2017 financial year to 17.6 percent in the reporting year. EBIT (earnings before interest and tax) fell by 36 percent to EUR 237.6 mn, leading to a lower EBIT margin of 10.9 percent (2017: 16.4 percent). Net profit for the year after one-off effects dropped by 47.4 percent from EUR 281.7 mn in the previous year to EUR 148.2 mn. Earnings per share equaled EUR 5.61 (2017: EUR 10.47).

The Management Board and the Supervisory Board will propose a stable dividend of EUR 3.00 per share plus a special dividend of EUR 2.00 per share at the upcoming Annual General Meeting. In total, the paid dividend will amount to EUR 5.00 per share, corresponding to a dividend payment to shareholders of roughly EUR 133 mn.