From the Sector

The Lenzing Group, a supplier of regenerated cellulosic fibers for the textile and nonwovens industries, reported both revenue and earnings growth year-on-year in the first half of 2025. In the second quarter, however, international tariff measures and the resultant uncertainty led to tangible stress along the textile value chain and slowed the Lenzing Group’s recovery. Market prices remained at a low level while costs for raw materials, energy and logistics continued to be high. 
 
The Lenzing Group generated revenue of EUR 1.34 bn in the first half of 2025, which was higher than in the same period of the previous year. The operating earnings trend benefited significantly from the positive effects of the performance program. EBITDA grew by 63.3 percent to EUR 268.6 mn, which included positive exceptional effects from the sale of surplus EU emission allowances amounting to EUR 30.6 mn and the valuation of biological assets amounting to EUR 12.5 mn. The EBITDA margin rose from 12.5 percent to 20 percent. Earnings before interest and tax (EBIT) amounted to EUR 109 mn (compared with EUR 18.9 mn in the same period of the previous year), which corresponds to an EBIT margin of 8.1 percent (compared with 1.4 percent in the same period of the previous year). Earnings before tax (EBT) amounted to EUR 22.1 mn (compared with minus EUR 22.3 mn in the same period of the previous year). Earnings after tax improved significantly to EUR 15.2 mn (compared with minus EUR 65.4 mn in the same period of the previous year).  
 
“Lenzing made further progress on its path to operational recovery in the first half of 2025. Our performance program is making a clear contribution to earnings improvement. At the same time, we are seeing tangible effects from the growing uncertainties in international trade in the second quarter – particularly as a consequence of the aggressive tariffs policy. These developments not only affect our visibility, but also our earnings. For this reason, we are all the more determined to continue our measures to secure our turnaround in the long term and further strengthen our margins,” notes Rohit Aggarwal, Lenzing Group CEO.  
 
The Lenzing Group’s performance program is comprehensively geared towards strengthening long-term crisis resilience and enhancing agility in the face of market changes. The aim is to sustainably improve EBITDA and generate free cash flow through increased profitability and consistent cost excellence. Measures such as acquiring new customers for key products and expanding into smaller markets were implemented in order to strengthen sales activities and thereby revenue growth. At the same time, Lenzing is implementing measures to significantly improve its cost structure, which are being reviewed and further developed on an ongoing basis. Over EUR 130 mn in cost savings were already achieved in 2024. Progress was made especially in terms of product costs and product quality. The Managing Board also expects further efficiency gains in the coming quarters, especially in production costs and overhead functions. The ongoing improvements in structures, processes and personnel expenses are expected to lead to an increase in both revenue and margins. The Managing Board anticipates cost savings of in excess of EUR 180 mn in the current financial year.  
 
Lenzing has also successfully strengthened its capital structure over the course of the year to date. A syndicated loan of EUR 545 mn was concluded in May. The structure of the loan comprises a EUR 355 mn term loan with a three-year term and a revolving line of credit of EUR 190 mn, also with a three-year term and extension options totaling two years. In addition, a new EUR 500 mn three-year non-callable hybrid bond was successfully placed on the market. With these measures, Lenzing secures its financing until 2027 and can continue to focus fully on implementing its successful performance program to enhance margins and free cash flow as well as to improve the cost position. 
 
Outlook
For 2025, the IMF forecasts global growth of three percent, followed by 3.1 percent in 2026 – marking a slowdown compared to the previous year (2024: 3.3 percent). The projection remains below the pre-pandemic historical average. At the same time, the IMF warns of persistently high risks to the global economy: a renewed escalation of trade conflicts, geopolitical tensions, or tighter financing conditions could dampen growth and reignite inflationary pressures.  
 
In an environment characterized by uncertainty and a persistently high cost of living, consumers are anticipated to remain cautious. This is exerting a lasting negative impact on their propensity to spend. Given the announced tariff increases, the rise in spending on apparel in the USA in the first half of the year is to be regarded as a temporary, one-off effect and is unlikely to continue over the course of the remainder of the year. 
 
The currency environment is expected to remain volatile in regions relevant to Lenzing.  
 
In the global bellwether market for cotton, market analysts’ current forecasts anticipate a slight increase in stocks to around 16.3 mn tons for the coming 2025/26 harvest season. 
 
Lenzing will continue to consistently implement its performance program and will conduct ongoing evaluations in order to leverage further cost potentials and further improve its revenue and margin generation.  
 
At present, the Lenzing Group confirms its guidance for the 2025 financial year of year-on-year higher EBITDA.  
 
The ongoing tariffs conflict and associated uncertainty are negatively affecting market expectations and are continuing to exert a very restrictive effect on earnings visibility.   
 
In structural terms, Lenzing continues to expect growing demand for environmentally responsible fibers for the textile and apparel industry as well as the hygiene and medical sectors. Lenzing is therefore very well positioned with its strategy and is pushing both profitable growth with specialty fibers and the further expansion of its market leadership in the sustainability area. 

