EQS-News: Lenzing Group reports further improvement in operating result

EQS-News: Lenzing AG / Key word(s): Quarterly / Interim Statement/Quarter Results
Lenzing Group reports further improvement in operating result

07.11.2024 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.

════════════════════════════════════════════════════════════════════════════════════════

Lenzing Group reports further improvement in operating result

 

  • Revenue up 5 percent year-on-year to EUR 2 bn in the first three quarters of 2024
  • Performance program well ahead of budget: EBITDA up +20.3 percent to EUR 263.7 mn,
    free cash flow of EUR 191.8 mn (compared with minus EUR 138.2 mn in the first three
    quarters of 2023)
  • External costs – raw materials, energy, logistics – remain challenging
  • Lenzing confirms EBITDA guidance for 2024

 

Lenzing – The Lenzing Group, a leading supplier of regenerated cellulosic fibers for the
textile and nonwovens industries, continued to gradually improve its business
performance in the first three quarters of 2024. By contrast, the recovery of the
markets relevant to Lenzing proved to be sluggish. While fiber sales volumes continued
to rise during the reporting period, fiber prices remained at a low level. Raw material
and energy costs remained high, and logistics costs also rose significantly.

 

Revenue grew by 5 percent year-on-year to EUR 2 bn in the first three quarters of 2024.
This growth primarily reflects higher revenue from fibers (+10.9 percent).

 

The operating earnings trend was mainly characterized by positive effects deriving from
the performance program. Earnings before interest, tax, depreciation and amortization
(EBITDA) rose by 20.3 percent year-on-year to EUR 263.7 mn in the first three quarters
of 2024. The EBITDA margin increased from 11.7 percent to 13.5 percent. The operating
result (EBIT) amounted to EUR 38.3 mn (compared with minus EUR 10.5 mn in the first
three quarters of 2023) and the EBIT margin was 2 percent (compared with minus
0.6 percent in the first three quarters of 2023). Earnings before tax (EBT) amounted to
minus EUR 33.4 mn (compared with minus EUR 86.9 mn in the first three quarters of 2023).

 

“The Lenzing Group is continuing its recovery course”, says Rohit Aggarwal, Chief
Executive Officer of the Lenzing Group. “We continue to ensure strict cost management
and focus on strengthening our global sales activities. At the same time, we are
adapting our corporate organization to the changed market conditions and thus
strengthening the positioning of the Lenzing Group as a leading integrated fiber group.”

 

The net loss after tax decreased to minus EUR 111.1 mn (compared with minus EUR 96.7 mn
in the first three quarters of 2023) due to a tax effect. The income tax expense
amounted to EUR 77.7 mn in the first three quarters of 2024 (compared with EUR 9.8 mn in
the first three quarters of 2023). This was especially attributable to the withdrawal
from the Austrian tax group due to the participation rate of B&C Holding Österreich GmbH
(group parent) decreasing to below 50 percent. As a consequence, the Lenzing Group is
required to pay a tax transfer of EUR 25.8 mn to the group parent in accordance with the
group tax allocation agreement, which was expensed in the third quarter. The income tax
expense was also affected by the value adjustment of tax assets of individual Group
companies and by currency effects due to the translation of tax items from the local
currency into the functional currency[1]^[1].

 

Earnings per share amounted to minus EUR 3.50 (compared with minus EUR 4.90 in the first
three quarters of 2023). The significantly improved cash flow from operating activities
amounted to EUR 287 mn in the reporting period (compared with EUR 61.1 mn in the first
three quarters of 2023). Free cash flow recorded a clearly positive trend with an
increase to EUR 191.8 mn (compared with minus EUR 138.2 mn in the first three quarters
of 2023).

 

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 implementation of our performance program is
currently well ahead of schedule. The program initiatives are aimed at improving EBITDA
and at generating free cash flow through enhanced profitability, as well as sustainable
cost excellence. We expect annual cost savings in excess of EUR 100 mn, of which more
than 50 percent will already be effective from this financial year onward.”

