Austria's Lenzing posts improved revenue, earnings performance in 2021

Increasing optimism in the textile and apparel industry as a consequence of the progress made with vaccinations and the continuing recovery in the retail sector ensured a strong rise in demand and prices on the global fibre market, particularly at the beginning of the reporting year, Lenzing said in a press release.

In addition to the predominantly positive market environment, the focus on specialty fibres such as Tencel, Lenzing Ecovero and Veocel branded fibres also had a positive impact on revenue growth. Specialty fibres currently account for 72.3 per cent of fibre revenues. Significant increases in energy, raw material and logistics costs occurred throughout the reporting year. Earnings before interest, tax, depreciation and amortisation (EBITDA) almost doubled compared to the previous year to reach a level of €.9 million. The EBITDA margin rose from 11.8 to 16.5 per cent. Net profit for the year amounted to €127.7 million, and earnings per share stood at €4.16.

“Lenzing can be pleased with a strong business year. Demand for our wood-based, biodegradable specialty fibres under the Tencel, Lenzing Ecovero and brands continued to perform very well in 2021,” said Cord Prinzhorn, chief executive officer of Lenzing Group. “Strategically, Lenzing remains on course despite the challenges posed by the global pandemic. With the start of production at our state-of-the-art lyocell plant in Thailand a few days ago, we are further strengthening our leading position as a supplier of eco-friendly specialty fibres. The completion of our pulp mill in Brazil is imminent. We are very proud to be able to realise these projects – which are so important for Lenzing – both on time and within budget.”

Gross cash flow almost tripled to €372 million in 2021. This growth primarily reflected the earnings trend. Cash flow from operating activities amounted to €394 million. Capital expenditure on intangible assets, property, plant and equipment and biological assets (CAPEX) increased by 26.3 per cent to €844.3 million in the reporting period, approximately half of which was financed from cash flow from operating activities. The sharp rise in investment volumes is primarily due to the implementation of the two key projects.

Specialty fibres are Lenzing’s great strength. In 2024, more than 75 per cent of fibre revenues are expected to derive from the wood-based specialty fibre business. In recent years, the focus of this strategic objective has been on the construction of the new, state-of-the-art lyocell plant in Thailand, which was officially opened on March 03, 2022. This project was completed both on time and within budget. The new production plant, which is the largest of its kind in the world with a nominal capacity of 100,000 tonnes per year, will help to better serve growing consumer demand for Tencel and Veocel lyocell fibers.

The construction of the pulp mill in Brazil strengthens the group’s own supplies of dissolving wood pulp, and thereby also specialty fibre growth in line with the sCore TEN strategy. Implementation of the project continues to progress to schedule despite the challenges posed by COVID-19.

With the implementation of the two key projects in Brazil and Thailand, as well as with the investments at the existing Asian sites in China and Indonesia amounting to €200 million, Lenzing continues to march purposefully towards group-wide climate neutrality. In 2019, Lenzing became the first fibre manufacturer to set a target to reduce its carbon emissions by 50 per cent by 2030 and to be climate neutral by 2050. This carbon reduction target has been recognized by the Science Based Targets Initiative, the release added.

The partnership with Swedish pulp producer Södra marks a further milestone in Lenzing’s efforts to realise its ambitious climate and sustainability goals. These two global market leaders, which have been proactively promoting the circular economy in the fashion industry for many years, are joining forces to give the issue a further boost and to make a decisive contribution to resolving the global textile waste problem. An expansion of capacities for pulp recovery from waste textiles is also planned. The goal is to be able to recycle 25,000 tonnes of used textiles per year by 2025.

Sustainability is not only a very important element of strategy at Lenzing, but also a guiding principle for innovation and product development. Lenzing continued to expand its product offering for the textile and nonwovens sectors in 2021. The third quarter saw the presentation of the first Tencel lyocell fibres made from wood and orange-based fibre pulp. The upcycling of orange peels as part of the Tencel limited edition initiative represents a further successful step by Lenzing to develop new closed loop solutions together with partners along the value chain. The introduction of the first carbon neutral fibres on the global nonwovens market under the Veocel brand comprises a further product innovation from the reporting year that exemplifies Lenzing’s ambitious path in climate protection and the circular economy.

Fibre2Fashion News Desk (RR)