The Lenzing Group significantly improved earnings in the first half-year 2016 compared to the first half-year 2015. The Austrian maker of wood-based, or cellulosic, specialty fibers such as Model and Tencel, said it significantly increased revenue and profitability and substantially improved the cash flow and reduced net debt on flat production volumes.
Consolidated revenue rose 8.3 percent to € 1.04 billion as a consequence of higher fiber selling prices and an attractive product mix compared to the first half-year of 2015. The Lenzing Group also profited from the increase of spot market prices for viscose fibers.
Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) improved by 54.3 percent to 195.1 million, boosting the EBITDA margin to 18.9 percent compared to the prior-year level of 13.2 percent. Earnings before interest and tax (EBIT) more than doubled to €129.7 million. The EBIT margin increased to 12.5 percent, up from 6.3 percent in the previous year. The net profit for the period increased by 83.9 percent to €94.6 million, and earnings per share were up 76.2 percent to € 3.49. The Lenzing Group continues to show strong cash generation momentum. The cash flow from operating activities more than doubled to €268.8 million compared to the prior-year period. The free cash flow rose three-fold to €228.3 million.
“The Lenzing Group looks back at a very successful first half-year 2016,” says Stefan Doboczky, chairman of the Management Board and CEO of Lenzing AG. “On the one hand, we benefitted from a positive market environment. On the other hand, we continued our implementation of sCore TEN, our new group strategy, in a very disciplined and intense fashion. We further optimized the product mix and profited from higher selling prices thanks to ongoing strong demand for all Lenzing fibers. All this was clearly reflected in our half-year 2016 business results, and therefore we also expect a substantial improvement of our business performance for the full year compared to 2015.”
Expansion of production capacities for specialty fibers
As announced on August 2, the company decided to expand its production capacities for specialty fibers by a total of 35,000 tons by 2018 with an investment program amounting to €100 million. The capacity increase will be mainly carried out at the Austrian sites in Heiligenkreuz, Burgenland and Lenzing, Upper Austria. This decision is the first step of the strategic investment program announced by the Lenzing Group.
New Tencel recycling fiber about to be launched
The Lenzing Group has developed a new generation of its trademarked Tencel fibers using cotton fabric waste as a key raw material. This product combines the benefits of the extremely environmental friendly production process of Tencel fibers with an innovative raw material concept based on recycling. As a result, the new fiber offers an exciting ecological footprint. Inditex is the first retailer testing this innovative fibre. Other brands will follow.
Outlook for 2016
The Lenzing Group expects a friendly market environment for the global fiber industry in the second half of 2016. The market for wood-based cellulose fibers is currently developing especially favorably due to strong demand at stable supply.
The strong earnings figures for the first half of 2016 paired with the positive market environment reinforce the optimism of the Lenzing Group for the full year. Lenzing expects excellent business results in the financial year 2016 and consequently a substantial earnings improvement compared to the financial year 2015.
