Technical Absorbents
Techtextil Frankfurt

Free membership

Receive our weekly Newsletter
and set tailored daily news alerts.

Fibres/​Yarns/​Fabrics

Lenzing curbs expansion plans in China and Indonesia

As a result of adjustments to its subsidiaries, the Group’s profit for the 2014 financial year is expected to be around minus EUR 14 million.

3rd March 2015

Innovation in Textiles
 |  Lenzing

Clothing/​Footwear, Sports/​Outdoor

The Supervisory Board of Lenzing AG approved the reorganization of its engineering and maintenance operations.

Lenzing, a leader in the production of man-made cellulose fibres, will be adjusting the expansion plans of its subsidiaries PT. South Pacific Viscose in Indonesia and Lenzing Nanjing Fibres in China to reflect the new market conditions.

Due to the changed medium-term viscose fibre price expectations, the company plans to save around EUR 94 million in goodwill, property, plant and equipment and other intangible assets of these Group’s companies.

On a medium-term basis, this will lead to an improvement in the Group’s consolidated balance sheet. As a result, the Group’s profit for the 2014 financial year is expected to be around minus EUR 14 million and EBIT is expected to amount to approximately EUR 22 million.

Financial results

According to preliminary figures, consolidated sales of the Lenzing Group declined slightly to EUR 1.86 billion in 2014, down from the EUR 1.91 billion in 2013. This drop can be attributed to the continuing downward pressure on fibre prices as a consequence of the global surplus capacities of viscose fibre producers.

On an operational level, Lenzing succeeded in countering the prevailing trend in the industry, the company reports. According to the figures, the Lenzing Group reported consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) of about EUR 240 million in 2014 in spite of the ongoing low selling price environment.

Sustainable cost savings

This increase totalling almost 25% compared to the similarly challenging year 2013 was achieved thanks to sustainable cost savings generated within the context of the excelLENZ programme, substantial improvements in the product mix and the successful coming on stream of the new Tencel fibre production facility at the Lenzing site.

In particular, new Tencel applications for denim fabrics, shirts, home textiles and new nonwoven products, as well as generally new blends with cotton, were successfully launched on the market.

Reorganization

The Supervisory Board of Lenzing AG approved the reorganization of its engineering and maintenance operations, workshops and Lenzing Technik, which was first announced in November 2014.

These measures will lead to additional significant cost savings and productivity increases of about 15% in the company’s technical departments. These cost reductions will be based on setting up a centralized maintenance unit, adapting engineering capacities to the lower investment activity of the Lenzing Group in the future and strategically repositioning Lenzing Technik.

Moreover, the Supervisory Board authorized the Management Board to explore potentially new ownership structures for all sub-segments, which do not belong to the core business of Lenzing Technik as the optimal basis for these areas.

www.lenzing.com

Latest Reports

Business intelligence for the fibre, textiles and apparel industries: technologies, innovations, markets, investments, trade policy, sourcing, strategy...

Find out more