VIENNA (Reuters) — Viscose fibers maker Lenzing announced higher savings targets on Thursday after first-half operating profit more than halved on deteriorating viscose prices.
The Austrian company, which is the world's biggest maker of cellulose fibers including its trademark Tencel, said it now expected cost savings of up to 90 million euros, or $119 million, this year, half as much again as originally planned.
First-half earnings before interest and tax (EBIT) were 32 million euros, or $42.4 million, on sales that fell 4 percent to 900 million euros, or $1.19 billion.
Lenzing said it expected viscose staple fiber (VSF) prices, which are driven by the Chinese market and closely linked to cotton prices, to improve in 2015 at the earliest.
"There are no perceptible signs of any easing of the situation on the global fiber market in the second half of 2014," it said in a statement. "Repeated measures initiated to stabilize prices are bound to fail."
Lenzing said it more than halved capital expenditure to 64 million euros, or $84.8 million, in the first half, and would concentrate on promoting its higher-margin specialty fibers Tencel and Modal.
A sluggish textile industry has pulled down viscose fiber prices over the past few years, and although demand has recently picked up, capacity expansions by Chinese manufacturers have kept prices low.
Lenzing is the only large non-Chinese player still in the viscose business apart from India's Aditya Birla. Their competitors include China's Fulida Group, Sanyou Chemical and CHTC Helon.
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