Cautious optimism for 2010; expansion continues - Lenzing

17 Mar '10

5 min read

After successful test runs Lenzing's Indonesian subsidiary PT. South Pacific Viscose will take up regular production of 60,000 tons of viscose fibers annually in the first half of 2010. Subsequently further debottlenecking will increase capacity by another 18,000 tons. Further current investment programs in segment Fibers focus on the expansion of pulp production at the Lenzing site, the TENCEL fiber production site at Heiligenkreuz (Burgenland) and the modification of the TENCEL plant in Grimsby (Great Britain). Preparations for a new viscose fiber plant in India and the further expansion in China are being promoted.

Plastics Products hit by the crisis
The very poor economic situation in the construction and automotive industries and in industrial and infrastructural investment caused perceptible decline in order bookings and results for segment Plastics Products (11.7 % of sales). However, the development of the market for special products in other world regions, especially in the Near East, was positive. The focus of attention in 2009 was accordingly placed on securing operative business and on adapting production capacity to current demand.

Segment sales declined to EUR 147.8 mill (2008: EUR 182.2 mill.) due to lower sales volumes at lower prices. Segment EBIT came to EUR minus 9.8 mill (2008: EUR 7.3 mill). The negative result reflects the very difficult business development on one hand and the non-cash write-off of goodwill relating to business unit Filaments on the other. EBITDA of EUR 2.0 mill. were positive.

Engineering weaker due to general economic situation
In segment Engineering (2.3 % of sales) Lenzing Technik did not escape the negative economic situation of 2009. Intra-group and external order bookings declined significantly.

Sales came to EUR 81.5 mill. (2008: EUR 110.9 mill.) of which EUR 29.5 mill. (2008: EUR 51.3 mill.) were generated by sales to customers outside the Lenzing Group. EBIT according to segment reporting came to EUR 2.2 mill. (2008: EUR 10.0 mill.).

Confident outlook
In 2010 segment Fibers is expected to enjoy production at full capacity and positive results due to continuing good demand especially from the emerging markets. Innovative fiber applications and fiber blends, as well as rising demand for fibers made from renewable resources are expected to power sales.

The market environment of segment Plastics Products is expected to remain difficult. However, numerous optimization measures are intended to improve results over those of 2009. Improving order bookings point to a positive development for segment Engineering in 2010.

All in all, a positive result can be expected for the Lenzing Group in 2010 due to the good prospects of core business fibers.

The Lenzing Group

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