EANS-News: Lenzing AG
Lenzing Group achieves fourth best full-year results in
its history
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Corporate news transmitted by euro adhoc with the aim of a Europe-wide
distribution. The issuer is responsible for the content of this announcement.
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Financial Figures/Balance Sheet/Company Information
Highlights -
* Challenging market environment due to low prices for standard viscose, less
favorable exchange rates and higher raw material and energy prices
* Very positive development of specialty fiber business with revenue share
exceeding 45 percent
* Dividend proposal of EUR 3.00/share plus a special dividend of EUR 2.00/share
* Results for 2019 expected at about the level of 2018 despite a significantly
more demanding market environment
Lenzing - The Lenzing Group's business developed well in the 2018 financial
year. A significantly more challenging market environment led to a decline in
revenue as well as earnings compared with the record results of the previous
year. This was primarily caused by lower selling prices for standard viscose,
exchange rate effects as well as higher raw material and energy costs.
Group revenue declined by 3.7 percent compared with the previous year to EUR
2.18 bn. The predicted challenging market environment for standard viscose, plus
less favorable exchange rates and a slight decline in sales volume were the key
contributing factors. EBITDA (earnings before interest, tax, depreciation and
amortization) was down by 24 percent to EUR 382 million due to price increases
for key raw materials and higher energy and personnel costs. The EBITDA margin
dropped from 22.2 percent in the 2017 financial year to 17.6 percent in the
reporting year. EBIT (earnings before interest and tax) fell by 36 percent to
EUR 237.6 mn, leading to a lower EBIT margin of 10.9 percent (2017: 16.4
percent). Net profit for the year after one-off effects dropped by 47.4 percent
from EUR 281.7 mn in the previous year to EUR 148.2 mn. Earnings per share
equaled EUR 5.61 (2017: EUR 10.47).
The Management Board and the Supervisory Board will propose a stable dividend of
EUR 3.00 per share plus a special dividend of EUR 2.00 per share at the upcoming
Annual General Meeting. In total, the paid dividend will amount to EUR 5.00 per
share, corresponding to a dividend payment to shareholders of roughly EUR 133
mn.
"Although 2018 proofed to be more challenging than the preceding years, it was,
nevertheless, the fourth best year in the company's history. We consistently
worked on the strategic imperatives of our sCore TEN corporate strategy in order
to raise our pulp integration, enhance customer intimacy, increase the share of
specialty fibers in revenue and to invest in new technologies and business
areas", says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. "The
very positive development of our specialty business in an expected challenging
market environment for standard viscose confirms our strategic direction and our
ambitious plans. Thanks to its specialty strategy and its strong brands based on
innovation and sustainability, the Lenzing Group is significantly more resilient
today than only a few years ago. However, we are not immune to global
developments, and further efforts and investments in specialty fibers are
required to become even more resistant to market fluctuations", Doboczky adds.
Zwtl.: Solid balance sheet, further increase in CAPEX
Adjusted equity increased by 1.7 percent to EUR 1.55 bn. The adjusted equity
ratio decreased from 61.2 percent as at December 31, 2017 to 59 percent as at
December 31, 2018. ROCE (return on capital employed) declined to 10.3 percent in
2018 (2017: 18.6 percent). Despite higher capital expenditures, net financial
debt remained at a low level, totaling EUR 219.4 mn at the end of 2018 (December
31, 2017: EUR 66.8 mn).
Capital expenditures (CAPEX) of the Lenzing Group continued to increase to EUR
257.6 mn in 2018 (2017: EUR 238.8 mn.). Trading working capital rose by 7.2
percent to EUR 444.4 mn and cash flow from operating activities increased by 3.3
percent to EUR 280 mn. Expenditures for research and development (R&D),
calculated according to the Frascati method(1), amounted to EUR 42.8 mn in the
2018 financial year (2017: EUR 55.4 mn), putting Lenzing in the top ranks of the
industry both in absolute terms as well as in relation to revenue.
Zwtl.: Sustainability driven by innovation
The textile and nonwoven industries are faced with fundamental ecological
challenges, and as a leading producer of wood-based specialty fibers, the
Lenzing Group bears a special responsibility. In 2018, the company decided to
continue along its ambitious path and to invest roughly EUR 100 mn in
sustainable manufacturing technologies and production facilities by 2022 in
order to further strengthen its closed-loop model and support its customers in
replacing resource-intensive and environmentally harmful solutions.
With its most recent innovations, the Lenzing Group has taken important steps in
this direction. After the presentation of the REFIBRA(TM) technology, LENZING
(TM) ECOVERO(TM) branded high-performance and identifiable viscose fibers and
TENCEL(TM) Luxe lyocell filament yarn, Lenzing announced the successful
development of the LENZING(TM) Web Technology in 2018. This is a new technology
platform with a focus on sustainable nonwoven products, which will open up new
market opportunities for the industry. In a first step, 25 patent applications
were filed.
