The Lenzing Group reported solid sales and earnings for the first half ended June 30 as market conditions improved, but said the current China-related global financial volatility makes the second-half outlook more uncertain.
The Austrian fiber specialist said Tuesday that earnings before interest, taxes, depreciation and amortization improved 37.7 percent in the six months to 126.5 million euro, or $144.35 million at current exchange, from 91.9 million euro, or $104.87 million, in the year-ago period.
Consolidated revenue rose 6.2 percent to 955.4 million euro, or $1.03 billion. Lenzing said its sales and earnings performance in the half were boosted by positive currency effects, an improved cost position thanks to its ExcelLENZ program and better market conditions at the end of the second quarter. The EBITDA margin improved to 13.2 percent compared to 10.2 percent in the first half of 2014.
“Lenzing delivered a solid performance in the first half of 2015,” Stefan Doboczky, chief executive officer and chairman of the management board of Lenzing AG, said Tuesday. “The underlying reasons were the currency effects, which turned out to be very positive for us due to the weakness of the euro; good fiber demand in the second quarter and our improved cost position. Viscose fiber prices in China, the world’s largest sales market for fibers, increased toward the end of the second quarter due to a more favorable supply-demand ratio related to several local viscose fiber production plants being shut down for environmental reasons. We remain cautious concerning prospects for the rest of 2015, in light of the fact that these capacities could be put into operation again.”
The ExcelLENZ cost optimization initiative continued to be implemented in the first half-year according to plan and proved to be successful, Lenzing said, with their full impact expected to be felt starting in 2016. The restructuring program to adjust capacities of the technical units of Lenzing AG and the subsidiary Lenzing Technik that was launched in the first quarter of 2015 is on schedule.
Lenzing said it was successful in further developing the market for high quality viscose products in the first half of 2015. Demand for its proprietary Tencel brand used in denim jeans remained strong, and the number of processors integrating Tencel into their denim fabrics has doubled over the last 12 months. The new Tencel A100 microfiber was successfully launched on the market in the first half of 2015, the company said, and it also plans further expansion of its strong market position for nonwovens.
Lenzing said the specific market environment for the man-made cellulose fiber industry improved somewhat in the middle of 2015 compared to the end of the first quarter. Solid volume demand up until now was followed by initial fiber selling price increases.
However, Lenzing said, “The troubled geopolitical situation, the economic situation in China and unforeseeable exchange rate fluctuations are factors of uncertainty in the second half of 2015.”
The company added, though, that despite a volatile environment, it expects a further improvement in its operating results compared with 2014, as well as a further reduction in its net financial debt. Medium- and long-term growth rates in the man-made cellulose fiber industry are expected to be higher than that of the global fiber market.