The Lenzing Group is investing $112 million toward expanding its production capacity for specialty fibers.
The main focus for the expansion is at the company’s manufacturing facilities in Heiligenkreuz and Lenzing, Austria.
“We will invest more than 100 million euro over the next 20 months to expand production capacities for our high-quality botanic fibers, 70 percent at the Heiligenkreuz site and 30 percent at Lenzing,” said Lenzing’s chief executive officer, Stefan Doboczky. “Given the strong market demand, this expansion will help our customers in their growth plans as well as expanding our global market leadership position for specialty fibers.”
Doboczky has said that Lenzing’s cellulosic specialty fibers Tencel and modal are the fastest-growing segments of the business, which in fibers also includes various forms of viscose. It also sells commercial dissolving pulp created in the fiber production in its closed loop manufacturing system.
As part of its new group strategy sCore TEN, Lenzing set the target of increasing the share of specialty fibers as a proportion of its total revenue to 50 percent by 2020. Specialty fibers currently account for 41.7 percent of revenue.
The multifaceted plan announced in November also has a goal to expand the quality and technological position for its fibers and open new business areas.
Lenzing had revenue of 1.98 billion euros in 2015, with a fiber sales volume of 965,000 tons.
In the first quarter, consolidated earnings rose 54.7 percent to 92.2 million euros, or $105.2 million, as consolidated revenue increased 8.1 percent to 512.8 million euros, or $585.1.
The planned capacity expansion of 35,000 tons of specialty fibers at the sites in Heiligenkreuz and Lenzing, as well as at its site in Grimsby, U.K., is the first step of a planned specialty fiber expansion program. Customers will be able to take advantage of some 10,000 tons of specialty fiber capacity already by the end of this year.
Lenzing also struck a deal last month with Inditex in which it will convert recycled cotton garments into a new Tencel blended fiber.
The major part of investments will be carried out in 2016 and 2017. The Lenzing Group will fully utilize its in house engineering competence, supported by local construction companies and suppliers for these projects.
Lenzing said its investment in Heiligenkreuz will create 25 new jobs. Lenzing AG decided to start its investment program for specialty fibers at its existing sites in Austria and the U.K., as it allows fast capacity ramp up.
The strategic role of the Heiligenkreuz site as a key location of new types of Tencel premium fibers developed by researchers and application engineers in Lenzing in cooperation with customers play a key role in the growth.
The Lenzing group is a world market leader for wood pulp-based cellulosic fibers, headquartered in Austria, with production sites in all major markets, as well as a worldwide network of sales and marketing offices. The company also has production facilities in Mobile, Ala., the Czech Republic and China, employing 6,127 people worldwide.