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Lenzing H1 EBITDA slips 28.8% from low fiber selling price
Aug '14
Difficult market conditions, including considerably lower average fiber selling prices led to consolidated EBITDA slipping 28.8 percent year-on-year at Austria-based man-made cellulose fibers producer Lenzing Group in the first six months of 2014.

EBITDA from continuing operations in the period January to June 2014 totalled EUR 91.9 million down 28.8 percent from EUR 129.1 million in the first half of 2013.

First half of 2014 consolidated earnings before interest and taxes (EBIT) from continuing operations amounted to EUR 32.4 million, a plunge of 56.1 percent from EUR 73.8 million in the comparable period of the previous year.

Lenzing said, business development in the first half of 2014 was impacted by difficult market conditions, including considerably lower average fiber selling prices and the cost reduction program initiated in 2013, was only able to partially offset the decline in sales and earnings.

Average fiber selling prices in the first half of 2014 equalled EUR 1.54/kg, a drop of 12.5 percent from average selling prices of EUR 1.76/kg in the first half of 2013.

Consolidated sales in the first six months of 2014 declined 9.1 percent to EUR 900.0 million from EUR 989.9 million, from prior-year period.

Lenzing said more than half of this sales decrease can be attributed to the one-off effects relating to the divestment of the Business Unit Plastics towards the end of first half of 2013.

On a like-for-like basis involving a year-to-year comparison of continuing operations, consolidated sales were down by 4.3 percent. The significantly lower average fiber selling prices could not be offset by higher fiber shipment volumes and an improved product mix, Lenzing said.

“Due to the continuing tense price development on the global market for viscose fibers, additional cost savings were initiated within the context of the efficiency enhancement program”, Lenzing informed.

It added, “In light of the current level of fiber prices, the originally planned savings of about EUR 60 million in 2014 are not sufficient for Lenzing to be able to profitably manufacture fibers, especially at its European sites.

“The previously implemented measures have already proven to be effective. Once again we were able to increase the savings generated in the year 2014. In light of the continuing market weakness we have to further sharpen the targeted annual cost savings of up to EUR 160 million.”

Lenzing now expects cost savings of up to EUR 90 million for the current financial year, one-third higher than originally budgeted.

Taking in view the current market distortions, Lenzing have cut back investments by more than a half in the first six months of 2014. Capex totalled EUR 64.2 million in the first half of 2014, down more than 50 percent from EUR 134.4 million in the prior-year period.

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