Zwtl.: Capacity expansion for specialty fibers
The Lenzing Group continued the implementation of its sCore TEN strategy in
2018. The start-up of new capacities for lyocell fibers in Heiligenkreuz, the
production start of LENZING(TM) ECOVERO(TM) fibers at the Nanjing site, the
acquisition of the remaining 30 percent of the Chinese subsidiary Lenzing
(Nanjing) Fibers from the joint venture partner and the investment in another
pilot plant for TENCEL(TM) Luxe filaments are important steps to achieve the
goal of increasing the share of specialty fibers in total revenue.
As a result of the decision to temporarily mothball the lyocell capacity
expansion project in Mobile, Alabama (USA), in view of the buoyant labor market
in the USA and the economic tensions between the major trading blocks, the
implementation of the plan for specialty fiber growth will be slowed down. The
Lenzing Group will adjust its growth plan accordingly in order to meet strong
market demand for its lyocell fibers. This includes an increased focus on the
lyocell expansion project in Prachinburi (Thailand). The planned production
facility with a capacity of up to 100,000 tons will further strengthen the
Lenzing Group's global lyocell network.
Zwtl.: Largest dissolving wood pulp line worldwide
At the end of June, the Lenzing Group and Duratex, the largest producer of
industrialized wood panels of the southern hemisphere, announced that they had
agreed on the terms and conditions to form a joint venture to investigate
building the largest single line dissolving wood pulp plant in the state of
Minas Gerais (Brazil). This decision supports the self-supply with dissolving
wood pulp and the growth in specialty fibers. The joint venture is investigating
the construction of a 450,000 ton dissolving wood pulp plant, which is expected
to become the largest and most competitive single line dissolving wood pulp
plant in the world. The final investment decision to build the dissolving wood
pulp plant is subject to the outcome of the basic engineering studies and the
approval by the respective bodies.
Zwtl.: Closer to the customer - even greater focus on customer intimacy
With the new positioning of its master brand and its product brands, the Lenzing
Group started a new phase of branding and brand communication in 2018. Lenzing
decided to carry out a new brand strategy to sharpen its corporate and product
portfolio for consumers as a sustainable innovation leader and to support them
in their purchasing decisions by creating a better understanding of the benefits
of its products.
In order to further intensify its cooperation with its customers and partners in
the textile and nonwoven sectors, the Lenzing Group opened another innovation
center at the Indonesian site in Purwakarta at the end of 2018. At the new
Lenzing Center of Excellence the company conducts joint research and development
work on new yarns with its customers and tests various types of fibers and yarns
in special laboratory facilities.
Zwtl.: Outlook
The International Monetary Fund expects a slowdown of global economic growth to
3.5 percent in 2019, mainly driven by increasing protectionist tendencies and
growing geopolitical tensions. The currency environment in the regions relevant
to Lenzing will remain volatile.
Demand on the global fiber markets is still positive. According to preliminary
calculations, cotton inventory levels should decline slightly again in 2019.
Over the past months, the polyester market recovered from slower growth at the
beginning of the reporting year. The price levels for cotton and polyester are
expected to remain stable. Capacity expansions for standard viscose should
remain at a similar level as in the 2018 financial year. Despite strong demand,
this will result in growing oversupply, which will cause even higher pressure on
prices. The Lenzing Group expects the positive development of its specialty
fiber business to continue.
Caustic soda prices in Asia have already declined significantly over the past
months; however, there are no signs of such a development in Europe yet.
Overall, Lenzing does not expect any significant changes for key raw materials
that would be relevant to earnings.
Based on the current exchange rates, the Lenzing Group expects its results for
2019 to reach a similar level as in 2018 despite a much tighter market
environment for standard viscose. These developments reassure the Lenzing Group
in its chosen corporate strategy sCore TEN. Lenzing is very well positioned in
this market environment and will continue its consistent focus on growth with
specialty fibers.
Key group indicators
(IFRS) 01-12/2018 01-12/2017
(in EUR mn)
Revenue 2,176.0 2,259.4
Earnings before interest,
tax, depreciation and 382.0 502.5
amortization (EBITDA)
EBITDA margin in % 17.6 22.2
Earnings before interest 237.6 371.0
and tax (EBIT)
EBIT margin in % 10.9 16.4
Net profit for the year 148.2 281.7
CAPEX(2) 257.6 238.8
31.12.2018 31.12.2017
Adjusted equity ratio(3) 59,0 61.2
in %
Number of employees at 6,839 6,488
year-end
1) The Frascati method takes into account expenditures including investments in
the respective year after the deduction of grants.
2) Capital expenditures: i.e. acquisition of intangible assets, property, plant
and equipment as per statement of cash flows
2) Ratio of adjusted equity to total assets in percent
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Further inquiry note:
Lenzing AG
Mag. Waltraud Kaserer
Vice President Corporate Communications & Investor Relations
Tel.: +43 (0) 7672 701-2713
mailto:w.kaserer@lenzing.com
end of announcement euro adhoc
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issuer: Lenzing AG
A-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
Original content of: Lenzing AG, transmitted by news aktuell