From the Sector

• 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 enters the age of digital traceability
• Transparency ensured from wood to the finished garment
• Partnership with Hong Kong based TextileGenesis™

The Lenzing Group, world market leader in specialty fibers made from the renewable material wood, is strengthening its leading position in sustainability in the textile industry. Lenzing will use blockchain technology to support its TENCEL™ branded fiber business, ensuring complete transparency and traceability for brands and consumers of its fibers in the finished garment. After evaluating various initiatives Lenzing decided to join the platform of the Hong Kong based technology company TextileGenesis™ to accomplish this ambition.

Consumers increasingly want to understand the ingredients and suppliers of the products they buy, requesting a new level of transparency and traceability. The supply chain transparency from wood to garment and home textiles will enable all customers and partners to identify TENCEL™ fibers and the respective wood source in each production and distribution step. Thanks to a QR code on the final garment, consumers will be able to detect the origin of the clothes they intend to buy.

“With LENZING™ ECOVERO™ branded fibers Lenzing was the frontrunner in physical traceability and is now entering the age of digital traceability. This milestone in transparency is a further strong commitment to sustainability”, says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “Together with TextileGenesis™, we aim to create an unmatched level of transparency for brands and consumers. With this step Lenzing will further help to green up the textile industry.”

Lenzing will carry out several pilot tests over the next few months involving partners along the entire value chain. Lenzing expects the platform to be fully operational as of 2020.

• 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).

• Christian Bruch and Stefan Fida proposed to serve as new members of the Supervisory Board
• Hanno Bästlein and Christoph Kollatz will resign from their positions on the Supervisory Board at the upcoming Annual General Meeting

Prior to the Annual General Meeting of the publicly traded company Lenzing AG scheduled for April 17, 2019, the Nomination Committee dealt with the future composition of the Supervisory Board. It has proposed that the Annual General Meeting appoint Christian Bruch to serve on the Supervisory Board. Mr. Bruch has been a member of the Executive Board of Linde AG since 2015 and a member of the Management Committee of Linde plc since 2019. The graduate in mechanical engineering will contribute his extensive experience in plant engineering and various technical and management positions in internationally operating industrial companies. The Viennese lawyer Stefan Fida has also been nominated as a future member of the Supervisory Board.

As previously announced, Hanno Bästlein will resign from his position on the Supervisory Board at the upcoming Annual General Meeting in order to be able to increasingly devote his attention to his own business activities. Christoph Kollatz will also step down from the Supervisory Board for professional reasons at the Annual General Meeting in April 2019.

“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.

• Basic dividend to remain constant at EUR 3.00 per share
• Special dividend of EUR 2.00 proposed once again

The Management Board of Lenzing AG, market leader in the production of specialty fibers made from the renewable raw material wood, has resolved to propose to the Annual General Meeting that the following dividend be distributed to shareholders for the 2018 financial year: a basic dividend of EUR 3.00 per share and a special dividend of EUR 2.00 per share.

This dividend proposal reflects the good implementation of the corporate strategy sCore TEN and the company’s strong balance sheet. Performance indicators and the outlook of Lenzing AG for the current financial year will be published on March 14, 2019.

The total dividend payout to shareholders will amount to about EUR 133 mn, subject to the acceptance of the proposal by the Supervisory Board at its meeting scheduled for March 13, 2019 for the purpose of approving the consolidated financial statements as well as the approval granted by Lenzing AG shareholders at the Annual General Meeting on April 17, 2019.

• Lenzing und BILLA bieten “grüne” Alternative zu Plastiksackerl für Obst und Gemüse
• Holzfasern statt Plastik: Material ist vollständig biologisch abbaubar
• Erhältlich bei BILLA, MERKUR und ADEG in ganz Österreich

Die Lenzing Gruppe, Weltmarktführer bei Spezialfasern aus Holz, und BILLA, der österreichische Nahversorger mit über 1.088 Filialen in Österreich, bieten Konsumenten alternative Lösungen zu Verpackungen aus Plastik. Die neu auf den Markt gebrachten Mehrwegnetze für Obst und Gemüse aus LENZING™ Modalfasern finden großen Anklang: Seit der Einführung der Mehrwegnetze im November 2018 sind bereits über 138.000 Stück bei BILLA, MERKUR und ADEG verkauft worden. Aufgrund der großen Nachfrage ist die umweltfreundliche Verpackung seit Anfang Februar in allen BILLA-Filialen österreichweit erhältlich.

Die Mehrwegnetze aus den holzbasierten Fasern der Lenzing Gruppe bieten einen entscheidenden ökologischen Vorteil gegenüber herkömmlichen Plastiksackerln für Obst und Gemüse, denn sie sind natürlichen Ursprungs und daher im Abfall biologisch abbaubar und kompostierbar. Mikropartikel, die beim Waschen der Netze in das Abwasser gelangen, werden zügig Teil des natürlichen Kreislaufes und hinterlassen daher weder in Flüssen noch Meeren schädliche Rückstände.

