Latest figures and other news from Lenzing
In the third quarter of 2015, the Lenzing Group continued the positive development of the first two quarters of the year. Earnings improved substantially compared to the first nine months of the previous year
The figures
Ongoing strong demand for Lenzing fibres
Despite higher market prices, demand for Lenzing fibres remained strong across all regions and all product groups. The fibre and pulp production capacities of the Lenzing Group were operating at high utilisation rates in the first nine months of 2015.
After the successful disposal of three business units of Segment Lenzing Technik in mid-2015 Lenzing decided to initiate the sales process of the unit Lenzing Technik Fertigung, thus finally concluding the reorganization of the technical services units.
The fibre processing entities face increasing difficulties to pass on the higher material costs in the cellulosic fibre value chain. To some extent, this could lead to the substitution of cellulosic fibres, especially by polyester in low-end applications over the medium term. In China some of the first previously closed down viscose fibre production capacities are starting operation once again.
The Lenzing Group expects fourth quarter 2015 earnings to show a similar development as in the third quarter of the year. Positive currency effects, higher fibre selling prices and a good cost position in the light of ongoing strong demand for Lenzing products will enable a significant earnings improvement for the year 2015 compared to the previous year.
New Group Strategy “sCore TEN“: Profitable Growth Thanks to Eco-Friendly Specialty Fibres
The Lenzing Group is presenting its business strategy for the coming years entitled “sCore TEN”.
Accordingly, Lenzing’s main priorities are strengthening the company’s core business, intensifying cooperation with customers along the value chain, increasing the share of specialty fibres to 50% of total revenue by 2020, expanding its quality and technological leadership for manmade cellulose fibres and opening up new attractive business areas.
“Our objective is to safeguard and expand Lenzing’s leadership role on the dynamic growth market for man-made cellulose fibres“, says Lenzing’s Chief Executive Officer Stefan Doboczky. “To achieve this, we will focus more intensively on the most attractive segments in the specialty fibre business.
Lenzing will put value before volume in the future. We aim at achieving volume growth.”
Lenzing expects demand for manmade cellulose fibres to increase by 5 to 6% p.a. until 2020, which is nearly twice as fast as the global fibre market. The primary factors driving demand are the continuing growth of the world’s population and rising prosperity in the emerging markets. Forecasts call for a rise in per capita textile consumption in the emerging markets, all in all 50% in the period
2010 to 2020. In the industrialized countries the nonwovens industry, an important sales market for Lenzing, will profit from the increased demand for hygiene products. The nonwovens segment will expand twice as fast as the textile market.
The new Lenzing strategy entitled “sCore TEN” is designed to take account of the major megatrends. On the one hand, the name stands for a resolute performance orientation (scoring) and for a strengthening of Lenzing‘s core business operations (core) and on the other hand, the new strategy reflects the objective of generating sustainable growth with specialty fibres such as Lenzing
Modal® or TENCEL® (TEN). Five strategic measures comprise the cornerstones of sCore TEN: Strengthen the core: the target is to increase Lenzing’s pulp position through backward integration by increasing the Group’s own pulp production volumes and/or expanding strategic co-operations. Lenzing will strive to expand upon its quality and technology leadership. A programme is aimed at strengthening commercial processes and is designed to deliver a positive EBITDA contribution totalling EUR 50 million by the year 2017. The reorganization of the technical service units will be set-up in 2016.
Customer intimacy: Lenzing plans to establish regional competence centres for product innovations, and it will move greater decision-making powers to the regions. These steps will bring Lenzing closer to its customers.
Specialisation: Lenzing aims at generating 50% of total revenue from the business with eco-friendly specialty fibres such as TENCEL®, Lenzing Modal® and viscose fibre specialties by the year 2020. Lenzing will further increase production capacities for TENCEL® depending on market requirements.
Forward solutions: Lenzing will selectively enhance its R&D activities along the value chain by new game-changing technologies.
New business areas: Based on its core competencies, Lenzing will open up new business areas.
In the light of the increasing demand for textile fibres one of the major future challenges for the fibre industry is sustainability. Lenzing boasts a major competitive advantage in this respect. Its cellulose fibres originate in sustainably managed forests and these are produced and harvested in an environmentally friendly manner, and are biodegradable. In particular, TENCEL® fibres are unrivalled on the marketplace when it comes to sustainability. Taking all parameters, TENCEL® is up to 17 times more environmentally compatible than other fibres. Lenzing fibres are outstanding as blending partners for cotton and polyester, and improve their sustainability.
“Compared to the previous year, we want to continually increase EBITDA by 10% annually and aim to increase the return on capital employed (ROCE) to more than 10% by 2020. At the same time, our objective is to keep net financial debt at a level which is less than 2.5 times EBITDA”, Doboczky explains in reference to the financial performance targets of sCore TEN. Lenzing plans to finance all necessary investments required to implement this strategy from its own capital resources and simultaneously strive for a dividend payout of up to 50% of the Group net profit.
Novozymes joins forces with Lenzing
Novozymes join forces with Lenzing AG to create a unique method to maintain the superior look and feel of TENCEL cotton blends. Known as Tencel CombiPolish, the treatment ensures textile smooth and gentle feel and continues to look great after wear and washing.
Tencel is one of the most innovative and sustainable fibers available, and is of exceptional quality being silky-smooth and breathable, said Christian Wieth, Novozymes’ Global Marketing Manager for Textile. They are excited to work with Lenzing, a company with similar focus on sustainable innovation, and they are delighted that their enzymes can help Tencel stay looking and feeling great for longer.
Tencel is the name of the lyocell fibres from Lenzing, the innovator of this new manmade cellulose fibre category. Lyocell is extracted from wood and resembles the quality of long staple cotton. Textiles made from Tencel are in general highly absorbent, soft, smooth and therefore friendly to the skin. When blending up to 50% Tencel with cotton, the result is a fabric with enhanced strength, sheen, and breathing properties.
Bio-polishing is a process of enzymes remove the protruding fibres and dead cotton that causes cotton knits to look fuzzy and appear worn. The bio-polishing enzymes can be applied during dyeing, avoiding an additional process step, saving time, water, and energy. The Tencel CombiPolish treatment is based on Novozymes’ patented process for bio-polishing.
The companies will launch a marketing programme to help identify knitted Tencel garments in the market that have used the unique bio-polishing method.
Textile manufacturers and retailers have high quality and innovative knitted textiles with Tencel CombiPolish that stand out from mass-produced products.