Lenzing’s Modal Fiber Shipments Set Record in Third Quarter

“Following the outstanding second quarter, the market for standard viscose fibers weakened as expected in the third quarter,” said Lenzing CEO Peter Untersperger. “Nevertheless, we were able to post third-quarter earnings which matched the very good first quarter of 2011.

This was primarily due to the quantitatively higher share of the specialty fibers Lenzing Modal and Tencel along with their stable price development. New record shipment volumes were achieved with Lenzing Modal.”

Modal and Tencel have been growing their share in the outdoor apparel market for their great hand and eco-friendly qualities. In early November, Tencel fibers have been certified as 100% Biobased and Lenzing FR fibers have been certified as 96% Biobased by the US Department of Agriculture (USDA).  The Biobased certification is part of the BioPreferred program which encourages government agencies and contractors to purchase products that are biobased or made from significant amounts of biobased materials. The purpose of the BioPreferred program is to increase the government’s use of environmentally-friendly products and to support the farmers, suppliers, and manufacturers who provide “green” jobs and create more sustainable products and markets.
 
Biobased products are made of ingredients derived from renewable resources such as biological products, agricultural materials, forestry products, or marine products. In order to use the USDA’s Biobased label, products must be tested and meet specific criteria.

 

The strong volume demand for both textile and nonwoven fibers has enabled Lenzing to fully utilize all available fiber production capacities during the reporting period. Inventories of the Lenzing Group were at a low level at the end of the third quarter and the company invested €130.5 million expandfing its fiber and pulp capacity in the first nine months of the year.

While noting that reliable near term forecasts are not yet available, Lenzing said it is convinced that the demand for man-made cellulose fibers will continue to increase in line with the long-term upward trend. For this reason, Lenzing will push ahead with the implementation of its planned expansion program with the aim of enabling the company to optimally supply the market with about 1.2 million tons annually of Lenzing fibers by 2015.

Lenzing provided the information in its interim report for the nine-month period ended Sept. 30. The Austrian company said it is performing in line with the expectations defined in the half-yearly report.

Consolidated sales in the first nine months of 2011 climbed 23.9% year-on-year, from €1.29 billion to €1.59 billion. A total of 3.5 percentage points of this increase can be attributed to the higher fiber shipment volumes, whereas 13.6 percentage points are the result of the higher average fiber selling prices. Growth in other business areas as well as the full consolidation of the Paskov pulp plant over three quarters also contributed to the rise in consolidated sales.

EBITDA in the first three quarters of 2011 improved by 55.3% to €362.9 million from the prior-year level of € 233.6 million This corresponds to an EBITDA margin of 22.8% (Q1-3 2010: 18.2%). The operating profit (EBIT) in the first nine months of 2011 was up 71.6% to €289.7 million. (Q1-3 2010: €168.8 million), equivalent to an EBIT margin of 18.2% (Q1-3 2010: 13.1%). The profit for the period climbed to €217.9 million from €122.8 million in the previous year, an increase of 77.5%.

The Lenzing Group confirmed its outlook for the entire year 2011 published in its half-yearly report, in which the company is said it expected to achieve total sales between €2.1 billion and €2.2 billion. The expected EBITDA is also unchanged and will be in the range of €470 million to a maximum of €500 million.

In its core fiber business the Lenzing Group anticipates average selling prices to be broadly in line with third-quarter price levels and full utilization of its existing fiber production capacities. No major changes are likely to occur on the raw material side. As expected, the Segments Plastics Products and Engineering will achieve good results in 2011 which surpass the comparable prior-year performance.

The overall business environment is characterized by uncertainty in Europe and the USA with respect to the further development of the economy as well as the temporarily lower credit growth in China and shorter-term decision-making on the part of customers.