Lenzing Strategy Focusses On Accelerated Transformation To A Circular Economy Model As It Reports Significant Revenue Growth And Solid Earnings For The First Half-Year
Image Courtesy of Lenzing Group
Lenzing – The Lenzing Group’s revenue grew by 25.2 percent year-on-year to reach EUR 1.29 bn in the first half of 2022, primarily due to higher fiber prices.
The earnings trend mainly reflects the cost trend in global energy and raw material markets, which affected the whole of manufacturing industry.
Energy, raw materials and logistics costs rose sharply once again in the reporting period, after cost pressure had already risen steadily throughout the 2021 financial year. As a consequence, earnings before interest, tax, depreciation and amortization (EBITDA) decreased by 13.3 percent year-on-year to EUR 188.9 mn.
The strength of the specialty strategy and of brands based on innovation and sustainable activity as well as the continued focus on measures to improve structural earnings in all regions mitigated this negative effect.
The EBITDA margin reduced from 21.1 to 14.6 percent in the first half of the year.
Net profit for the periode decreased by 24.8 percent to EUR 72.3 mn, while earnings per share amounted to EUR 2.36 (compared to EUR 3.06 in the first half of 2021).
“In the first half of 2022, we have accomplished an enormous amount together in order to achieve our ambitious growth and sustainability goals. Thanks to considerable efforts, we can be satisfied with our business performance given the extreme developments in global energy and raw material markets,” comments Stephan Sielaff, Lenzing Group CEO. “The second half of the year will continue to be characterized by elevated levels of uncertainty and extreme challenges on the energy and raw materials sides. Lenzing is a company with an international footprint and for this reason is partly able to offset certain local challenges globally, albeit at significantly higher costs. Lenzing has analyzed conceivable scenarios and developed appropriate responses. For months, we have been preparing as best we can for a situation of acute energy shortages, rising prices and supply constraints, and we will continue to do everything within our power to ensure sustainable business performance, and to continue to be a reliable partner,” notes Sielaff.
Corporate Strategy Further Developed
A comprehensive review of the corporate strategy was also conducted in the reporting period.
As a consequence, Lenzing will continue on its profitable growth trajectory following the successful implementation of the two key projects in Thailand and Brazil.
The focus on sustainable and high-quality premium textile fibers and nonwoven fibers is being sharpened further, and the transition from a linear to a circular economy model is being accelerated.
On the basis of this further development of the corporate strategy, Lenzing also adjusted its financial targets and, assuming that a healthy economic environment prevails, will significantly increase its EBITDA to over EUR 1 bn by 2027, with an ROCE of over 12 percent.
Strengthening Specialty Fibers Growth
In March, the new, state-of-the-art lyocell plant in Thailand was opened.
The production plant, which is the largest of its kind with a nominal capacity of 100,000 tonnes per year, was commissioned as planned after two and a half years of construction, and despite the challenges deriving from the pandemic.
The successful implementation of the project will enable Lenzing to better meet growing customer demand for lyocell fibers, thereby making the global textile and nonwovens industries more sustainable.
Specialty fibers are Lenzing’s great strength.
By 2024, more than 75 percent of fiber revenue is to be generated from the business with wood-based, biodegradable specialty fibers under the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands.
With the opening of the lyocell plant in Thailand and the investments in existing production sites in China and in Indonesia, Lenzing will already have increased specialty fibers’ share of fiber revenue to well above the 75 percent target by the 2024 target year.
The implementation of the pulp project in Brazil secures the Group’s own supply of dissolving wood pulp and thereby also strengthens growth in specialty fibers in line with the corporate strategy.
With the successful start-up on schedule, Lenzing, which holds a 51 percent interest in the LD Celulose joint venture, reached a further important milestone. The plant ramp-up phase is scheduled to be completed by the end of 2022.
Aiming For A Carbon-Free Future
With the implementation of the two key projects in Brazil and Thailand, as well as with the investments at the existing Asian sites in China and Indonesia amounting to EUR 200 mn, Lenzing continues to march purposefully towards Group-wide climate neutrality.
In 2019, Lenzing became the first fiber manufacturer to set a target to reduce its carbon emissions by 50 percent by 2030 and to be climate-neutral by 2050. This carbon reduction target has been confirmed by the Science Based Targets Initiative.
In order to further reduce carbon emissions in line with its strategic targets, Lenzing will rely to an even greater extent in the future on electricity generation from renewable energies.
Lenzing is currently working on the construction of several photovoltaic systems at its site in Upper Austria.
The total capacity of the ground-mounted system and the three rooftop systems will amount to approximately 7 MW peak after the expected commissioning in the second half of 2022.
The Indonesian site has been sourcing green electricity exclusively from renewable sources since July this year and is currently being converted to biomass.
In Purwarkata, Lenzing invests in reducing CO2 emissions as well as air and water emissions.
As part of this investment, Lenzing is converting its existing capacities for standard viscose entirely to capacities for specialty viscose under the LENZING™ ECOVERO™ and VEOCEL™ brands.
Sustainability Champion
During the first quarter, Lenzing was also pleased to receive the prestigious ÖGUT Environmental Award 2022 in the “World Without Waste” category.
The Austrian Society for Environment and Technology (ÖGUT) thereby recognized Lenzing’s contribution to transforming the textile industry into a model of the circular economy.
In 2021, Lenzing was recognized on several occasions for its achievements as a “sustainability champion”, including top ratings by CDP, MSCI and Ecovadis.
