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. The disciplined implementation of the sCore TEN strategy and the focus on speciality fibres continue to have a positive impact. Thanks to ongoing high demand for sustainably produced speciality fibres and positive currency effects, the impact of low standard viscose prices was largely offset in earnings.
Revenue of the Lenzing Group increased by 1.2 per cent in the first half of 2019 and amounted to EUR 1.09 bn. In addition to more favourable currency relations, this was primarily attributable to a further product mix optimisation and higher prices for speciality fibres. The share of speciality fibres in revenue, at 48.4 per cent, significantly exceeded the prior-year value of 44.1 per cent. EBITDA (earnings before interest, tax, depreciation and amortization) dropped by 7 per cent to EUR 181.2 mn.
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 per cent in the first half of 2018 to 16.6 per cent in the reporting period. EBIT (earnings before interest and tax) fell by 17.9 percent to EUR 105.6 mn, resulting in a lower EBIT margin of 9.7 per cent (H1 2018: 12 per cent). Net profit for the period decreased by 15.9 per cent from EUR 91.3 mn to EUR 76.8 mn. Earnings per share amounted to EUR 2.97 (H1 2018: EUR 3.44).
“Fully in line with our sCore TEN strategy, our speciality 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 speciality fibres. The first phase of this ambitious growth plan is the construction of a state-of-the-art lyocell plant in Thailand”, says Stefan Doboczky, Chief Executive Officer 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”, says Doboczky.
Capital expenditures dropped by 18.9 per cent to EUR 95.1 mn in the first half of 2019. This decline is temporary, primarily attributable to the completion of the expansion project in Heiligenkreuz (Austria) in 2018. Going forward, the planning for major projects in Brazil and Thailand will have a significant effect on the investment volume in the coming quarters.