• Revenue of EUR 1.25 bn and EBITDA of EUR 136.5 mn in the first half of 2023

• EBITDA and net result for the period significantly improved compared with the first quarter of 2023

• Cost-cutting program and measures to strengthen sales activities being implemented as planned

• Liquidity position strengthened by successful capital increase and extension of credit terms

• Production of TENCEL™ brand modal fibers successfully launched in China

Revenue in the reporting period decreased by 3.4 percent year-on-year to EUR 1.25 bn. This reduction was primarily due to lower fiber revenues, while pulp revenues were up. In addition to the current market environment, the earnings trend was particularly influenced by positive one-off effects from the valuation of biological assets and inventories. As a consequence, earnings before interest, tax, depreciation and amortization (EBITDA) in the first half of 2023 decreased by 27.7 percent year-on-year to EUR 136.5 mn. The net result amounted to minus EUR 65.8 mn (compared with EUR 72.3 mn in the first half of 2022) and earnings per share amounted to minus EUR 3.92 (compared with EUR 2.36 in the first half of 2022).

As far as business trends in the second quarter are concerned, the Lenzing Group recorded a recovery compared to the first quarter of 2023. Revenue increased by 0.6 percent compared to the previous quarter to EUR 627.1 mn. EBITDA amounted to EUR 106.8 mn (compared with EUR 29.7 mn), while the net result for the period amounted to minus EUR 0.8 mn (compared with minus EUR 64.9 mn in the first quarter of 2023).

“Lenzing is on a recovery track, as a comparison with the previous quarter in particular shows, even though the current market environment continues to weigh on consumer sentiment and thereby on the order situation in many industries. We proactively implemented optimization measures on the cost and liquidity side as well as on the sales side at an early stage, which are having an increasingly positive impact,” notes Stephan Sielaff, Lenzing Group CEO. “Overall, we remain cautiously optimistic, although visibility remains limited, especially in the textile segment. In the medium and long term, we continue to expect strong growth in demand for sustainable products from Lenzing. The capital increase, which was implemented swiftly and successfully, provides Lenzing with financial flexibility and strength, and will form a solid basis for our strategic growth.”

Nico Reiner, CFO of the Lenzing Group, adds: “We have significantly strengthened our balance sheet and liquidity position not only through the successful capital increase but also through the extension of credit terms. Timing played a crucial role in these steps. Instead of speculating about the future, we resolutely seized the opportunity to strengthen the company and prepare for the many tasks ahead.”

Effective measures launched

Lenzing launched a reorganization and cost-cutting program in the third quarter of 2022 and is fully on track with its implementation. More than EUR 70 mn in annual cost savings are targeted once the program has been fully implemented. In addition, measures were initiated to bolster free cash flow, further steps were taken to reduce working capital, and currency and energy price hedging were restructured.

At the same time, Lenzing launched a program in the reporting period to strengthen sales activities and to improve revenue. In order to meet market requirements at the highest level, Lenzing continues to invest in the development of premium products in accordance with its “Better Growth” corporate strategy and services and consistently places customer needs at the center of its work.

Lenzing also successfully implemented a capital increase with subscription rights for existing shareholders during the reporting period. The gross issue proceeds of approximately EUR 400 mn will be deployed to strengthen the balance sheet and liquidity position, to create additional flexibility in relation to the financing strategy and to support the Better Growth strategy. The effects of the capital increase will not be reflected in Lenzing Group’s cash flow and balance sheet figures until the third quarter.

“Better Growth” further advanced

In the first half of 2023, the implementation of the “Better Growth” corporate strategy was also driven forward. This strategy is mainly aimed at better serving structurally strong demand growth for specialty fibers of the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands. In line with its strategy, Lenzing will pursue a profitable growth path following the successful implementation of its key projects, sharpen its focus on sustainable and high-quality premium fibers for textiles and nonwovens and, in parallel, continue to push ahead with the transition to a circular economy model.

Since 2021, Lenzing has invested more than EUR 200 mn in production sites in China and in Indonesia in order to convert existing capacities for generic viscose into capacities for environmentally responsible specialty fibers. In Nanjing (China), the conversion of a production line to TENCEL™ modal fibers was successfully completed in the reporting period. As part of the investments at the site in Purwakarta (Indonesia), Lenzing is creating additional capacity for LENZING™ ECOVERO™ fibers. The conversion work is proceeding according to plan, and the site is expected to be converted into a pure specialty viscose supplier before the end of this year. 

Lenzing has proactively developed and promoted innovations in recycling for several years (such as the REFIBRA™ and Eco Cycle technologies) in order to provide solutions to the global textile waste problem. Since 2021, Lenzing has been working with Swedish pulp producer Södra to jointly develop new processes for recycling used textiles on an industrial scale. In the reporting period, the project[1] was supported by an EU grant of EUR 10 mn under the LIFE 2022 program.[2]