Lenzing
(Source: Lenzing)
In the 2022 financial year, the Lenzing Group, like most of the manufacturing industry in Europe, was increasingly affected by the extreme developments on the global energy and raw material markets. In the 3rd and 4th quarters (Q3 & Q4), the market environment deteriorated significantly, while worsening consumer sentiment placed an additional burden on the business growth of cellulose fiber manufacturer Lenzing AG, Lenzing/Austria.
In 2022, sales increased by 16.9% to reach €2.57 billion, primarily as a result of higher fiber prices. The quantity of fiber sold decreased, while the quantity of pulp sold rose. In addition to lower demand, the earnings trend particularly reflects the increase in energy and raw material costs. Earnings before interest, tax, depreciation and amortization (EBITDA) decreased by 33.3% to €241.9 million in 2022. The net result for the year was minus €37.2 million (compared with €127.7 million in the 2021).
Given the trend in earnings and the pronounced deterioration in market conditions, Lenzing launched a reorganization and cost reduction program in Q3/2022. Implementation of the program is proceeding according to plan and is expected to save at least €70 million in costs per year once fully implemented.
At the same time, additional measures will be adopted to strengthen free cash flow, which stands at minus €740.7 million. This is mainly attributable to the investments in Brazil and Thailand. Thus, in addition to the cost reduction program, further steps will be taken in the months ahead to reduce working capital and reposition currency and energy price hedging. The temporary suspension of dividend payments is expected to boost free cash flow.
As the lyocell plant in Thailand is now fully operational, Lenzing has the capacity to increase its share of specialty fibers substantially and is even better equipped to meet structurally rising demand for environmentally friendly Tencel and Veocel branded lyocell fibers. With a nominal capacity of 100,000 tons/year, the new production plant is the largest of its kind worldwide. The requisite dissolving wood pulp will also be provided by the new plant in Brazil in future. Despite multiple challenges, especially relating to the pandemic, Lenzing realized both projects on time and within the planned budget and has successfully placed the volumes produced to date on the market.
In China and Indonesia, Lenzing is currently converting existing capacities for conventional viscose into those for environmentally friendly specialty fibers. In Nanjing, Lenzing is about to complete the conversion of a production line to Tencel modal fibers. In Purwakarta, the company is creating additional capacities for Lenzing Ecovero branded fibers. The Indonesian site is set to become a pure specialty viscose provider in 2023.
In 2022, sales increased by 16.9% to reach €2.57 billion, primarily as a result of higher fiber prices. The quantity of fiber sold decreased, while the quantity of pulp sold rose. In addition to lower demand, the earnings trend particularly reflects the increase in energy and raw material costs. Earnings before interest, tax, depreciation and amortization (EBITDA) decreased by 33.3% to €241.9 million in 2022. The net result for the year was minus €37.2 million (compared with €127.7 million in the 2021).
Given the trend in earnings and the pronounced deterioration in market conditions, Lenzing launched a reorganization and cost reduction program in Q3/2022. Implementation of the program is proceeding according to plan and is expected to save at least €70 million in costs per year once fully implemented.
At the same time, additional measures will be adopted to strengthen free cash flow, which stands at minus €740.7 million. This is mainly attributable to the investments in Brazil and Thailand. Thus, in addition to the cost reduction program, further steps will be taken in the months ahead to reduce working capital and reposition currency and energy price hedging. The temporary suspension of dividend payments is expected to boost free cash flow.
As the lyocell plant in Thailand is now fully operational, Lenzing has the capacity to increase its share of specialty fibers substantially and is even better equipped to meet structurally rising demand for environmentally friendly Tencel and Veocel branded lyocell fibers. With a nominal capacity of 100,000 tons/year, the new production plant is the largest of its kind worldwide. The requisite dissolving wood pulp will also be provided by the new plant in Brazil in future. Despite multiple challenges, especially relating to the pandemic, Lenzing realized both projects on time and within the planned budget and has successfully placed the volumes produced to date on the market.
In China and Indonesia, Lenzing is currently converting existing capacities for conventional viscose into those for environmentally friendly specialty fibers. In Nanjing, Lenzing is about to complete the conversion of a production line to Tencel modal fibers. In Purwakarta, the company is creating additional capacities for Lenzing Ecovero branded fibers. The Indonesian site is set to become a pure specialty viscose provider in 2023.
