EANS-News: Lenzing AG Lenzing?s performance impacted by historically difficult market environment
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Corporate news transmitted by euro adhoc with the aim of a Europe-wide
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Financial Figures/Balance Sheet/Quarterly Report
Highlights -
* Fiber prices and demand under pressure due to COVID-19 crisis
* Measures to maintain operations and to protect employees, customers and
suppliers implemented successfully
* Hygiene competence center established to produce personal protective equipment
in the fight against COVID-19 pandemic
* Strategic investment projects in Brazil and Thailand progressing according to
plan
* Management Board proposes not to distribute a dividend for 2019 - AGM
rescheduled for June 18, 2020
Lenzing - In a historically difficult market environment with increased pressure
on prices and volumes resulting from the COVID-19 crisis, the Lenzing Group held
its ground well in the first quarter of 2020. Thanks to a diversified business
model and its global footprint on the one hand, and the disciplined
implementation of the sCore TEN corporate strategy on the other, the effect on
the revenue and earnings development was partially offset.
In the first quarter of 2020, revenue declined by 16.7 percent in comparison
with the prior-year quarter and amounted to EUR 466.3 mn. The main reason was
the development of prices for standard viscose (due to significant overcapacity
in the market) and other standard fibers. The impact of the COVID-19 crisis
further increased pressure on prices and volumes. The prices for standard
viscose dropped to a new all-time low of 9,150 RMB/ton by March 31 - up to 33
percent lower than in the prior-year quarter. The comparatively positive
development of the specialty fiber business and slightly higher demand for
fibers in the medical and hygiene segments partially offset the decline in
revenue. The share of specialty fibers increased from 47.3 percent in the first
quarter of the previous year to 60.9 percent. The earnings development reflects
the decline in revenue: EBITDA (earnings before interest, tax, depreciation and
amortization) decreased by 24.3 percent to EUR 69.6 mn. The EBITDA margin
declined from 16.4 percent to 14.9 percent. Net profit for the period was down
58.6 percent to EUR 17.7 mn. Earnings per share amounted to EUR 0.84 compared
with EUR 1.65 in the first quarter of the previous year.
"The COVID-19 crisis has a severe impact on the entire textile and apparel
industry and has further increased the pressure on prices and volumes in the
global fiber market. Lenzing held its ground in this extremely difficult market
environment and continues to drive the implementation of its key projects in
Brazil and Thailand", says Stefan Doboczky, Chief Executive Officer of the
Lenzing Group. "To meet the strong demand for hygiene and protective products
for the population and for medical personnel, we intensified the collaboration
with partners along the value chain in the first quarter of 2020. Today we are
proud that we have achieved our goal of an industrial production of high-quality
protective masks together with our partner Palmers and have therefore been able
to support Austria and Europe in combating the pandemic as best possible", says
Doboczky.
Zwtl.: Strengthening specialty fiber growth
CAPEX (expenditures for intangible assets and property, plant and equipment and
biological assets) more than tripled to EUR 138.6 mn in the first quarter of
2020. This increase is a consequence of the progress of the major projects in
Brazil and Thailand. The implementation of the two most important long-term
investment projects to strengthen internal pulp supply and to increase the share
of specialty fibers in line with the sCore TEN corporate strategy is progressing
according to plan. After the decision to build the dissolving wood pulp plant in
Brazil with a capacity of 500,000 tons, the Duratex Group acquired a 49 percent
share in the joint venture LD Celulose as agreed in the first quarter of 2020.
Lenzing holds 51 percent of the shares.
In the first quarter of 2020, Lenzing completed the second pilot production
plant for its TENCEL(TM) Luxe branded filament yarn. The new facility at the
Lenzing site with a total investment of EUR 30 mn provides sufficient capacity
for the development of commercial programs and further fiber applications.
