Lenzing first nine months sales decline 7.7%

Highlights:

- EBITDA of EUR 220 - 230 mn expected for 2013

- Material costs and personnel expenditures to be reduced by EUR 120 mn p.a. until 2015

- All fiber production facilities will continue to operate at full capacity

Consolidated sales amounted to EUR 1,447.0 mn, a decline of 7.7% from the comparable level of EUR 1,567.5 mn in the previous year. Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) continued to be at a good level, amounting to EUR 223.8 mn in the first nine months of 2013, a drop of 20.5% from the prior-year figure of EUR 281.5 mn.

This comprised an EBITDA margin of 15.5% (Q1-3/2012: 18.0%). Earnings before interest and tax (EBIT) in the first nine months of the year fell by 33.0% to EUR 136.4 mn, down from EUR 203.4 mn. On the basis of the anticipated weaker fourth quarter of 2013, Lenzing revised its guidance for the entire year 2013 downwards. Lenzing now expects EBITDA of between EUR 220 - 230 mn in 2013 (last guidance: EUR 280 mn).

In the light of the ongoing difficult market situation, Lenzing has decided to proactively implement a massive, far-reaching cost optimization program. The initiative will enable cost savings of EUR 120 mn p.a. until 2015 as a means of safeguarding Lenzing’s cost leadership on the global market for man-made cellulose fibers. In this way Lenzing is responding to the current difficult market environment, which has led to increasingly fierce price competition.

“The difficult market situation will continue in 2014 and possibly well into 2015. We will resolutely counteract this unfavorable situation and adjust our cost structures to the new circumstances as quickly as possible”, says Peter Untersperger, Chief Executive Officer of Lenzing AG. “Our aim must not only be to expand our quality leadership and innovative strength on a sustainable basis, but also to regain the cost leadership in our industry.

“We continue to see attractive growth potential for our products, but we are already preparing ourselves today as optimally as possible for the increasingly tough competition. Cost discipline and cash generation will be our targets over the coming years.”

In particular, the sales and marketing organization will be strengthened as part of the current reorganization project. The entire organization will sharpen its focus to more strongly orient its activities to the important fiber markets of Asia and Turkey. Sales efforts in China especially will be expanded on the basis of additional technical experts and market development capabilities.

Lenzing will continue to invest, particularly in developing TENCEL for high quality textile applications and sustainable nonwoven applications. Demand for Lenzing Modal remains strong. The expanded cost optimization program “excelLENZ 2.0” is a further, comprehensive step to sustainably safeguard earnings and future investment projects.

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