Lenzing reports solid result in FY18 first half

12 Nov '18
3 min read
Courtesy: Lenzing
Courtesy: Lenzing

Lenzing's strategic orientation with a focus on specialty fibres has had a positive impact in the first half of fiscal 2018. Lenzing recorded a solid business development in the first three quarters of fiscal 2018. However, the company saw decline in revenue with lower prices for standard viscose, less favourable currencies and lower production volume.

"The Lenzing Group is currently operating in a challenging environment. Against this background, we are satisfied with the solid business development and the corporate strategy sCore Ten has a positive impact. The new production line in Heiligenkreuz started up successfully and customers’ feedback has been positive," said Stefan Doboczky, chief executive officer. "While many viscose producers are faced with a very tense profit situation, we are well positioned due to our specialty strategy and still expect a satisfactory full year."

Key strategic measures were implemented during the first three quarters of 2018 in line with the sCore Ten strategy. The start-up of new capacities for lyocell fibres in Heiligenkreuz, the production start of Lenzing Ecovero fibres at the Nanjing site and the investment in another pilot line for Tencel Luxe filaments are important steps to accomplish the goal of increasing the share of specialty fibres in total revenue, Lenzing said in a press release.

In the beginning of November, the takeover by the Lenzing Group of the remaining 30 per cent of its Chinese subsidiary Lenzing (Nanjing) Fibers Co. Ltd. (LNF) from its state-owned joint venture partner NCFC was completed. After closing of the transaction, the Lenzing Group will hold 100 per cent of LNF. The acquisition will have a negative impact on net profit of approx. €21 million for 2018. The purchase of the shares supports Lenzing’s strategic growth as a producer of specialty fibers from the renewable raw material wood in China and worldwide. It has paved the way to setting up further production lines for specialty fibres. Lenzing aims to convert LNF into a specialty fibres hub over time.

Regarding the capacity expansion for specialty products such as Tencel Luxe filaments and Lenzing Ecovero viscose fibres, Lenzing is still on track. After the introduction of Tencel Luxe branded lyocell filament yarns in the previous year, Lenzing continues to drive innovations in the area of the value chain. In September, the company announced the successful development of the Lenzing Web Technology, a new technology platform focusing on sustainable nonwoven products, which will lead to new market opportunities for the industry. Following several years of research and development work and investments totaling €26 million, the pilot plant at the headquarters in Lenzing has been successfully put into operation.

Lenzing expects wood-based cellulosic fibres to continue to grow at a higher rate than the overall fibre market. In a challenging market environment the Lenzing Group expects solid results for 2018, albeit lower than in the outstanding last two years.

For 2019, Lenzing expects standard viscose markets to remain under pressure because of an ongoing oversupply and very high raw material prices. Lenzing’s specialty fibre business is expected to continue the very positive development. (RR)

Fibre2Fashion News Desk – India

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