Zwtl.: Stand up! Against business as usual
On March 21, Lenzing presented its Sustainability Report 2019, which was also
the International Day of Forests. The report sets out how the company is
actively dealing with the global challenges. Under the motto "Stand up! Against
business as usual", Lenzing emphasizes its wider responsibilities over and above
its products. With the implementation of the science-based target, Lenzing
actively contributes to mastering the problems caused by climate change. The
Lenzing Group is committed to reducing its greenhouse gas emissions per ton of
product by 50 percent by 2030 (baseline: 2017) and to become climate-neutral by
2050.
Zwtl.: Production of high-quality protective masks: Hygiene Austria LP GmbH
Lenzing intensified its collaboration with partners along the value chain in the
first quarter of 2020 to meet the increased demand for high-quality hygiene and
protective products. In late April, Lenzing AG and Palmers Textil AG founded
"Hygiene Austria LP GmbH", in which Lenzing AG holds 50.1 percent and Palmers
Textil AG 49.9 percent. The newly founded company started producing and selling
protective masks for the domestic and European markets from May 2020. The two
companies invested several million euros in a modern production infrastructure
at the Wiener Neudorf location and secured the corresponding raw materials for
protective masks production. In a first step, the company produces so-called
mouth-nose protective masks (MNS) and surgical protective masks of class
EN14683. Hygiene Austria LP GmbH plans to increase its capacities to over 25
million masks per month and to expand this business geographically as well.
Zwtl.: Virtual Annual General Meeting on June 18, 2020
The Lenzing Group's 76th Annual General Meeting has been rescheduled for June
18, 2020 after it was postponed on March 17 against the backdrop of further
measures taken by the Austrian government to contain the coronavirus. The
Management Board of the Lenzing Group reassessed its original resolution for a
dividend distribution of EUR 1.00 and decided to propose to the Supervisory
Board and the Annual General Meeting not to distribute a dividend for the 2019
financial year. The proposal not to pay out a dividend is supported by B&C, the
majority shareholder of Lenzing AG.
Zwtl.: Guidance for 2020 remains suspended
The Lenzing Group suspended on March 24 its result forecast for 2020 as a
consequence of the COVID-19 crisis.
For 2020, the International Monetary Fund currently projects the greatest
recession of the global economy in the course of a century. Global economic
output is expected to contract by 3 percent in 2020, while a decline by 6.1
percent is anticipated for the advanced economies.
The impact of the COVID-19 crisis on the business of the Lenzing Group can still
not be reliably estimated and strongly depends on the duration of the crisis and
its impact on the global economy and textile markets. Consequently, the guidance
for 2020 remains suspended.
The comparatively solid business development in the first quarter reassures the
Lenzing Group in its chosen corporate strategy sCore TEN. Lenzing will continue
to implement its strategy with great discipline with a particular focus on the
strategic investment projects which both will yield to a significant
contribution to earnings starting from 2022.
Selected indicators of the
Lenzing Group 01-03/2020 01-03/2019
EUR mn
Revenue 466.3 560.0
EBITDA (Earnings before
interest, tax, 69.6 92.0
depreciation and
amortization)
EBITDA margin 14.9% 16.4%
Net profit for the period 17.7 42.8
Earnings per share in EUR 0.84 1.65
CAPEX(1) 138.6 45.7
Free cash flow -106.7 28.0
31.03.2020 31.12.2019
Net financial debt 561.3 400.6
Adjusted equity ratio(2) 44.6% 50.0%
Number of employees 7,191 7,036
1) Capital expenditures: expenditures for intangible assets and property, plant
and equipment and biological assets as per statement of cash flow
2) Ratio of adjusted equity to total assets in percent
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Further inquiry note:
Filip Miermans
Vice President Corporate Communications & Public Affairs
Lenzing AG
Telefon: +43 664 8477802
E-Mail: f.miermans@lenzing.com
end of announcement euro adhoc
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issuer: Lenzing AG
A-4860 Lenzing
phone: +43 7672-701-0
FAX: +43 7672-96301
mail: office@lenzing.com
WWW: http://www.lenzing.com
ISIN: AT0000644505
indexes: ATX, WBI
stockmarkets: Wien
language: English