Die Mehrwegnetze sind optimal für Lebensmittel geeignet, denn wie vom Hersteller VPZ Verpackungszentrum GmbH bestätigt, halten die atmungsaktiven und feuchtigkeitsregulierenden Eigenschaften Obst und Gemüse bis zu drei Tage länger frisch. Die nachhaltigen Netze wurden bereits mit dem Staatspreis für Smart Packaging ausgezeichnet, der vom Bundesministerium für Digitalisierung und Wirtschaftsstandort in Kooperation mit dem Bundesministerium für Nachhaltigkeit und Tourismus verliehen wird.

Die Packnatur® Mehrwegnetze auf Holzbasis werden von VPZ Verpackungszentrum GmbH in Graz aus LENZING™ Modalfasern hergestellt. Bereits seit 2014 gibt es bei BILLA Cellulosenetze aus LENZING™ Fasern, die bei Bio-Gemüse und Bio-Obst zum Einsatz kommen. Auch die Zitrusfrüchte sind großteils auf das Cellulosenetz umgestellt. Mit dem Mehrwegnetz wurde nun eine zusätzliche nachhaltige Verpackungslösung für den dauerhaften Gebrauch gefunden.

• Twenty-five patent applications claiming product, process and application inventions published
• New technology platform starts with botanic wood pulp and creates a nonwoven fabric made of 100 percent continuous lyocell filament

Lenzing – The Lenzing Group filed a first wave of patent applications for its new LENZING™ Web Technology with the World Intellectual Property Organization. The 25 applications focus on product, process and application inventions and are part of Lenzing’s intellectual property protection strategy.

The LENZING™ Web Technology is a nonwoven web formation process that starts with botanic wood pulp and produces a nonwoven fabric made of 100 percent continuous lyocell filament. The technology offers a unique self-bonding mechanism where filaments bond into a fabric during the laydown process. This self-bonding mechanism allows for a much wider variety of basis weight, surface textures, drapeability and dimensional stability than other nonwoven technologies.

“Lenzing’s corporate strategy sCore TEN is very focused on driving growth via sustainability focused innovation. The new LENZING™ Web Technology is one of the most exciting Research & Development projects. The 25 patent applications related to this new technology underline our commitment to the nonwoven industry. We will continue to support our partners in their business and help consumers with sustainable innovative solutions for their everyday needs”, says Stefan Doboczky, Chief Executive Officer of the Lenzing Group.

Decline in revenue due to lower prices for standard viscose, less favorable currencies and lower production volume

• Pressure on prices for key raw materials remains high
• Positive impact due to focus on specialty fibers and further optimization of the product mix
• Expansion project in Mobile temporarily mothballed
• Acquisition of the remaining 30 percent of Lenzing (Nanjing) Fibers Co. Ltd.

The Lenzing Group recorded a solid business development in the first three quarters of 2018. The decline in revenue and earnings compared with the same period of the previous year was essentially based on a mix of lower prices for standard viscose, more unfavorable exchange rates and price increases for key raw materials. The Lenzing Group’s strategic orientation with a focus on specialty fibers had a positive impact in this environment.

Revenue decreased by 5.2 percent to EUR 1,636.2 mn over the comparative period of the previous year. Apart from the high starting base, this was primarily attributable to the expected challenging market environment for standard viscose, less favorable exchange rates and lower production volume. EBITDA (earnings before interest, tax, depreciation and amortization) recorded a decline by 26.8 percent to EUR 290.6 mn due to price increases for key raw materials and higher energy and dissolving wood pulp prices. The EBITDA margin dropped from 23 percent in the first three quarters of the previous year to 17.8 percent. EBIT (earnings before interest and tax) fell by 36.2 percent to EUR 190.3 mn, leading to a lower EBIT margin of 11.6 percent (01-09/2017: 17.3 percent). Net profit for the period dropped by 39 percent from EUR 219.3 mn in the previous year to EUR 133.8 mn. Earnings per share equaled EUR 5.06 (01-09/2017: EUR 8.12).

“The Lenzing Group is currently operating in a challenging environment. Against this background, we are satisfied with the solid business development and the corporate strategy sCore TEN has a positive impact. The new production line in Heiligenkreuz started up successfully and customers’ feedback has been positive,” says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “While many viscose producers are faced with a very tense profit situation, we are well positioned due to our specialty strategy and still expect a satisfactory full year”, Doboczky adds.

Key strategic measures were implemented during the first three quarters of 2018 in line with the sCore TEN strategy. The start-up of new capacities for lyocell fibers in Heiligenkreuz, the production start of LENZING™ ECOVERO™ fibers at the Nanjing site and the investment in another pilot line for TENCEL™ Luxe filaments are important steps to accomplish the goal of increasing the share of specialty fibers in total revenue.

