The Austrian fiber manufacturer Lenzing AG continues to suffer from the adverse economic conditions. On Friday, the company reported a decline in sales and high losses in the first nine months of the current 2023 financial year. At the same time, it announced further cost-cutting measures. Numerous positions will also be eliminated.
The fiber manufacturer is suffering from the persistently weak market environment
In the months January to September, the group generated sales of 1.87 billion euros. This means that revenues fell by 5.3 percent compared to the same period last year.
The company admitted in a statement that the “expected recovery” in the markets relevant to the fiber producer has not yet occurred. In particular, the “still significantly increased raw material and energy costs on the one hand and very subdued demand on the other” had a negative impact on business development.
The effects of the weak market environment also caused earnings to slide. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to 219.1 million euros, 16.7 percent below the corresponding previous year’s level. The bottom line was a net loss of 96.7 million euros, after the group had achieved a surplus of 74.9 million euros in the same period of the previous year.
Lenzing is planning extensive job cuts
In view of the continued weak development, the company intensified its reform efforts. In addition to the savings program initiated a year ago, the group has now announced further measures. The plan is to reduce personnel costs by up to 30 million euros by cutting “around 500 full-time equivalents”.
According to the company, the desired savings are to be achieved “by not filling the positions that become vacant due to retirements and natural fluctuation, as well as through job cuts.” For the Austrian locations in Lenzing and Heiligenkreuz, “a social plan is currently being negotiated with the works council, the implementation of which is scheduled to begin in the first quarter of 2024,” according to a statement.
The board hopes that the measures now decided will result in “annual cost savings of more than 100 million euros, of which around 50 percent will be effective from the coming financial year”. The group’s overarching goal is to ensure “significantly increased long-term resilience to crises” and “greater agility in the face of market changes,” explained Lenzing.