 

Capital expenditure on intangible assets, property, plant and equipment, and on
biological assets (CAPEX) amounted to EUR 95.5 mn in the first three quarters of 2024
(compared with EUR 199.7 mn in the first three quarters of 2023), partly due to a
reduced level of investment activities. Compared with December 31, 2023, liquid assets
increased by 16.4 percent to EUR 851.2 mn as at September 30, 2024.
 

Successful green bond issue

In September, Lenzing announced the successful issuance of a USD 650 mn green bond by
the Brazilian joint venture LD Celulose (LDC). The bond, which matures on January 25,
2032, and carries an annual coupon of 7.950 percent, encountered significant demand from
institutional investors. A USD 350 mn syndicated loan forms part of LDC’s new USD 1
billion financing structure. LDC used the net proceeds from the bond issue and cash from
the syndicated loan plus existing cash to repay the existing financing agreements, which
enabled the construction of one of the world’s largest pulp plants, and to convert it
into independent corporate financing. Lenzing holds 51 percent of the joint venture.
 

Changes on the Managing and Supervisory Boards

Lenzing also announced personnel changes on its Managing Board during the 2024 reporting
period. Rohit Aggarwal assumed the CEO role as of September 1, 2024. Stephan Sielaff,
the company’s previous CEO, left Lenzing AG by mutual agreement with the Supervisory
Board as of the end of August 2024. Rohit Aggarwal is a graduate in business
administration specializing in strategy and has decades of experience in management
positions in the textile and chemical industries. Rohit Aggarwal possesses a deep
understanding of the strategic development of international markets and of building
effective management teams through global leadership positions in Europe, the USA, and
Asia. Walter Bickel was appointed as a member of the Managing Board and as Chief
Transformation Officer of Lenzing AG until December 31, 2025, with effect as of April
15, 2024.

 

On Thursday, October 10, 2024, the Extraordinary General Meeting of Lenzing AG elected
the following individuals as new members of the Supervisory Board: Marcelo Feriozzi
Bacci (until the Annual General Meeting passing resolutions relating to the 2028
financial year), Carlos Aníbal de Almeida Junior (until the AGM passing resolutions
relating to the 2028 financial year), and Markus Fürst (until the AGM passing
resolutions relating to the 2028 financial year). As a consequence, the Supervisory
Board of Lenzing AG once again comprises ten members elected by the AGM. Christian Bruch
stepped down as a member of the Supervisory Board after the last AGM. In addition,
Nicole van der Elst Desai and Melody Harris-Jensbach resigned their Supervisory Board
mandates early.

 

B&C Group and Brazilian pulp producer Suzano S.A. had signed a long-term partnership in
connection with the majority interest in Lenzing. Under this agreement, Suzano S.A. had
acquired a 15 percent interest in Lenzing AG from B&C Group. Suzano S.A. is the world’s
largest pulp producer. It is based in São Paulo and recently posted annual revenue
equivalent to more than EUR 7 billion.
 

Outlook

The IMF left its growth forecast for 2024 unchanged at 3.2 percent but slightly
downgraded its 2025 forecast to 3.2 percent. The outlook is characterized by unusually
high risks continuing to emanate from the Chinese real estate sector, as well as by
increasing tendencies towards protectionism and economic isolation.

 

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

 

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 regions relevant to Lenzing.

 

In the trend-setting market for cotton, a slight reduction in stock levels and a
moderate price recovery at a continued low level is expected for the remainder of the
2024/2025 harvest season. Initial cautious estimates for the coming 2024/2025 harvest
season suggest a further build-up of stocks.

 

Earnings visibility remains limited overall.

