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Weathering the storm at Lenzing

Demand for wood-based specialty fibres had a positive impact but could not compensate for overall losses.

11th March 2021

Innovation in Textiles
 |  Lenzing, Austria

Clothing/​Footwear, Medical/Hygiene

Cellulosic fibres leader Lenzing Group implemented a broad package of measures in response to the extremely difficult market environment created by Covid-19 in 2020.

These ensured service to customers was uninterrupted, despite pressure on both fibre prices and volumes, but the Austrian-headquartered company’s 2020 sales fell to €1.63 billion from €2.1 billion in 2019 and it posted a net loss of –€10.6 million, compared to profit of €114.9 million in 2019.

A recovery of demand in the second half of the year, primarily for wood-based specialty fibres such as Tencel Modal and Ecovero, had a positive impact on revenue and earnings but could not compensate for overall losses.

We are consistently pursuing the major goal of making a zero-carbon future come true

“Strategically, we remain fully on track and the implementation of our key projects in Brazil and Thailand continue to proceed according to plan,” said CEO Stefan Doboczky. “We are consistently pursuing the major goal of making a zero-carbon future come true.”

Expenditures related to the major projects in Brazil and Thailand nearly tripled to €668.8 million in 2020.

They are aimed at expanding the internal production of pulp, increasing the share of speciality fibres and implementing climate targets in line with the company’s sCore TEN corporate strategy.

The construction of the dissolving wood pulp plant in Brazil continues to progress according to plan and commissioning is scheduled for the first half of 2022.

The total investment in the new speciality fibres plant in Thailand, which will have a capacity of an annual 100,000 tons. amounts to roughly €400 million. Construction work started in the second half of 2019 and production is expected to be launched at the end of 2021.

The introduction of the first Tencel branded CarbonNeutral fibres and the establishment of the Renewable Carbon Initiative are notable events from 2020, as examples of the successful path that Lenzing and its partners are taking towards carbon neutrality.

Going forward, the company expects a continued increase in demand for sustainably produced fibres for the textile and apparel industry as well as for the nonwovens sector. This trend is likely to continue unabated after the Covid-19 pandemic, not least due to new legislative initiatives.

With the prospect of a broad population being vaccinated against Covid-19 in the near future, optimism and confidence in an early return to normality are also growing. However, the currently positive environment is still characterised by a high level of uncertainty and earnings visibility remains limited. Taking into account the above factors, Lenzing Group expects operating result to develop in 2021 at a similar level to the pre-crisis year of 2019.

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