In 2017, the Lenzing Group has reported its best financial performance ever with record revenue and earnings. Group revenue grew by 5.9% in the 2017 financial year to EUR 2.26 billion, compared to: EUR 2.13 billion in 2016. The net profit for the year totalled EUR 281.7 million, a rise of 23% from the prior-year figure of EUR 229.1 million.

Group earnings before interest, tax, depreciation and amortisation (EBITDA) improved by 17.3% to EUR 502.5 million. The corresponding EBITDA margin rose to 22.2%. Earnings before interest and tax (EBIT) increased by 25.2% to EUR 371 million, resulting in a higher EBIT margin of 16.4%.

“The Lenzing Group looks back at a very successful year 2017. We continued to implement our corporate strategy sCore TEN with great discipline and focus on our investment projects and successfully captured value in a positive market environment. Our commitment to innovation and customer centricity was underpinned by the opening of an application innovation centre in Hong Kong and the creation of the new sales and marketing office in Turkey,” said Stefan Doboczky, CEO of the Lenzing Group.

“In line with sCore TEN we decided to revamp our brand architecture and image to sharpen Lenzing’s corporate and product profiles for customers and consumers. We want to put a stronger emphasis on our ambition to make the textile and nonwoven market more sustainable. We are very positive about our chosen strategy as it will help us to be more resilient as we expect more headwinds in the upcoming quarters.”

Sustainability driven innovation power

In 2017, the Lenzing Group presented a number of sustainability innovations, that underline the ongoing transformation of Lenzing into a genuine specialist player focused on high-quality botanic materials made from the sustainable raw material wood.

The introduction of Tencel branded lyocell fibres with Refibra technology at the Première Vision trade fair in Paris in February and the launch of Lenzing EcoVero branded viscose fibres in May were followed by the presentation of Tencel Luxe branded lyocell filaments. Tencel Luxe was developed to open new markets for the company and for its customers and partners and allow the company to further participate in the premium segment of the fabrics market. With the help of Tencel Luxe filaments Lenzing supports customers of the premium luxury fashion industry to improve their ecological footprint.

New strategy

The Lenzing Group aims to increase the share of specialty fibres as a percentage of revenue to 50% by 2020. Next to the capacity expansion in Heiligenkreuz (Austria), to be completed in the second quarter of 2018, and the new plant in Mobile, Alabama (USA), with a start-up in 2019, Lenzing announced its intention to construct the next world-scale plant to produce Lenzing branded lyocell fibres in Thailand.

In September 2017, the Lenzing Group opened a new textile application innovation centre (AIC) in Hong Kong, thus setting a further milestone in strengthening its innovation offering to all partners along the value chain. New applications for Lenzing fibres will be developed and tested at the AIC. Furthermore, new sales and marketing offices were opened in Turkey and South Korea in the first half of 2017.

Lenzing will also sharpen its corporate and product portfolio profile for customers and partners, as well as consumers, as a sustainable innovation leader. Consequently, Lenzing decided in 2017 on a new brand strategy. The backbone of the new brand strategy is a brand architecture focused on fewer brands and a strong message to consumers.

Outlook

The International Monetary Fund expects a further acceleration in global economic growth to 3.7% in 2018. However, growing protectionist tendencies in the political arena represent a source of uncertainty. Developments on the fibre markets should also be positive in 2018, but with continuing volatility.

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 standard viscose fibre business during the coming quarters; coupled with anticipated negative exchange rate fluctuations, the Lenzing Group expects its results for 2018 to be lower than the outstanding results in the last two years.

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