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15th November 2017, Lenzing

Lenzing Group reports substantial earnings increase

The Lenzing Group generated a substantial increase in revenue and earnings in the first nine months of the 2017 financial year compared to the prior-year period. Consolidated revenue climbed by 9.4% year-on-year to EUR 1,726.6 million. This increase is mainly attributable to higher prices for all three fibre generations.

Consolidated earnings before tax, depreciation and amortisation (EBITDA) rose by 23.9% to EUR 397.1 million, corresponding to an EBITDA margin of 23%, up from 20.3% in the prior-year period. Earnings before interest and tax (EBIT) increased by 34.6% to EUR 298.4 million, resulting in a higher EBIT margin of 17.3% (Q1-3 2016: 14%). The profit for the period improved by 35.3% to EUR 219.3 million, and earnings per share rose 36% to EUR 8.12 per share.

Fibres. © Lenzing AG

In September Lenzing redeemed the retail bond of EUR 120 million. At the end of the reporting period the Group had net liquidity of EUR 16.9 million.

Positive market environment

“In the first three quarters of 2017, we successfully captured value in a very positive market environment and we continue to implement the sCore TEN strategy with great discipline. The opening of our new application innovation centre in Hong Kong is an important step to boost our regional innovation capabilities. We were particularly proud to launch Tencel Luxe as a sign of Lenzing’s ongoing commitment to innovation and sustainability,” said Stefan Doboczky, Chief Executive Officer of the Lenzing Group.

“After three excellent quarters we are confident to deliver substantially better operating results in 2017 compared to 2016, but at the same time we do expect more headwinds in 2018.”

Focus on customer intimacy

In September 2017, the Lenzing Group opened a new application innovation centre (AIC) in Hong Kong, setting a further milestone in strengthening its innovation offering to all partners along the value chain. New applications for Lenzing fibres will be developed and tested at the new facility, among them applications for recent innovations such as the Tencel Luxe branded lyocell filament, the Refibra branded lyocell fibre and the Ecovero branded viscose fibre.

Stefan Doboczky, CEO. © Lenzing AG

Furthermore, new sales and marketing offices were opened in Turkey and South Korea in the first half of 2017. The direct contact to customers and well-equipped showrooms featuring products made of Lenzing fibres serve as the basis for providing better customer support.

Investment programme

The Lenzing Group aims to increase the share of specialty fibres as a percentage of revenue to 50% by 2020. Following the capacity expansion initiatives in Heiligenkreuz (Austria) and Mobile, Alabama (USA) which are both underway, Lenzing announced its intention to construct the next plant to produce Tencel fibres in Thailand.

Sustainable production

In October 2017, the Lenzing Group presented a new product, Tencel Luxe, at an exclusive event held in Paris. The Tencel Luxe branded filament yarn represents Lenzing’s entry in the filament market. This fibre will support the Lenzing Group’s path towards becoming a true specialty player in the market for botanic materials derived from the sustainable raw material wood.

Tencel Luxe. © Lenzing AG

The launch volumes of Tencel Luxe are being produced at the Lenzing site.

Outlook

Demand development on the global fibre market remains positive. Lenzing expects wood-based cellulose fibres to grow at an even higher rate than the overall fibre market. After three excellent quarters, the Lenzing Group will achieve an operating result in 2017 that is significantly better than 2016.

For 2018, Lenzing sees a number of somewhat opposing factors that limit visibility regarding fibre price developments. Overall market demand is expected to remain high. However, the Group expects a substantial increase on the supply side, especially for viscose but also for cotton. Price trends for selected key raw materials, especially caustic soda, are difficult to predict. Against this background the Lenzing Group expects a much more challenging market environment for standard viscose during the upcoming quarters.

www.lenzing.com

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