The Lenzing Group generated substantial increases in earnings and revenue in the nine months ended Sept. 30, compared with the comparable period in 2015, citing higher selling prices and an improved product mix.
The Austria-based fiber giant said Wednesday that significant improvements in cash flow led to a reduction of net debt, allowing for further investments and the implementation of its sCore Ten efficiency program.
“The Lenzing Group continues to implement the sCore Ten strategy with great discipline and the excellent business performance further helped our already strong balance sheet,” said Stefan Doboczky, chief executive officer of Lenzing AG. “These nine months underpin our confidence and are an excellent basis for the implementation of our ambitious growth program.”
Consolidated earnings before interest, tax, depreciation and amortization rose by 52.2 percent to 320.6 million euros, or $342.5 million at current exchange. Earnings before interest and tax of the Lenzing Group almost doubled to 221.7 million euros, or $236.8 million.
Consolidated revenue rose by 8.2 percent in the first nine months to 1.58 billion euros, or $1.69 billion.
Next to slightly higher sales volumes, it was primarily higher selling prices of all three fiber generations — viscose, modal and Tencel — and more attractive product mix that contributed to higher revenues, Lenzing said. In the third quarter, it was specifically the sharp increase in viscose prices that fueled the results, the company noted.
The net profit for the period of 162.1 million euros, or $173.2 million, was 91.1 percent higher than in the first three-quarters of last year.
In the first nine months of this year, the strong business resulted in a twofold increase in operating cash flow to 374.9 million euros, or $400.5 million.
At the end of September, net financial debt fell to 64.2 million euros, or $68.6 million, from 327.9 million euros, or $350.3 million, on Dec. 31.
The strong balance sheet supports the investment program already initiated, including the expansion of specialty fiber production by 35,000 tons per year at the Heiligenkreuz and Lenzing, Austria and Grimsby, U.K., sites that are under way. Investment volume will total about 100 million euros, or $106.8 million. In addition, pulp production will be modernized in Lenzing and Paskov, Czech Republic, by 2019, also at a cost of around 100 million euros, or $106.8 million. This will lead to additional capacities of about 35,000 tons annually.
Lenzing said the macroeconomic environment remains volatile, especially given the recent political events. Against this background, the fundamentals of the wood-based cellulosic fiber industry should stay favorable in the midterm.
However, Lenzing expects viscose prices to be notably lower than the high peaks of the third quarter due to seasonality effects. Under the assumption of unchanged positive fiber market conditions and foreign exchange rates, Lenzing expects to deliver strong results in the financial year 2016.