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Fibres/​Yarns/​Fabrics

Tough year for Lenzing

Company now equipped to generate 100% of its fibre revenues from the Tencel, Lenzing, Ecovero and Veocel speciality fibre brands.

15th March 2024

Innovation in Textiles
 |  Lenzing, Austria

Clothing/​Footwear, Sustainable

Subdued demand and a continued rise in raw material and energy costs had a negative impact on the earnings of the Lenzing Group in 2023.

Despite persistently low fibre prices, the company’s revenue remained comparatively stable at €2.52 billion compared to €2.57 billion in 2022, but the demand for wood-based speciality fibres from brands and retailers was weak and having invested in significant additional capacity, the company recorded an overall loss in earnings for the year of –€593 million compared to –€37.2 million in 2022.

“The anticipated recovery of relevant markets has failed to materialise to date,” said CEO Stephan Sielaff. “Subdued demand and high raw material and energy costs have led to a 2023 result that we are not satisfied with. This makes the measures we have taken to keep Lenzing on track and further boost its resilience all the more significant.”

The company is anticipating annual savings of €100 million as a result of its current performance improvement programme, with 50% becoming effective this year.

Its capital expenditure was €283.6 million in 2023 on top of a hefty €698.9 million in 2022, with recent moves including  the conversion of a production line in Nanjing, China, and conversion and modernisation measures in Purwakarta, Indonesia, to enable the production of speciality viscose and reduce specific emissions. Lenzing is now equipped to generate 100% of its fibre revenues from the Tencel, Lenzing, Ecovero and Veocel speciality fibre brands.

During 2023, Lenzing was again recognised by rating agencies and organisations for its sustainable achievements. For the third consecutive year, is was ranked in all categories on the annual A list compiled and published by CDP, a global non-profit environmental organisation. Lenzing is one of only ten companies worldwide to receive a triple A ranking – out of over 21,000 companies. It also ranks in the top 1% of companies rated by EcoVadis.

The company reports that although the International Monetary Fund (IMF) has upgraded its growth forecast for 2024 from 2.9% to 3.1%, a number of risks to the global economy continue to exist –

potential geopolitical shocks, persistently higher inflation and higher key interest rates, as well as market risks emanating from the Chinese real estate market, are currently considered to be the most relevant.

Many consumers are continuing to suffer from general inflation and diminishing incomes in real terms, which is having a negative impact on consumer sentiment. A recovery in the consumer clothing market, which is important for Lenzing, will also depend on a further normalisation of stock levels.

Neverthless, the company expects its earnings in 2024 to be higher than in 2023.

www.lenzing.com

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