Lenzing Group Reports Further Improvement in Operating Result

• Revenue up 4.8 percent year-on-year to EUR 1.31 bn in the first half of 2024
• Performance program shows effect: EBITDA up 20.4 percent year-on-year to EUR 164.4 mn in in the first half of 2024
• Free cash flow of EUR 141.5 mn (compared with minus EUR 165.4 mn in in the first half of 2023)
• Lenzing confirms EBITDA guidance for 2024

Lenzing – The Lenzing Group, a leading supplier of regenerated cellulose fibers for the textile and nonwovens industries, reports a gradual improvement in its business performance in the first half of 2024. As expected, the recovery of the markets relevant to Lenzing proved to be sluggish. Although fiber sales volumes increased, fiber prices remained at a low level. The cost of raw materials and energy remained high. At the same time, logistics costs rose significantly in the reporting period.

Revenue grew by 4.8 percent year-on-year to EUR 1.31 bn in the first half of 2024, primarily thanks to higher revenue from fibers (+9.3 percent).

The trend in the operating result primarily reflects the positive effects of the comprehensive performance program. Earnings before interest, tax, depreciation and amortization (EBITDA) rose by 20.4 percent from EUR 136.5 mn in the first half of 2023 to EUR 164.4 mn in the same period of 2024. The EBITDA margin increased from 10.9 to 12.5 percent.

The operating result (EBIT) amounted to EUR 18.9 mn (compared with minus EUR 12 mn in the first half of 2023) and the EBIT margin stood at 1.4 percent (compared with minus 1 percent in the previous year). Earnings before tax (EBT) amounted to minus EUR 22.3 mn (compared with minus EUR 76.1 mn in the prior-year period). Earnings per share stood at minus EUR 1.84 (compared with minus EUR 3.92 in the first half of 2023). Cash flow from operating activities amounted to EUR 202.8 mn in the first half of the year (compared with minus EUR 29.2 mn in the same period of 2023). Free cash flow shows a clearly positive trend with an increase to EUR 141.5 mn (compared with minus EUR 165.4 mn in the first half of 2023).

“The Lenzing Group’s business performance continues to point in the right direction, even without a significant recovery in the relevant markets,” comments Stephan Sielaff, Lenzing Group CEO. “We are continuing to place pressure on expenditure within the organization, and at the same time we are focusing on measures to strengthen our global sales activities. We are taking action on a consistent and proactive basis, and we are making the Lenzing Group not only more profitable but also more resilient in the medium term.”

Since the end of 2022, the Lenzing Group has been implementing measures to reduce costs and, building on this, has developed a comprehensive performance program with the overriding objective of significantly enhanced long-term resilience to crises and greater agility in the face of market changes. Nico Reiner, Lenzing Group CFO, notes: “The performance initiatives are showing visible results and are primarily aimed at improving EBITDA and generating free cash flow through stronger revenue and margin growth as well as sustainable cost excellence. We expect an excess amount of EUR 100 mn, of which more than 50 percent will be effective from this financial year. The performance program is currently ahead of schedule.”

Capital expenditure on intangible assets, property, plant and equipment, and on biological assets (CAPEX) amounted to EUR 61.6 mn in the first half of 2024 (compared with EUR 136.5 mn in the first half of 2023), which is partly due to reduced investment activities. Compared to December 31, 2023, cash and cash equivalents increased by 13.0 percent, from EUR 731 mn as of December 31, 2023, to EUR 825.9 mn as of June 30, 2024.

Changes to dividend policy, ownership structure and Managing Board

On April 11, the Lenzing Group Managing Board passed a resolution to indefinitely suspend the existing dividend policy of at least EUR 4.50 per share.

B&C Group and Suzano S.A. announced on June 12 that they are entering a long-term partnership in relation to B&C’s majority interest in Lenzing AG. On the basis of this agreement, Suzano is acquiring a 15 percent interest in Lenzing from B&C.

Also, Lenzing recently announced personnel changes on its Managing Board. The Supervisory Board of Lenzing AG has appointed Walter Bickel as member of the Managing Board and Chief Transformation Officer of Lenzing AG until December 31, 2025, with effect as of April 15, 2024. Stephan Sielaff, Lenzing AG CEO, will leave the company, at the latest, when his contract expires at the end of March 2025, in order to devote himself to new tasks. The Lenzing Group Supervisory Board has appointed Rohit Aggarwal as a new member of the Managing Board of the Lenzing Group. He will take over responsibility for the fibers business area in the course of the third quarter and will succeed Stephan Sielaff as CEO of the Lenzing Group after his Onboarding. Mr. Aggarwal, a graduate in business administration, possesses decades of professional experience in leading positions in markets relevant to Lenzing and is consequently fully familiar with Lenzing’s core business in all its content-related and geographical facets.

