WWD.com/globe-news/textiles/lenzing-earnings-fall-25-in-2012-6863645/
government-trade
government-trade

Lenzing Earnings Fall 25% in 2012

Sales decline 2.3 percent to $2.72 billion.

A rendering of the Lenzing "Jumboline" facility.

Following a record sales year in 2011 proved somewhat difficult for the Lenzing Group, but the Austrian fiber manufacturer and marketer said it still managed its second-best year for volume in 2012 on the strength of its specialty fibers, particularly Tencel.

But it was still a tough environment. On Friday, Lenzing reported consolidated sales were down 2.3 percent to 2.09 billion euros, or $2.72 billion at current exchange, from 2.14 billion euros, or $2.78 billion, in 2011. The decline was attributed to more dissolving wood pulp from its Paskov, Czech Republic, plant being used internally than in 2011. Adjusted for this effect, consolidated sales were constant. The company said lower average fiber selling prices compared with 2011 were balanced by the strong rise in fiber volume, which climbed about 14 percent year-on-year to 810,000 tons.

 

RELATED CONTENT: Click Here for More Earnings Coverage >>

Consolidated earnings before interest, taxes, depreciation and amortization were 358.7 million euros, or $466.1 million, a decline of 25.3 percent from the record EBITDA of 480.3 million euros, or $624.1 million, achieved in 2011. The EBITDA margin was 17.2 percent. Earnings before interest and tax were 255 million euros, or $331.4 million in 2012, a 29.9 percent decline. The EBIT margin was 12.2 percent.

“We performed quite well in 2012 despite a very difficult market environment,” said Lenzing chief executive officer Peter Untersperger. “Naturally, our operating margins were below those in the boom year 2011, but still at a good level. We fully utilized our new production capacities and were sold out throughout the entire year. This success proves the long-term correctness of our growth strategy in our core business of manufacturing man-made cellulose fibers.”

Investments rose to a record level of 346.2 million euros, or $49.9 million, in 2012. Lenzing’s investment activity focused on the completion of the fifth production line at its Indonesian subsidiary; a capacity expansion drive at the Tencel factory in Mobile, Ala., and expansion investments at the Lenzing site, as well as the commencement of construction of a new large-scale Tencel plant in Lenzing.

“As planned, 2012 represented the peak year of investments when it comes to the implementation of our growth strategy,” said Lenzing chief financial officer Thomas G. Winkler. “Due to Lenzing’s stable financial position and low debt, we can afford this investment into the future without touching on our strategic liquidity reserve of more than half a billion euro.”

Initial estimates show a 1.2 percent rise in world fiber production during the reporting year, with volume nearly flat, the company noted. Worldwide production of man-made cellulose staple fibers, the core business of the Lenzing Group, climbed 9.2 percent in 2012 to 3.66 million tons, expanding at a considerably faster rate than the global fiber market as a whole.

The fiber market in 2012 was dominated by a significant decrease in selling prices for all fibers, Lenzing noted. The average price of cotton, the benchmark for the entire fiber industry, fell more than 40 percent below the prior-year level. Cotton inventories further increased and the global stock-to-use ratio reached a record level of more than 70 percent. Spot prices for viscose fibers were down by about 15 percent in China, the world’s largest fiber market.

Lenzing said the additional production capacities that will be available for an entire year in 2013 will serve as the basis for an anticipated volume gain of about 13.5 percent to 920,000 tons. Sales are expected to climb to a range of 2.15 billion to 2.25 billion euros, or $2.79 billion to $2.92 billion. Lenzing forecasts EBITDA to range between 260 million to 290 million euros, or $337.9 million to $376.9 million in 2013.