 

Revenue and earnings in the first three quarters of 2024 were slightly above Lenzing’s
expectations despite a 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 above 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                                                             01-09/2024 01-09/2023
Revenue                                                               1,958.2    1,865.8
EBITDA (earnings before interest, tax, depreciation and                 263.7      219.1
amortization)
EBITDA margin                                                          13.5 %     11.7 %
Net profit/loss after tax                                             (111.1)     (96.7)
Earnings per share in EUR                                              (3.50)     (4.90)
Cash flow from operating activities                                     287.0       61.1
Free cash flow                                                          191.8    (138.2)
CAPEX                                                                    95.5      199.7

 

                                  30/09/2024 31/12/2023
Net financial debt                   1,357.3    1,562.6
Adjusted equity ratio                 31.9 %     34.7 %
Employees (full-time equivalents)      7,874      7,917

 

 

 

Photo download:

[2]https://mediadb.lenzing.com/pinaccess/showpin.do?pinCode=0w2K5DT4xheb
PIN: 0w2K5DT4xheb

 

 

Your contact for                                      
Public Relations:                                    Investor Relations:
                                                      
Dominic Köfner                                       Sébastien Knus
Vice President  Corporate  Communications  &  Public Vice President Capital Markets
Affairs                                              Lenzing Aktiengesellschaft
Lenzing Aktiengesellschaft                           Werkstraße 2, 4860 Lenzing, Austria
Werkstraße 2, 4860 Lenzing, Austria                   
                                                     Phone  +43 7672 701 3599
Phone  +43 7672 701 2743                             E-mail   [5]s.knus@lenzing.com
E-mail  [3]media@lenzing.com                         Web       [6]www.lenzing.com
Web     [4]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 “Notes on the
Financial Performance Indicators of the Lenzing Group”, available at the following  link
[7]https://www.lenzing.com/notes-financial-performance-indicators-lenzing-group-2024-q3,
as well as in the condensed consolidated interim financial statements and in the Lenzing
Group’s prior-year consolidated financial statements. Rounding differences can occur  in
the presentation of rounded amounts and percentage rates.

   

[8]^[1] Predominant currency of the primary economic environment of a subsidiary

════════════════════════════════════════════════════════════════════════════════════════

07.11.2024 CET/CEST This Corporate News was distributed by EQS Group AG. www.eqs.com

════════════════════════════════════════════════════════════════════════════════════════

   Language:    English
   Company:     Lenzing AG
                4860 Lenzing
                Austria
   Phone:       +43 7672-701-0
   Fax:         +43 7672-96301
   E-mail:      office@lenzing.com
   Internet:    www.lenzing.com
   ISIN:        AT0000644505
   Indices:     ATX
   Listed:      Vienna Stock Exchange (Official Market)
   EQS News ID: 2024375


    
   End of News EQS News Service


   2024375  07.11.2024 CET/CEST

References

   Visible links
   1. file:///appl/crsred1/tmp/HTML-FormatExternal-jgQJzL.html#_ftn1
   2. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=17087c6214594735bc9ac83d99713291&application_id=2024375&site_id=apa_ots_austria~~~18b544d0-9c71-4160-bd95-cc8b9aff9fbf&application_name=news
   3. mailto:media@lenzing.com
   4. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=5803f22d982f72dcc3d9f0027e178e6b&application_id=2024375&site_id=apa_ots_austria~~~18b544d0-9c71-4160-bd95-cc8b9aff9fbf&application_name=news
   5. mailto:s.knus@lenzing.com
   6. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=8937a13fc33a0a14e89778154b8631b5&application_id=2024375&site_id=apa_ots_austria~~~18b544d0-9c71-4160-bd95-cc8b9aff9fbf&application_name=news
   7. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=cb61c4fb3cfeb93978fa803c1917a60e&application_id=2024375&site_id=apa_ots_austria~~~18b544d0-9c71-4160-bd95-cc8b9aff9fbf&application_name=news
   8. file:///appl/crsred1/tmp/HTML-FormatExternal-jgQJzL.html#_ftnref1

OTS-ORIGINALTEXT PRESSEAUSSENDUNG UNTER AUSSCHLIESSLICHER INHALTLICHER VERANTWORTUNG DES AUSSENDERS - WWW.OTS.AT |

print