From the Sector

• Strong operating result: EBITDA at EUR 217.8 mn, cash flow from operating activities at EUR 199.8 mn
• Major strategic projects continue fully on track – production start of the lyocell plant in Thailand in the fourth quarter of 2021
• Start of strategic cooperation agreement for textile recycling with Södra
• New milestones in the implementation of group-wide carbon neutrality: EUR 200 mn investment in existing locations in Asia
• Guidance 2021: Lenzing expects EBITDA of at least EUR 360 mn

The Lenzing Group reported a significant improvement in revenue and earnings in the first half of the year. Growing optimism in the textile and apparel industry and the ongoing recovery in retail caused a substantial increase in demand and prices on the global fiber market, in particular at the beginning of the current financial year.

Revenue rose by 27.5 percent to EUR 1.03 bn in the first half of 2021. This increase is primarily attributable to higher viscose prices, which stood at more than RMB 15,000 in May thanks to significantly higher demand for fibers, especially in Asia. The focus on wood-based specialty fibers such as TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ branded fibers also had a positive impact on the revenue development; the share of specialty fibers in fiber revenue rose to 72.8 percent in the reporting period. The negative impact of more unfavorable currency effects was consequently more than offset.

The earnings development essentially reflects the positive market development and was additionally reinforced by measures to improve efficiency. Energy and logistics costs increased significantly throughout the entire reporting period. EBITDA (earnings before interest, tax, depreciation and amortization) more than doubled and amounted to EUR 217.8 mn in the first half of 2021 (compared to EUR 95.6 mn in the first half of 2020). The EBITDA margin rose from 11.8 percent to 21.1 percent. Net profit for the period amounted to EUR 96.1 mn (compared to a net loss of EUR minus 14.4 mn in the first half of 2020) and earnings per share to EUR 3.06 (compared to EUR 0.06 in the first half of 2020).

“Lenzing had a very strong first half-year. The demand for our sustainably produced specialty fibers once again developed excellently,” says Stefan Doboczky, CEO of the Lenzing Group.

• Closing the loop from fiber to fiber in fashion

Lenzing, a leading global supplier of wood-based specialty fibers, and Södra, a producer of pulp, signed a cooperation agreement today, June 02, 2021. The cooperation involves the transfer of knowledge between the two companies, which have been proactively driving the circular economy issue for many years, and a joint process development followed by a capacity expansion for pulp from post-consumer waste. The jointly developed pulp OnceMore® will subsequently also be used as a raw material for the production of Lenzing’s TENCEL™ x REFIBRA™ branded specialty fibers.
The goal is to process 25,000 tons of textile waste per year by 2025.

OnceMore® by Södra is the world’s first process for industrial-scale recycling of textile waste of blended fibers, and it’s the forest who makes that possible. The process combines wood cellulose with textile waste to create a pure, high-quality dissolving pulp which can be used to produce new clothing and other textile products. During 2022, a new investment will ten-fold the production capacity of OnceMore® pulp and reach a higher level of recycled textile content. The goal for 2025 is to process 25,000 tons of textile and offer a OnceMore® pulp based on our wood material and 50 percent recycled textile material.

• Successful measures to fight against the COVID-19 pandemic with a focus on the safety and health of employees, customers and partners and securing sustainable business development
• Implementation of strategic investment projects and climate targets progressing on schedule – launch of first TENCEL™ branded carbon-zero fibers
• New level of transparency in the textile industry: introduction of blockchain technology
• Target setting: Lenzing raises the bar even higher and sets new sustainability goals

The Lenzing Group presented its Sustainability Report 2020 on April 22, 2021, World Earth Day. Featuring the title “Stand up for future generations”, Lenzing once again emphasized its commitment to taking responsibility beyond the products it makes. The non-financial report, prepared in accordance with the reporting standards of the Global Reporting Initiative (GRI) and the Austrian Sustainability and Diversity Improvement Act (NaDiVeG) and reviewed by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, illustrates how the company is responding to the global challenges of our time.

The 2020 financial year of the Lenzing Group was largely dominated by the COVID-19 pandemic. Lenzing took short-term measures to safeguard its business operations and mitigate the effects of fiber prices and fiber demand which came under increasing pressure. The priority was to protect employees and strengthen long-term partnerships with suppliers and customers. Following the current fight against the coronavirus and its consequences, the company continues to move ahead determinedly to achieve its sustainability targets, also against the backdrop of such a difficult market environment.

