In the first quarter of 2022, Lenzing Group, the world market leader in wood based cellulosic fibres, has posted revenue growth of 25.7 per cent year-on-year to reach €615 million, due to continued high demand for wood-based biodegradable specialty fibres and higher fibre prices. Specialty fibres’ share of fibre revenue currently stands at 73.3 per cent.
The earnings trend reflects trends in energy, raw materials and logistics costs, although the company’s continued focus on measures to improve structural earnings in all regions mitigated this negative effect. Earnings before interest, tax, depreciation and amortization (EBITDA) decreased by 7 per cent year-on-year to €88 million. The EBITDA margin reduced from 19.3 to 14.3 per cent. Net profit for the quarter grew by 14.3 per cent to €34.1 million, while earnings per share amounted to €0.87 (compared to €1.06 in the first quarter of 2021).
In the first quarter of 2022, the Lenzing Group, like the entire manufacturing industry, was significantly affected by the extreme developments in global energy and commodity markets. A predominantly positive market environment and the strategic focus on specialty fibres such as those of the Tencel, Lenzing Ecovero and Veocel brands nevertheless ensured a solid revenue and earnings trend, with the effect of higher costs being largely offset, the company said in a press release.
“Lenzing made a solid start to the 2022 financial year thanks to considerable efforts in an environment of sharply rising costs. Demand for our wood-based, biodegradable specialty fibers also recorded a positive trend in the first quarter,” said Stephan Sielaff, Lenzing Group CEO. “Strategically, we remain fully on track with the opening of our lyocell plant in Thailand and the commissioning of the pulp mill in Brazil, and we are very proud of this. We now aim to take the next step and continue our shift from a linear to a circular economy model. As a sustainability champion, we are aware that the textile and nonwovens industries cannot continue to operate as they do at present.”
Gross cash flow was up by 2 per cent to €86 million in the first quarter of 2022, mainly due to the earnings trend. Cash flow from operating activities decreased by 28.5 per cent to €79.7 million. Free cash flow amounted to minus €102.9 million (compared to minus €99 million in the first quarter of 2021), particularly due to investing activities in connection with the projects in Thailand and Brazil. Capital expenditure on intangible assets, property, plant and equipment and on biological assets decreased by 13.6 per cent to €182.7 million, of which approximately 44 per cent was financed from cash flow from operating activities. The continuing high level of investment volume primarily reflects the completion of the two key projects.
With the implementation of the two key projects in Brazil and Thailand, as well as with the investments at the existing Asian sites in China and Indonesia amounting to more than EUR 200 mn, Lenzing continues to push forward Group-wide climate neutrality. In 2019, Lenzing became the first fiber manufacturer to set a target to reduce its carbon emissions by 50 percent by 2030 and to become climate neutral by 2050. This carbon reduction target has been confirmed by the Science Based Targets Initiative.
In order to further reduce carbon emissions in line with its strategic targets, Lenzing will also rely to an even greater extent on electricity generation from renewable energies in the future. Lenzing is currently working on the construction of several photovoltaic systems at its site in Upper Austria. The total capacity of the ground-mounted system and the three rooftop systems will amount to approximately 7 MW peak after the expected commissioning in the second half of 2022.
The International Monetary Fund forecasts global growth of 3.6 per cent for 2022. However, the economic recovery from the deep recession caused by COVID-19 has been slowed by the war in Ukraine. Extreme developments in energy and commodity markets as well as global supply chain constraints are currently posing a major challenge for the entire manufacturing industry. The currency environment is expected to remain volatile in the regions of relevance to Lenzing.
Lenzing continues to expect demand for environmentally responsible fibres for the textile and clothing industry as well as the hygiene and medical sectors to grow. However, the trend in the energy and raw materials costs as well as disturbances in the supply chain are currently creating a very challenging market environment. Earnings visibility remains limited.
Source：Fibre2Fashion News Desk
