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Lenzing revenue down 6.1% in Q1FY18
May '18
Courtesy: Lenzing Groupl
Courtesy: Lenzing Groupl
The revenue of Lenzing Group in the first quarter of fiscal 2018 decreased 6.1 per cent, from the prior-year quarter to €550.3 million. This drop is mainly attributable to less favourable currency exchange rates. The net profit for the period dropped 33.3 per cent from €75 million in the first quarter of the previous year to €50 million.

Group earnings before interest, tax, depreciation and amortization (EBITDA) fell 24.8 per cent to €101.6 million mainly due to softening prices for commodity viscose and increasing costs for key raw materials. The EBITDA margin decreased to 18.5 per cent in the first quarter of 2018 compared to 23 per cent in the first quarter of 2017. Earnings before interest and tax (EBIT) declined by 32.7 per cent to €68.9 million, which resulted in a lower EBIT margin of 12.5 per cent (Q1 2017: 17.5 per cent).. Earnings per share equaled €1.89 (Q1 2017: €2.75).

"Following the record year of 2017, Lenzing began the expected challenging 2018 financial year with a decline in revenue and earnings. Market headwinds were clearly noticeable in the first quarter but still we are pleased with the solid results given the more demanding market environment. At the same time, we are forging ahead with implementation of our corporate strategy sCore TEN. Expansion of production capacities for our specialty fibres is also progressing," said Stefan Doboczky, chief executive officer of the Lenzing Group. "We are convinced of the merits of our chosen strategy, which will help us to be more resilient in the upcoming quarters."

Capital expenditures more than doubled in the first quarter of 2018 to €58.9 million, up from €26.9 million in the prior-year period. This is mainly due to the expansion of production capacities for specialty fibres in Heiligenkreuz, Burgenland and Mobile, Alabama in the US as well as the expansion and modernisation of the dissolving pulp plants in Lenzing, Austria and Paskov, Czech Republic. In line with the corporate strategy sCore TEN, the company is pressing ahead with these projects as well as with planning work on construction of the next state-of-the-art lyocell production facility in Prachinburi, Thailand.

The Lenzing Group sees a number of, in part contradictory, factors which limit the visibility over fibre prices in 2018. The prices for several key raw materials, e.g. caustic soda, remain at a very high level and their further development is difficult to estimate. These general conditions are expected to form the basis for a challenging market environment in the commodity viscose fibre business during the coming quarters. Coupled with anticipated exchange rate fluctuations, the Lenzing Group expects its results for 2018 to be lower than the outstanding results in the last two years. (RR)

Fibre2Fashion News Desk – India

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