With the implementation of its science-based targets, the Lenzing Group actively contributes to mastering the problems caused by climate change. In 2019, Lenzing made a strategic commitment to reducing its greenhouse gas emissions by 50 percent per ton of product by 2030. The overriding target is to be climate-neutral by 2050.*

The launch of the first carbon-zero TENCEL™ fibers certified as CarbonNeutral® products in accordance with The CarbonNeutral Protocol – the leading global framework for carbon neutrality – represents another important milestone from the reporting year. As of June 2021, Lenzing will also market the first VEOCEL™ branded lyocell fibers as certified CarbonNeutral® products.

Promoting the circular economy
Lenzing also sets standards for the entire fiber, textile and clothing industry with respect to the circular economy which is of such crucial importance in climate and resource protection. In order to enhance resource efficiency and offer a solution for the global problem of textile waste, the company developed the REFIBRA™ recycling technology. REFIBRA™ is the only technology in the world enabling the production of new lyocell fibers on a commercial scale from cotton scraps derived from manufacturing cotton clothing as well as from used garments. In this way, an important contribution is made to promoting circularity in the textile industry.*

New level of transparency in the textile industry
In addition to environmental protection, the issue of transparency along the supply chain poses a major challenge to the textile industry. Working in cooperation with TextileGenesis™, Lenzing offers an innovative solution to ensure greater transparency on the basis of blockchain technology. Following several successful pilot projects with renowned fashion brands, this digital platform was ultimately launched in 2020 to enable the traceability of textiles, from the fiber to all stages of production and distribution. Thanks to the innovative Fibercoin™ technology of the TextileGenesis™ platform, Lenzing and its partners are able to issue so-called “blockchain assets” in direct proportion to the physical fiber deliveries of the brands TENCEL™ and LENZING™ ECOVERO™. These digital assets function like a “fingerprint” and thus prevent adulteration.*

Target setting: Lenzing raises the bar even higher
The Lenzing Group operates in line with three strategic principles within the context of its “Naturally positive” sustainability strategy: partnering for change, advancing circularity and greening the value chain.*

*See attached document for more information..

With the spring textile trade fair season in China just around the corner, a number of leading domestic and international suppliers are confirmed to take part in Intertextile Shanghai Home Textiles – Spring Edition. The fair will now take place at a slightly later date of 17 – 19 March. Together with the concurrent fairs Intertextile Shanghai Apparel Fabrics, Yarn Expo, CHIC and PH Value, these five events will form the first major in-person gathering for the textile industry this year.

From bedding and towelling, rugs and table & kitchen linen to home textile technologies and textile designs, buyers will have a wide range of the latest collections to source from this month at Shanghai’s National Exhibition and Convention Center. International exhibitors such as Lenzing and Cotton Council International as well as leading domestic brands including Coolist, Luolai, Soluffy and Yunjie Textile are amongst those signed up to take part this year.

Exhibitor highlights

• Lenzing Fibers: will showcase their flagship brand for textiles, TENCEL™. Used for a variety of highly specialised applications, TENCEL™ fibres are soft to the skin and excellent in thermal regulation and moisture absorption.
• Cotton Council International (CCI) is a non-profit association that promotes US cotton fibre and cotton products throughout the world.
• Zhangjiagang Coolist Life Technology: this Chinese company designs and produces a range of functional pillow collections including their Filmless Gel, Hydrophilic, Air, Flexible and Organic pillow series. Their unique Coolist design features patented technology, and is made from organic and environmental-friendly materials.
• Anhui Million Feather: located in Anhui province’s Lu’an city, known in China as the ‘Kingdom of Geese’, the company produces a range of down and feather products and various bedding items.
• Wujiang City Yunjie Textiles: specialising in wide-width fabrics including microfibre, satin and suede.
• Yantai Zhonglian Industry: their main products include sheets, pillowcases, quilt covers, bed skirts, comforters, coverlets, pillows and more.

The Spring Edition of Intertextile Shanghai Home Textiles will return to the National Exhibition and Convention Center (Shanghai) from 10 – 12 March 2021, together with four other textile events including Intertextile Shanghai Apparel Fabrics – Spring Edition, Yarn Expo Spring, CHIC and PH Value. The fairs will offer an all-round business platform and a host of exciting synergy effects for the sector.

High-quality finished products to be offered
In March 2021, the Spring Edition will showcase a selection of home textile products including bedding & towelling, rugs, table & kitchen linen, home textile technologies, textile design and many more. Additionally, the fair will be held concurrently with Intertextile Shanghai Apparel Fabrics – Spring Edition, Yarn Expo Spring, CHIC and PH Value, offering a comprehensive sourcing platform for the sector.

