Aiming for a carbon-free future

As part of these investments, both sites will be gradually converted to renewable energy; conversion to green electricity was realized in the third quarter of 2022 in China and in Indonesia. Both the new lyocell plant in Thailand, which will be operated in a carbon-neutral manner, and the investments in existing sites will help Lenzing achieve its ambitious climate targets. Lenzing aims to reduce its carbon emissions by 50 percent by 2030 and achieve net zero by 2050. In 2019, Lenzing became the world’s first manufacturer of wood-based cellulosic fibers to have its climate targets scientifically confirmed.

With the new pulp plant in Brazil, Lenzing is strengthening its own supply of dissolving wood pulp and thereby also growth in specialty fibers. It will rank as one of the world’s most productive and energy-efficient plants and feed more than 50 percent of the electricity generated into the public grid as renewable energy. With the successful start-up on schedule, Lenzing, which holds a 51 percent interest in the LD Celulose joint venture, reached a further important milestone. The plant ramp-up phase is running to schedule and will prospectively be completed by the end of 2022. The first volumes produced have already been successfully placed on the market.

Energy independence enhanced

In order to become less dependent on global energy markets and to further reduce carbon emissions in line with its strategic targets, Lenzing is also focusing to an even greater extent on electricity generated from renewable energies in Austria. During the reporting period, Lenzing constructed several photovoltaic plants at the Lenzing site in Upper Austria together with Austrian energy utility VERBUND. With a capacity of 5.6 MWp, the ground-mounted plant is the largest of its kind in this entire federal state. The output of the three roof systems amounts to 1.5 MWp.

Lenzing also announced the signing of a long-term electricity supply agreement with green power producer Enery and Energie Steiermark. Once commissioned, the photovoltaic plant that has thereby been financed will supply the fiber and pulp plant at the Lenzing site with further green electricity from the fourth quarter of 2023. The plant’s output will amount to 5.5 MWp.

Nico Reiner new CFO

The Lenzing Supervisory Board also appointed Nico Reiner as the new Chief Financial Officer with effect as of January 1, 2023 (see also the press release of November 2, 2022). In this position he succeeds Thomas Obendrauf, who informed the Supervisory Board in March that he would not be available for a further extension of his contract, which expires in June 2022. Until Nico Reiner joins the company, Sielaff will continue to perform the duties of the CFO on an interim basis, while Obendrauf will support the company in an advisory capacity.

Corporate strategy further developed

A comprehensive review of the corporate strategy was also conducted in the reporting period. As a consequence, Lenzing will continue on its profitable growth trajectory following the successful implementation of the two key projects in Thailand and Brazil, sharpen its focus on sustainable and high-quality premium textile fibers and nonwoven fibers, and further advance the transition from a linear to a circular economy model. On the basis of this further development of the corporate strategy, Lenzing also adjusted its financial targets and, assuming that a healthy economic environment prevails, will significantly increase its EBITDA to over EUR 1 bn by 2027, with a ROCE of over 12 percent.1

30 years of TENCEL™ fibers

With the positioning of its product brands, the Lenzing Group has been sending a strong message to consumers since 2018. With TENCEL™ und LENZING™ ECOVERO™ as umbrella brands for all specialty products in the textile segment, VEOCEL™ as the umbrella brand for all specialty nonwoven products, and LENZING™ for all industrial applications, the company showcases its strengths in a targeted manner.

The TENCEL™ brand has been supporting customers and partners in the textile and apparel industry with sustainable fiber innovations since 1992. In 2022, Lenzing is celebrating the 30th anniversary of its premium textile brand, which today stands for high-quality, sustainable fibers, digital technologies and transparency in the supply chain worldwide, and is the fastest growing ingredient brand on the market. This brand success is also reflected in the company’s collaboration with more than 300 partner brands. Since February, Lenzing has been conducting customer and employee activities in various regions under the motto "Feel Good Fibers Since 1992" in order to mark the brand anniversary.

Sustainability champion

For the second time, Lenzing was awarded platinum status for its sustainability performance by EcoVadis, a leading international provider of corporate sustainability ratings. This places Lenzing in the top one percent of companies worldwide in its industry as rated by EcoVadis. Already during the first quarter, Lenzing was also pleased to receive the prestigious ÖGUT Environmental Award 2022 in the “World Without Waste” category. The Austrian Society for Environment and Technology (ÖGUT) thereby recognized Lenzing’s contribution to transforming the textile industry into a model of the circular economy. In 2021, Lenzing was recognized on several occasions for its achievements as a “sustainability champion”, including top ratings by CDP and MSCI.

Outlook

The war in Ukraine, China’s zero-Covid policy and the sharp rise in inflation have had a significant impact on the global economy. In July, the International Monetary Fund downgraded its growth expectations for the current calendar year to 3.2 percent. This deterioration in the market environment is also increasingly affecting the consumer climate as well as sentiment in industries relevant for Lenzing. As a consequence, business prospects worsened significantly in the third quarter.

Given this deterioration in the market environment, Lenzing suspended its earnings guidance for the 2022 financial year on September 19, 2022.

The Lenzing Group anticipates earnings in the 2022 financial year in line with current market expectations.

1 Adjusted for major plants under construction and in the start-up phase

1) Capital expenditures: Investments in intangible assets, property, plant and equipment and in biological assets as per the consolidated statement of cash flows

2) Ratio of adjusted equity to total assets in percent