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Lenzing witnessed 16.7% profit decline in Q1 of 2020

COVID-19 crisis has hit Lenzing Group hard. The cellulosic fiber-based group has stated a revenue decline of 16.7% and amounted to €466.3 million in the first quarter of 2020.

The group said that the main cause was the development of prices for standard viscose and other standard fibers and the impact of the COVID-19 crisis further increased pressure on prices and volumes.

Earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter decreased by 24.3% to €69.6 million and the EBITDA margin declined from 16.4% to 14.9%. Net profit for the period was down 58.6% to €17.7 million and earnings per share amounted to €0.84 compared with €1.65 in the first quarter of the previous year.

“The COVID-19 crisis has a severe impact on the entire textile and apparel industry and has further increased the pressure on prices and volumes in the global fiber market. Lenzing held its ground in this extremely difficult market environment and continues to drive the implementation of its key projects in Brazil and Thailand,” said Stefan Doboczky, Chief Executive Officer of the Lenzing Group.

He added: “To meet the strong demand for hygiene and protective products for the population and medical personnel, we intensified the collaboration with partners along the value chain in the first quarter of 2020. Today we are proud that we have achieved our goal of industrial production of high-quality protective masks together with our partner Palmers and have therefore been able to support Austria and Europe in combating the pandemic as best possible.”

Investing in specialty fibers

CAPEX (expenditures for intangible assets and property, plant and equipment and biological assets) more than tripled to €138.6 million in the first quarter of 2020.

This upsurge is a result of the progress of the major projects in Brazil and Thailand. The implementation of the two most vital long-term investment projects to reinforce internal pulp supply and to upsurge the share of specialty fibers in line with the sCore TEN corporate strategies is progressing according to plan.

After the decision to build the dissolving wood pulp plant in Brazil with a capacity of 500,000 tones, the Duratex Group acquired a 49% share in the joint venture LD Celulose as agreed in the first quarter of 2020. Lenzing holds 51% of the shares.

In the first quarter of 2020, Lenzing completed the second pilot production plant for its Tencel Luxe branded filament yarn. According to the company, the new facility at the Lenzing site with a total investment of €30 million provides sufficient capacity for the development of commercial programs and further fibre applications.

The Lenzing Group’s superior fibers form the base for a variety of textile applications ranging from ladies’ clothing to versatile denim and high-performance sports clothing. Due to their consistent high quality, their biodegradability and compostability Lenzing fibers are also highly suitable for hygiene products and agricultural applications.

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