Lenzing views Intertextile as an ideal platform to present their sustainable home products
The Lenzing Group, a leading producer of man-made cellulose fibres, is amongst the major industry players who have already confirmed their participation in the upcoming fair. Ms Lesley Wu, Home Textile Business Development at Lenzing Fibers (Shanghai), talked about new market trends in the post-pandemic era and the reasons they decided to join the Spring Edition of Intertextile Shanghai Home Textiles:

“Even though the home textile industry has, to some extent, been negatively impacted by the COVID-19 outbreak, there are both opportunities and challenges for the sector. Without a doubt, environmental protection and sustainable development are the hottest topics in today’s society. Consumers are paying more attention to healthy lifestyles and looking to make a shift to green consumption as a result of the pandemic. More and more consumers are opting for functional and sustainable raw materials. Environmentally sustainable fibres are therefore gaining popularity.”

“Right now, we expect the home textile industry will continue its steady recovery. Home textile companies may look for opportunities in product and marketing innovations, such as developing functional and sustainable home textile products and exploring various O2O business model options,” Ms Wu added.

Lastly, Ms Wu shared why they chose to participate in Intertextile: “We decided to exhibit at Intertextile Shanghai Home Textiles because it is an influential trade fair for the industry. As the Lenzing Group has been expanding in the home textile market, we want to use this platform to showcase the applications for TENCEL™ branded fibres in home textiles, and to further promote sustainability through our TENCEL™ Home cellulosic fibres.”

To find out more about this fair, please visit: www.intertextilehome.com

• New level of transparency in the textile industry
• Building on several successful pilot projects with TextileGenesis™, the digital platform for the traceability across the textile supply chain has now been introduced.

The Lenzing Group, a leading company in the area of wood-based specialty fibers, celebrates another milestone on the way to making the textile and apparel industry more sustainable and transparent. Since 2019, Lenzing has been using the blockchain technology powered by the Hong Kong start-up TextileGenesis™ to ensure the traceability of textiles from fiber to production and distribution. After several successful pilot projects, the digital platform was launched on 5 November for TENCEL™ and LENZING™ ECOVERO™ branded fibers. The platform provides customers and partners as well as consumers with an overview across the entire textile supply chain.

With the COVID-19 pandemic, more changes have been brought to the already transforming fashion and textile industries. To date, supply chain traceability has become a top priority for apparel and home brands. With the blockchain-enabled supply chain traceability platform powered by TextileGenesis™, Lenzing supports the entire supply chain in meeting the increasing demand for transparency and sustainability.

Phased onboarding and new digital certificates

A follow-up of a 12-month pilot program and field trials with four leading sustainable brands (H&M, ArmedAngels, Mara Hoffman and Chicks) and supply chain players from 10 countries in three regions, the global roll-out of Lenzing’s blockchain-enabled supply chain traceability platform will be conducted in phases. During the first phase, Lenzing’s supply chain partners based in South Asia (India, Bangladesh, Pakistan and Sri Lanka) will complete the onboarding process within Q4 2020. An estimated 300+ supply chain partners in China and Turkey will also join the program in Q1 2021. It is estimated that by Q2 2021,  most eligible Lenzing supply chain partners will be onboarded into the platform, ensuring full supply chain traceability.

One of the core components of the platform powered by TextileGenesis™ is integration with the Lenzing EBranding fabric certification system, which allows brands and retailers not only to access the full supply chain traceability for TENCELTM and LENZINGTM ECOVEROTM branded fibers but also to view the results of forensic (physical) verification of fabric samples via the digitally signed Lenzing E-Branding fabric certificates. “

Over the past year, during the pilot program and field trials we have been receiving very positive feedback from brands and supply chain partners. Our brand partners have also been encouraging us to accelerate the global roll-out for traceability of Lenzing fibers. With this new system and the integration with Lenzing E-Branding fabric certificates, the entire Lenzing ecosystem will create an unprecedented level of transparency. This will provide consumers with the most sustainable and climate-friendly clothing and home textile products that are made of TENCEL™ or LENZING™ ECOVERO™ branded fibers”, says Robert van de Kerkhof, Chief Commercial Officer and Member of the Board at Lenzing.

“With increasing compliance and reputational risks, CEOs and Boards of top 100 fashion brands have committed to using 100% sustainable and traceable fibers over the next 5 years, with transparency being a core part of business priorities. Sustainability and traceability are two sides of the same coin, and it’s great to see Lenzing paving the way for the entire fashion industry to follow. Our supply chain traceability platform will create digital accounting for Lenzing’s innovative and sustainable fibers across the entire supply chain using Fibercoins™ traceability technology”, says Amit Gautam, Chief Executive Officer and Founder of TextileGenesis™.

Fibercoin™ technology to ensure traceability across supply chain

Through using the innovative Fibercoin™ technology of the TextileGenesis™ platform, Lenzing and other brand
partners are now able to issue digital tokens (blockchain assets) in direct proportion to the physical shipments of TENCEL™ and LENZING™ ECOVERO™ branded fibers. These digital tokens provide a unique “fingerprint” and authentication mechanism, preventing adulteration, providing a more secure, trustworthy, digital chain-of custody across the entire textile supply chain, and most importantly, ensuring the materials are sustainably produced.

