Austrian Lenzing with record fibre sales
Austrian Lenzing Group has been increasing its fibre production and shipments in its core segment Fibres in the first half of 2013. In addition the company reports attractive price premiums for Modal and TENCEL®. The total fibre sales for that period amounted to 438000 t. On the other hand, prices for viscose fibres were less favourable than expected
Total consolidated group sales by contrast declined 6.8 % to EUR 989.9 million (EUR 1061.8 million). The significantly lower average fibre selling prices compared to the first half of 2012 could not be compensated by the higher fibre shipment volumes. In addition, a loss of external sales of around EUR 42.5 million at the Paskov pulp plant occurred in the same period of 2012. The comparability of the two periods are also hampered due to Lenzing’s sale of its Business Unit Plastics (Lenzing Plastics). EBITDA amounted in the first semester 2013 to EUR 162.0 million (EUR 193.6 million) thus the EBITDA margin dropped from 18.2 % to 16.4 %. EBIT decreased from EUR 141.1 million to EUR 103.0 million and its margin from 13.3 % to 10.4 %, the net profit amounted was reduced from EUR 100.1 to EUR 65.3 million.
The company expects in the second half a stabilisation of the volume demand in relation to the first semester, however the high levels of ongoing cotton inventories will prevent any further increase of cotton prices, thus of all other fibres. Excess production capacities in the manmade cellulose fibre industry are expected to continue, although expansion projects planned by Lenzing’s competitors have already been delayed. This situation is accompanied by lower prices for dissolving pulp, the most important raw material for fibre production. This situation leads to the fact that further price adjustment for viscose fibres cannot be excluded over the next months. Therefore Lenzing is adjusting its short term and medium term corporate strategy to market conditions prevailing at present and is anticipating a dampened level of fibre selling prices in the next quarters and investments will be adjusted in accordance with income, however the ongoing large scale investments such as the construction of the new TENCEL® production facility at the Lenzing site will not be affected, in turn, major new investments will only begin when a minimum return on the capital employed is fulfilled.
Ultimately, Lenzing is revising its performance indicators for all of 2013 as a result of the sale of the Business Unit Plastics (end of June 2013, we have been reporting before). Lenzing has been calculating with an average fibre selling price of EUR 1.76/kg in the first half of 2013, in the second half the calculated average price is EUR 1.70/kg thus consolidated sales of the Lenzing Group for the entire 2013 will settle around EUR 2.0 billion. Fibre shipment volumes are estimated at 910000 t for the full year or 10000 t less than predicted before but 12 % more than in 2012 with 810000 t. Lenzing will implement intensive marketing and sales efforts to promote its specialty fibres Lenzing Modal® and TENCEL® in order to stabilise the business.