• Weak demand from semiconductor customers weighs on Group sales and earnings performance
• Restructuring of Carbon Fibers business unit successfully on track
• EBITDA margin almost stable at 16.0% in half-year comparison 
• Sales forecast for 2025 slightly adapted, adjusted EBITDA expectations confirmed

Increasing uncertainty about the future development of global trade, tariff increases between the US and Europe, and weak demand in some of their markets are weighing on SGL Carbon's sales and earnings performance. On the other hand, the restructuring of SGL's Carbon Fibers business unit is showing initial signs of success. After six months of fiscal 2025, SGL Carbon generated sales of €453.2 million, down 15.8% on the previous year (H1 2024: €538.0 million).

The decline in sales within the Group is primarily attributable to negative volume effects, while currency and price effects played only a minor role. In particular, the continuing weak demand from semiconductor customers in the Graphite Solutions business unit weighed on sales development. Furthermore, the Carbon Fibers business unit reported lower sales as a result of the discontinuation of unprofitable business activities as part of the restructuring.

The cost savings resulting from the restructuring of Carbon Fibers and a slight improvement in adjusted EBITDA in the Process Technology business unit were unable to offset the shortfall in earnings contributions from the decline in the high-margin semiconductor business. Adjusted EBITDA, an important key figure for the Group, decreased by 16.2% compared to the first half of 2024 to €72.5 million (H1 2024: €86.5 million). The adjusted EBITDA margin remained almost unchanged at 16.0% compared to the previous year (H1 2024: 16.1%).

Taking into account depreciation and amortization of €25.8 million (H1 2024: €27.0 million) and non-recurring and special items of minus €49.9 million (H1 2024: €3.6 million), EBIT for the first half of 2025 amounted to €3.2 million (H1 2024: €55.9 million). The non-recurring and special items result in particular from restructuring expenses of €47.0 million.

The restructuring announced in February 2025 showed initial success in the first half of 2025, with positive adjusted EBITDA for the Carbon Fibers (CF) business unit. The discontinuation of loss-making business activities resulted in a 15.1% decline in sales to €93.5 million (H1 2024: €110.1 million) but also led to an increase in adjusted EBITDA for CF from minus €4.4 million to €5.2 million year-on-year.

"As part of the CF restructuring, production at our site in Lavradio (Portugal), which mainly produced acrylic fibers and precursors for carbon fibers, was closed down. Production and consequently also our business activities in the acrylic fibers and precursors product areas were completely discontinued at the end of June 2025. CF will focus in future on profitable products with greater differentiation from the international competition," said Dr. Stephan Bühler, member of the Executive Board responsible for this area.

It should be noted that the adjusted EBITDA of the CF business unit includes an earnings contribution of €4.7 million from its equity-accounted joint venture BSCCB (H1 2024: €7.9 million). The decline in BSCCB's earnings contribution is due to the costs of expanding production capacity and volatile demand from automotive customers. Excluding the earnings contribution of the equity-accounted BSCCB, adjusted EBITDA for CF would have been €0.5 million (H1 2024: minus €12.3 million).

The Composite Solutions (CS) business unit was also unable to avoid the increasing uncertainty in the automotive industry about future growth prospects. CS sales declined by 11.7% to €59.1 million in the first half of 2025 (H1 2024: €66.9 million). It should be noted that the first six months of the previous year still included sales from a contract with an automotive customer that expired in the second quarter of 2024.

As a result of lower volumes and the associated lower utilization of production capacities, CS's adjusted EBITDA decreased by €2.7 million to €5.4 million (H1 2024: €8.1 million) compared to the same period last year. Accordingly, the adjusted EBITDA margin of CS declined to 9.1% (H1 2024: 12.1%).

Outlook
Increasing trade barriers, especially due to US tariff policy, are having a negative impact on the business development of their customers and sales markets. In particular, the high level of uncertainty about future developments in the automotive industry is currently weighing on demand for the company’s products. This also includes expected sales of electric vehicles, which are the main drivers of demand for silicon carbide semiconductors. Special graphite components from SGL Carbon are required to manufacture these high-performance semiconductors.

In light of the current economic environment and the expectations for developments in the sales markets in the upcoming months and taking into account restructuring measures in the Carbon Fibers business unit, the sales forecast for fiscal year 2025 is adjusted on July 14, 2025. Consolidated sales for the full fiscal year 2025 are expected to decline by 10% to 15% compared with the previous year (2024: €1,026.4 million). Previously, SGL Carbon had expected sales to decrease by up to 10% (slight decline) compared with the previous year.

Due to the discontinuation of loss-making business activities in the Carbon Fibers business unit and cost savings as part of the successful restructuring and associated improvement in profitability, the forecast for the Group's adjusted EBITDA for fiscal year 2025 remains unchanged in the range of €130 million to €150 million.