• Due to the short-term increase in demand from Chinese customers, Lenzing AG is breaking new ground. For the first time in the history of Austria, a local company is sending goods that are 100 percent produced in Austria directly to China by train.

Vienna – The Lenzing Group stands for the ecologically responsible production of specialty fibers made from the renewable raw material wood. Due to the high demand from Chinese brands and retailers for sustainably produced fibers, Lenzing delivers fibers from the two Austrian production sites Lenzing and Heiligenkreuz directly to customers in China by train for the first time.

Austria's first complete train with goods exclusively “Made in Austria” will leave the Vienna South Terminal towards China on August 20, 2020 at 11 am. The train is loaded with Lenzing fibers and provided by NUNNER Logistics. In strict compliance with the COVID-19 protective measures, Leonore Gewessler, Federal Minister for Climate Action, Environment, Energy, Mobility, Innovation and Technology, His Excellency Xiaosi Li, Ambassador of the People's Republic of China in Austria, Stefan Doboczky, CEO of the Lenzing Group, Thomas Kargl, Board Member of the ÖBB Rail Cargo Group, Erwin Cootjans, CEO Nunner Logistics and Erich Hampel, Chairman of the Board of the B&C Private Foundation, took part in the departure ceremony.

The train, which started at Vienna, brings 41 containers with TENCEL™ branded Lyocell and Modal fibers with a total value of EUR 1.8 million directly to customers in China. On its 16-day trip to Shanghai, the train covers a total of 10,460 kilometers and passes seven countries: Austria, the Czech Republic, Poland, Belarus, Russia, Kazakhstan and China. “With this new transport route, we can meet the high demand from our customers for sustainably produced fibers more quickly. Thanks to train transport, the urgently needed fibers arrive at our customers in China twice as quickly as by sea freight,” says Stefan Doboczky, CEO of the Lenzing Group. Lenzing has had very good experiences with rail transport for a long time when it comes to delivering the renewable raw material wood to its plants. Almost 70 percent of the wood processed at the Lenzing site is already delivered by rail. “Our declared goal is to shift more freight traffic to rail. Rail is the only way to combine climate goals and economic interests and thus transport growth. That is why we are happy to be part of this unique project for our long-standing customer,” says Thomas Kargl, Board Member of the ÖBB Rail Cargo Group. “Transporting goods by rail to China is possible. And this train from Vienna to China is an integral part of climate protection. Because we want to support the shift from road to rail, especially in freight transport. Today's train is the first step – I am convinced this train will set an example”, says Leonore Gewessler, Federal Minister for Climate Action, Environment, Energy, Mobility, Innovation and Technology.

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.

• Lenzing plans to invest more than EUR 1 bn in new lyocell fiber production facilities
• First expansion phase with 100,000 tons approved in Thailand
• State-of-the-art production plant enhances global specialty fibers footprint
• Accelerates business growth with TENCEL™ branded fibers
• Biogenic energy supply fosters low CO2 emissions and climate protection  

Lenzing – The Lenzing Group is substantial increasing its production of lyocell fibers to meet the strong demand for these products and further strengthening its position as an industry leader in specialty fibers. Over the next years, it plans to invest more than EUR 1 bn in new production facilities for lyocell fibers. The first expansion phase of this ambitious growth plan, the construction of a state-of-the art lyocell fiber production plant in Prachinburi (Thailand), has now been approved. The plant will have a capacity of 100,000 tons and feature investments of approximately EUR 400 mn.

• Lenzing’s mission: Greening up the value chain
• Putting the Sustainable Development Goals into practice
• Partnering with US brands in Earth Day campaign to plant trees

For the Lenzing Group, sustainability is a core value, key business driver and stimulus for innovation. In its new Sustainability Report, which will be sent from Earth Day, April 22, readers will learn about the wide range of activities the company is engaged in pursuing its mission of greening up the value chain. The Report is entitled “Partner for Change”, a concept that also inspires the latest TENCEL™ campaign on occasion of Earth Month, launched on April 1, 2019 and continuing until April 30, 2019.

Sustainability is an increasingly important element of Lenzing’s brand promise. The current TENCEL™ Earth Month Campaign “From Trees, For Trees” is a brand collaboration supporting the replanting of trees in the California forests recently devastated by last year’s wildfires that burned over c of forest. From April 1 to April 30, 2019, TENCEL™ brand invites the public to get involved in helping them donate trees by liking and sharing Earth Month related posts on their branded Instagram channel as well as their retail partner’s Instagram channels (https://www.tencel.com/earth-day).