Lenzing is revising its outlook for 2013

Lenzing is revising its outlook for 2013


Lenzing is revising its outlook for 2013 Austrian Lenzing Group is revising its outlook for 2013 downwards and announces marked cost saving programme EBITDA is still earmarked with EUR220 -230million(EUR 280 million), despite some downward market results. This can only be maintained because of the announcement of a cost saving programme in the order of EUR 120 million annually on cost and materials until 2015 safeguarding Lenzing’s cost leadership on the global market for man-made cellulose fibres

The company states as reason the difficult market situation will continue in 2014 and possibly well into 2015. According to CEO Peter Untersperger“Our aim must not only be to expand our quality leadership and innovative strength on a sustainable basis, but also to regain the cost leadership in our industry. We continue to see attractive growth potential for our products, but we are already preparing ourselves today as optimally as possible for the increasingly tough competition. Cost discipline and cash generation will be our targets over the coming years.”

In particular, sales and marketing organisation will be strengthened as part of the current reorganization project. The entire organization will sharpen its focus to more strongly orient its activities to the important fibre markets of Asia and Turkey. Sales efforts in China especially will be expanded on the basis of additional technical experts and market development capabilities. Lenzing will continue to invest, particularly in developing TENCEL® for high quality textile applications and sustainable nonwoven applications. Demand for Lenzing Modal® remains strong.

The expanded cost optimization program “excelLENZ 2.0” is a further, comprehensive step to sustainably safeguard earnings and future investment projects. It complements the initial “excelLENZ” cost-saving program which has been underway since the beginning of the year as well as the organisational restructuring of the Group. Improvement potential for all cost modules encompassing all operating units has been defined over the past weeks.

The measures to be implemented on this basis will not only result in savings in material costs but also massive reductions in operating expenses and overhead, extensive increases in operating efficiency as well as a reduction in the total number of employees. All global sites will be affected. The staff at the Group’s largest production site in Lenzing, Upper Austria will likely be downsized by up to 15% from the current level of about 2,600 employees (including retiring employees and unfilled vacancies). On balance, a total of up to 600 jobs will be cut or vacant positions not filled.

TextileFuture adds that this situation is also caused by the increasing competition between fibres, the prices of commodities like cotton and polyester yarn prices. Even though Lenzing is offering sustainable products, the market is turning to more inexpensive fibres in order to safeguard the competitive edge of textile manufacturers around the globe. At the latest TextileExchange Sustainability Conference in Istanbul, Turkey, the fact of an accentuated battle between fibres has been an important topic. Majorly the fact that sustainability is nice to have but pricing of other fibres might lead to the circumstances that attention of the textile industry is focused more on price than noble arguments for sustainability. http://www.lenzing.com

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