Lenzing, a leading supplier of wood-based fibers used in athletic and outdoor apparel, expects profits to improve substantially this year despite low prices for competing cotton and petroleum-based synthetic fibers.
The Austrian company said that while high cotton inventories and low oil prices continue to put downward pressure on cotton and polyester selling prices, “a balance between supply and demand should prevail in the market segment of wood-based cellulose fibers.” In particular, Lenzing expects a strong increase in demand for its specialty fibers, which are marketed under Tencel and Modal and other brand names.
Assuming unchanged conditions on the fiber market and currency exchange rates, Lenzing remains confident it will report substantial improvement in earnings for the entire financial year 2016 compared to 2015.
Lenzing reported its earnings before income taxes, depreciation and amortization surged 54.7 percent to €92.2 million in the first quarter, due mainly to strong demand for its cellulosic, or wood-based fibers. Revenue increased 8.1 percent to €512.8 million compared with the first quarter of 2015.
In the third quarter, Lenzing expects to announce projects to increase its fiber production across its three new operating groups, which include: Lenzing Europe & Americas; North Asia (China, Japan, Korea, Taiwan and Vietnam); and AMEA (Asia excl. North Asia; Middle East and Africa).
