As with the first quarter of 2010, the Lenzing Group has made optimum use of favourable global market conditions achieving excellent results in Q2. Consolidated sales in the first half of 2010 climbed 43.6 %1 to EUR 847.2 million from EUR 589.9 million.

This was the company’s strongest rise in sales ever, which it says was was made possible by higher fibre volumes and price dynamics of global markets as well as full first time consolidation of the company’s pulp production site Biocel Paskov in the Czech Republic, which Lenzing acquired in April 2010.

However, Lenzing’s operating results were even more impressive than sales. Half year EBIT increased sevenfold from EUR 15.4 million to EUR 108.6 million. Due to the higher cost of financing investment EBT increased thirteen-fold from EUR 8.0 million to EUR 105.0 million. Profit for the period, after deduction of income tax of EUR 24.6 million (2009: EUR 2.1 mill.), was EUR 80.4 million (2009: EUR 5.9 mill.).

Lenzing’s profits for the first half of 2010 already exceeds that of the total annual profits for 2008 and 2009, respectively, with the first half year of 2010 therefore being the best half year in the company’s history.

Peter Untersperger, CEO of Lenzing AG, comments: “The half year result shows that the company's anti-cyclical investment strategy of the years 2008 and 2009 was absolutely right. The start-up of new fibre capacity in Indonesia in the first half of 2010, investment in debottlenecking in China and the expansion of Heiligenkreuz (Austria) put us in a position to make optimum use of the expected fibre market dynamics and to give our customers what they need." 

"Despite all these considerable investments and the acquisition of Biocel Paskov, Lenzing today has an equity ratio of 42.1 % of the balance sheet total at a net gearing rate of 54.3 %. These provide the company with a sustained solid balance sheet structure.”

Sales in Lenzing’s Fibers division grew by 46.3% to EUR 741.0 million an improvement from the previous year’s EUR 13.0 million to EUR 102.9 million despite rising raw material prices in the second quarter of 2010.

The company says this was due to higher production capacity along with full utilization at all sites and significantly higher prices. Lenzing’s Textile Fibers and Nonwoven Fibers business units are said to have performed excellently, with the Modal and Tencel special fibres achieving above average success due to innovative application. Demand from all major sales markets in Asia, Europe and USA was said to be strong.

In the second half of the year Lenzing’s core fibres business is expected to experience weakening fibre demand in view of recent first signs of overheating. “New cellulose fibre production capacity in China will begin to supply the market in 2010 and 2011 and may temporarily reinforce this trend. The strong momentum of the first half of the year will therefore lose some of its force in the second half of the year and continued high raw material prices (pulp and wood) are expected to weaken margins,” the company said.

Lenzing says its special fibres will not be affected by this development to the same degree. The raw material price situation, in particular pulp dissolving, is expected to calm down in the fourth quarter and in anticipation of a sustained recovery of the global economy, the Lenzing Group expects a satisfactory second half of the year with a result below that of the first half.