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Lenzing AG delivers good H1 results despite weak market

01 Sep '05

3 min read

The Lenzing Group again succeeded in obtaining a satisfactory result for the first half of 2005, despite significantly declined general conditions resulting in global pricing pressure on fibers and a weaker second half expected.

Consolidated sales of the Lenzing Group rose by 14.0% to EUR 464.4 mill. (as compared to EUR 407.3 mill. for the same period last year) due to the first-time consolidation of Tencel and increased production. Caused by higher depreciation, EBIT (Income from operations) according to IFRS increased by only 4.4% to EUR 50.2 mill., compared to EUR 48.0 mill. for the first half of 2004.

An improved financial result allowed raising the result before taxes by 11.7% to EUR 51.3 mill after EUR 45.9 mill. Net income reached EUR 38.4 mill. (compared to EUR 33.5 mill.), a plus of 14.5%.

The EBIT margin came to 10.8% for the first half of 2005 (compared to 11.8% for the first half of 2004), the EBITDA margin to 17.5% (after 18.0%). The mid-year balance sheet shows an equity ratio* of 47.6% (after 48.5% on 31 December 2004).

Cotton prices fell sharply and new production capacities went operational in China, causing a decline in prices and demand for viscose fibers.

The Lenzing Group production reacted to these weak market conditions by diverting production capacity from Business Unit Textile Fibers to Business Unit Nonwoven Fibers.

Simultaneously, the product mix of Textile Fibers was enhanced further in favor of high-end products. This enabled Lenzing in the first half of 2005 to operate all its fiber production units at full capacity, opposing the market trend, to maintain its cost advantage and to even significantly increase fiber production.

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