Lenzing satisfied with 2009 result despite crisis

4 March 2010, Lenzing – Lenzing Group, leading manufacturer of quality cellulose fibres says it has achieved a comparatively satisfactory result in 2009 despite the difficult global economic situation. In a statement released today with its preliminary figures, the company says this was made possible by timely counter measures it took and also by improved demand in its core fibres business from the second quarter on.

According to the group’s preliminary figures consolidated sales declined to EUR 1.25 billion (2008: EUR 1.33 bill.) mainly due to weaker fibre prices and EBITDA of EUR 182.0 million (2008: EUR 200.8 million) dropped by 9.3 %. Meanwhile, EBIT fell by 22.7 % to EUR 100.7 million (2008:130.3 mill.), allowing Lenzing to achieve results similar to of 2005 and 2006.

Peter Untersperger, Chairman of the Lenzing’s board of management, summed up 2009 by saying: “Our policy of supplying our customers with fibres even at temporarily unsatisfactory profit margins, of counting on an early recovery and of making optimum use of this recovery right from the start fully paid off in 2009. We gained share of supply, launched innovative product applications and set the course for further expansion. Simultaneously we successfully implemented a cost reduction program and still managed to expand the budget for research and development to almost EUR 20 million.”

Commenting on 2010, Untersperger said: “We therefore take a confident view of 2010 and intend to enhance our position as the world market leader in cellulose fibres by introducing a number of innovative fibre products and with our program of dynamic expansion”.

Lenzing says that despite the economic crisis the group's balance sheet structure and financial position actually improved compared to 2008. “The well-being of the Lenzing Group and sustainably protected expansion are at the focus of our attention,” says Untersperger. “

At the reporting date equity came to EUR 606.1 million (2008: 579.7 million). With an adjusted equity ratio of 43.5 % (2008: 42.7 %) Lenzing continues to show a solid balance sheet structure. Net debt was reduced to EUR 315.7 million (2008: EUR 365.4 million) which enabled continued expansion and made it possible to make the most of market opportunities. Net gearing also improved from 60.4 % to 50.2 %.

Upward trend

As in previous years fibre segment sales dominated Lenzing’s revenues from its different businesses: In 2009 with a share of 85.9 % or EUR 1,090.2 million (2008: EUR 1,107.9 million). Segment EBIT declined to EUR 109.8 mill. (2008: EUR 118.1 million). Total fiber production amounted to 568,600 tons (2008: 540,300 tons).

 “After the price collapse at the end of 2008 we were able to implement price increases again from the second quarter 2009 on. In addition, our special product segment had not been affected that severely by the decline in prices and quantity demand. And we were successful with innovative products and partnerships with leading textile suppliers, as well as in the nonwovens sector.”  Friedrich Weninger, member of the board of management, commented on the current fibre business situation.

Weninger names major textile retailers and the US infant care retailer Costco and emphasizes the successful placement of Lenzing fibers as eco-friendly products made from renewable resources. The ecological advantages of Lenzing fibres have become important sales arguments throughout the whole value creation chain.

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

Confident outlook

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