The Austrian Lenzing Group was able to increase its sales in the third quarter by 24 percent to EUR 1.97 billion compared to the same period of the previous year. But this increase, according to the company, essentially only reflects higher fiber prices. The operating result before depreciation and amortization (EBITDA) fell by 11.6 percent to 263 million euros compared to the same period of the previous year.
In the first three quarters of 2022, Lenzing, like the entire manufacturing industry, was increasingly affected by the extreme developments on the global energy and raw material markets. “Especially in the course of the third quarter, the market environment deteriorated drastically and the deteriorating consumer climate also weighed on Lenzing’s business development,” says the company’s press release.
Savings program started
Against the background of the earnings development and the significantly deteriorated market environment, the Lenzing Management Board has set up a program for reorganization and cost reduction. The program is already being implemented and should save at least 70 million euros annually once it is fully implemented.
In order to become less dependent on global energy markets and to further reduce CO2 emissions in accordance with the strategic targets, Lenzing in Austria is also focusing even more on power generation from renewable energies. In the reporting period, Lenzing set up several photovoltaic systems in Upper Austria together with the Austrian energy supply company Verbund. The open space system is the largest of its kind in the entire state.
Effective January 1, 2023, the Lenzing Supervisory Board appointed Nico Reiner as the new Chief Financial Officer. He succeeds Thomas Obendrauf, who announced in March that he would not renew his contract.
Investments in specialty fibers
In the current 2022 financial year, the Lenzing Group was able to commission various major projects. With the opening of the lyocell plant in Thailand in the first quarter of 2022, Lenzing can better serve the structurally growing demand for lyocell fibers of the Tencel brand. With a nominal capacity of 100,000 tons per year, the production facility is the largest of its kind in the world.
In addition, with the new pulp mill in Brazil, Lenzing was able to promote self-supply with dissolving pulp and thus also the growth in specialty fibers. According to the company, this plant, which Lenzing built as a joint venture with LD Celulose, is “one of the most productive and energy-efficient plants in the world and feeds more than 50 percent of the electricity generated into the public grid as renewable energy”. It is expected to be fully ramped up by the end of 2022.
Lenzing is also currently investing more than 200 million euros in China and Indonesia to convert existing capacities for standard viscose into capacities for environmentally friendly special fibers.
CO2-neutral production
As part of the conversion of both existing locations in China and Indonesia, both locations are gradually being converted to renewable energy. Both the new lyocell plant in Thailand, which is operated in a CO2-neutral manner, and the investments in the existing locations are helping Lenzing to achieve its ambitious climate goals. Lenzing aims to reduce its CO2 emissions by 50 percent by 2030 and reach net zero by 2050.