LENZING: LYOCELL DEMAND WEAK

Byline: James Fallon

LONDON — Lenzing AG, the Austrian fibers manufacturer, said demand for its lyocell and viscose fibers remains unsatisfactory and the company is in talks with its rival Acordis PLC regarding cooperation on viscose fibers in the U.S. market.
Lenzing revealed the continued weakness in reporting a net loss of $3.9 million on a 6.5 percent drop in sales to $307.8 million for the half year ended June 30. This compares with a net profit of $1.7 million on sales of $329.2 million a year earlier. Dollar figures are translated from the euro at current exchange.
The company said that its operations in Europe and the Far East are beginning to show an upward trend after a difficult fourth quarter of 1998 and first quarter of 1999. As a result, Lenzing hopes to report a breakeven result for the full year.
But the U.S. market remains difficult because of the continued flood of low-cost imports from the Far East, Lenzing said. Its U.S. subsidiary operated at a loss in the first half and even though the group has cut costs and introduced higher-margin fiber types, these actions are not expected to have any impact this year.
“As there is only a slight chance for any immediate improvement in the U.S. textile market, Lenzing has begun talks on cooperating with Acordis, the second-largest viscose manufacturer in the U.S.A. and former Courtaulds subsidiary and current Akzo subsidiary, regarding the U.S. viscose fiber market,” Lenzing said, adding such cooperation could help counterbalance the pressure from Far Eastern imports. Lenzing gave no indication of what this cooperation would entail. Officials of Acordis, based in London, could not be reached for comment.
However, Lenzing added that all activities in its technology sector, where it competes with Acordis, would remain separate from cooperation. It also would exclude lyocell, which competes with Acordis’s lyocell Tencel.
Lenzing said “despite the inclusion of the fiber in the collections of renowned brand-name manufacturers, the quantities sold in the remainder of 1999 are likely to remain relatively small.”
New blends of lyocell should help increase volumes, as should the firm’s work on processing guidelines for the textile chain. However, these will have an impact only in the medium-term, Lenzing said.