Outlook

The IMF left its growth forecast for 2024 unchanged at 3.2 percent and raised it to 3.3 percent for 2025. Nevertheless, a number of risks for the global economy remain.

Forecasting future economic growth is rendered more difficult by smoldering global conflicts, trade disputes, and the uncertain outcome of elections, including the USA and the EU.

Consumers are holding back on unnecessary purchases in an environment of rising prices, falling real wages in some cases, and concerns about economic growth. This is hampering a revival of the consumer apparel market, which is important for Lenzing.

The currency environment is expected to remain volatile in the regions relevant to Lenzing.

In the trend-setting market for cotton, a reduction in stock levels and a stable price trend at a low level is expected for the remainder of the 2023/2024 harvest season.

Earnings visibility remains limited overall.

Revenue and earnings in the first half of the year exceeded Lenzing’s expectations, despite the persistently difficult market. Lenzing is ahead of schedule with the implementation of its performance program. The company expects that the measures will make a greater contribution to further improving earnings in the coming quarters.

Taking the aforementioned factors into consideration, the Lenzing Group confirms its guidance for the 2024 financial year of year-on-year higher EBITDA.

Structurally, Lenzing continues to anticipate growth in demand for environmentally responsible fibers for the textile and clothing industry as well as for the hygiene and medical sectors. As a consequence, Lenzing is 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.

 

Selected indicators of the Lenzing Group`
EUR mn 01-06/2024 01-06/2023 Revenue 1,310.7 1,250.2 EBITDA (earnings before interest, tax, depreciation and amortization) 164.4 136.5 EBITDA margin 12.5% 10.9% Net profit/loss after tax (65.4) (65.8) Earnings per share in EUR (1.84) (3.92) Cash flow from operating activities 202.8 (29.2) CAPEX 61.6 136.5

 

  30/06/2024 31/12/2023 Net financial debt 1,427.8 1,562.6 Adjusted equity ratio 32.8% 34.7% Employees (full-time equivalents) 7,778 7,917

 

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Your contact for Public Relations:   Dominic Köfner Vice President Corporate Communications & Public Affairs Lenzing Aktiengesellschaft Werkstraße 2, 4860 Lenzing, Austria   Phone +43 7672 701 2743 E-mail  media@lenzing.com Web    www.lenzing.com

Investor Relations:   Sébastien Knus Vice President Capital Markets Lenzing Aktiengesellschaft Werkstraße 2, 4860 Lenzing, Austria   Phone  +43 7672 701 3599 E-mail   s.knus@lenzing.com Web    www.lenzing.com

 

About the Lenzing Group   The Lenzing Group stands for the ecologically responsible production of specialty fibers based on cellulose /// and recycled material. As an innovation leader, Lenzing is a partner to global textile and nonwoven manufacturers and drives many new technological developments. The Lenzing Group’s high-quality fibers are the raw material for a wide range of textile applications – from functional, comfortable and fashionable clothing through to durable and sustainable home textiles. Thanks to their special properties and botanical origin, TÜV-certified biodegradable and compostable Lenzing fibers are also ideal for demanding use in everyday hygiene applications.   The Lenzing Group’s business model extends far beyond that of a conventional fiber producer. Together with its customers and partners, Lenzing develops innovative products along the value chain, creating added value for consumers. The Lenzing Group strives for efficient utilization and processing of all raw materials and offers solutions for the transformation of the textile industry from the current linear economic system to a circular economy. In order to reduce the rate of global warming and thereby also support the goals of the Paris Agreement and the EU Commission’s Green Deal, Lenzing has a clear, science-based climate action plan that aims for a significant reduction in greenhouse gas emissions by 2030, and a net-zero target (Scopes 1, 2 and 3) by 2050.   Key Facts & Figures Lenzing Group 2023 Revenue: EUR 2.52 bn Nominal capacity (fibers): 1,110,000 tonnes Employees (full-time equivalents): 7,917   TENCEL™, LENZING™ ECOVERO™, VEOCEL™, LENZING™, and REFIBRA™ are trademarks of Lenzing AG.   Disclaimer: The above key financial figures are derived primarily from the condensed consolidated interim financial statements and the consolidated financial statements of the previous year of the Lenzing Group. Additional details are provided in the section “Notes on the financial performance indicators of the Lenzing Group”, in the glossary to the half-year report and in the condensed consolidated interim financial statements as well as the Lenzing Group’s prior year consolidated financial statements. Rounding differences can occur in the presentation of rounded amounts and percentage rates.