Project in Mobile temporarily mothballed
Due to the decision to temporarily mothball the lyocell expansion project in Mobile, Alabama (USA), in view of the buoyant US labor market and trade tensions between the major trading blocks, the implementation of the expansion plan for specialty staple fibers will be slowed down. The Lenzing Group will put all its effort to readjust the execution of its growth plan to meet strong market demand for its lyocell fibers. This includes an increased focus on the lyocell expansion project in Prachinburi (Thailand).

Advancing forward solutions
Regarding the capacity expansion for specialty products such as TENCEL™ Luxe filaments and LENZING™ ECOVERO™ viscose fibers, Lenzing is still on track. After the introduction of TENCEL™ Luxe branded lyocell filament yarns in the previous year, Lenzing continues to drive innovations in the area of the value chain. In September, the company also announced the successful development of the LENZING™ Web Technology, a new technology platform focusing on sustainable nonwoven products, which will lead to new market opportunities for the industry. Following several years of research and development work and investments totaling EUR 26 mn, the pilot plant at the headquarters in Lenzing has been successfully put into operation.

Largest dissolving wood pulp line worldwide
At the end of June, the Lenzing Group and Duratex, the largest producer of industrialized wood panels of the southern hemisphere, announced that they had agreed on the terms and conditions to form a joint venture to investigate building the largest single line dissolving wood pulp plant in the state of Minas Gerais (Brazil). This decision supports the self-supply with dissolving wood pulp and the growth in specialty fibers. The joint venture is investigating the construction of a 450,000 t dissolving wood pulp plant, which is expected to become the largest and most competitive single line dissolving wood pulp plant in the world. The final investment decisionto build the dissolving wood pulp plant is subject to the outcome of the basic engineering studies and the approval by the respective supervisory boards.

Acquisition of Chinese operation
At the beginning of November the takeover by the Lenzing Group of the remaining 30 percent of its Chinese subsidiary Lenzing (Nanjing) Fibers Co. Ltd. (LNF) from its state-owned joint venture partner NCFC was completed. After closing of the transaction, the Lenzing Group will hold 100 percent of LNF. The acquisition will have a negative impact on net profit of approx. EUR 21 mn for the fiscal year 2018. The purchase of the shares supports Lenzing’s strategic growth as a producer of specialty fibers from the renewable raw material wood in China and worldwide. It paves the way to setting up further production lines for specialty fibers. Lenzing wants to convert LNF into a specialty fibers hub over time.

Expansion of capacities
CAPEX (investments in intangible assets and property, plant and equipment) rose by 35.5 percent year-on-year to EUR 174.1 mn in the first three quarters of 2018. This is primarily attributable to capacity expansions in Heiligenkreuz and the expansion of the existing dissolving wood pulp plant in Lenzing as well as the investments made so far in Mobile.

Outlook
Demand development on the global fiber market remains positive. Lenzing expects wood-based cellulosic fibers to continue to grow at a higher rate than the overall fiber market. In a challenging market environment the Lenzing Group expects solid results for 2018, albeit lower than in the outstanding last two years.

For 2019, Lenzing expects standard viscose markets to remain under pressure because of an ongoing oversupply and very high raw material prices. Lenzing’s specialty fiber business is expected to continue the very positive development.

The above-mentioned development reassures the Lenzing Group in its chosen corporate strategy sCore TEN. Lenzing is very well positioned in this market environment and will continue its consistent focus on growth with specialty fibers.

Die Lenzing Gruppe beabsichtigt, die verbleibenden 30 Prozent des staatlichen Joint-Venture-Partners NCFC an ihrer chinesischen Tochtergesellschaft Lenzing (Nanjing) Fibers Co. Ltd. (LNF) zu übernehmen. Nach Abschluss der Transaktion wird Lenzing die LNF zur Gänze kontrollieren. Der Joint-Venture-Partner leitete den strukturierten Verkaufsprozess in einem staatlich kontrollierten Bieterprozess ein. Heute erhielt die Lenzing Gruppe den Entwurf des Anteilskaufvertrages. Der Abschluss der Transaktionsdokumente wird für Ende Oktober erwartet. Die Übernahme wird sich mit ca. EUR 21 Mio. negativ auf das Ergebnis der Lenzing Gruppe für das Geschäftsjahr 2018 auswirken.

Die Übernahme der Anteile unterstützt das strategische Wachstum von Lenzing als Hersteller von Spezialfasern aus dem nachwachsenden Rohstoff Holz in China und weltweit. Sie ebnet den Weg für weitere Produktionslinien für Spezialfasern. Lenzing will LNF im Lauf der Zeit in einen Spezialfaser-Hub umrüsten.