Led by its specialty fibers Tencel and modal, and a strong operational improvement, the Lenzing Group saw sales and earnings increases in 2015, but expects a continued volatile global fiber market this year.
Demand for its high-quality fibers was strong in 2015, encompassing all regions and product groups, the company noted. In particular, sales of the specialty fiber Tencel increased significantly. The share of specialty fibers as a percentage of total group revenue was 40.5 percent in 2015 compared with 35 percent the previous year. Expenditures for research and development increased 47 percent to 29.8 million euros, or $33.3 million, in line with the company’s strategy of focusing on the development, production and marketing of innovative specialty fibers.
Lenzing said the volatile development prevailing on the global fiber market is expected to continue. High cotton inventories and low polyester selling prices intensify price competition on the market, however, the market segment of wood-based cellulose fibers, which is of relevance to Lenzing, is showing signs of developing more positively than the overall fiber market.
“We made substantial progress in 2015 and delivered the promised improvements to our business operations,” said Stefan Doboczky, chief executive officer of Lenzing AG. “We strategically realigned the company, improved the earnings and cost structure and enhanced our financial strength. We also expect a considerable rise in earnings once again in 2016, provided that the underlying business framework does not significantly change.”
Lenzing said adjusted equity increased 15 percent to 1.23 billion euros, or $1.37 billion, from 1.07 billion euros, or $1.2 billion, in 2014. The adjusted equity ratio amounted to 50.6 percent, the highest level since the year 2006. Net financial debt was reduced 27 percent to 327.9 million euros, or $366.5 million, from 449.5 million euros, or $502.4 million, a year earlier, resulting in a 1.9 percent decline in the ratio of net financial debt to EBITDA.
Investments in intangible assets, property, plant and equipment of the Lenzing Group totaled 70.9 million euros, or $79.2 million, in the year, compared to the prior-year level of of 104.3 million euros, or $116.57 million. Following completion of the Tencel fiber production plant at the Lenzing site in 2014, the focus of Lenzing’s capital expenditures in 2015 was on maintenance work, as well as the implementation of quality and optimization measures. The excelLENZ cost-optimization initiative was concluded in 2015. The new strategy sCore TEN was developed by the Lenzing team and is already in implementation.
Demand for cellulose fibers remains strong and the ratio of supply to demand is favorable, Lenzing added. Assuming unchanged conditions on the fiber market and currency exchange rates, Lenzing said it expects further improvements in earnings this year.