Business news :Lenzing On Track for Second Best Year Despite Falling Fiber Prices

In spite of economic headwinds, the Lenzing Group succeeded in achieving the second best business results in its history. However, as expected, the company could not match the record performance of the previous year. Fiber shipment volumes rose by 12 percent year-on-year, whereas average sales prices for Lenzing fibers fell by about 11 percent, as anticipated.

Consolidated sales of the Lenzing Group in the first nine months ended Sept. 30, 2012 amounted to €1.57 billion ($2.0 bb), a drop of 1.5 percent from the prior-year level of €1.59 billion. Consolidated EBITDA (earnings before interest, tax, depreciation and amortization) in the first three quarters was the second highest in the company’s history, totaling €281.5 million ($361 mm), down 22.4 percent from €362.9 million in the first three quarters of 2011. The EBITDA margin remained at an attractive double-digit level of 18.0 percent (Q1-3 2011: 22.8 percent). Earnings before interest and tax (EBIT) were also at a gratifying level of €203.4 million ($261 mm)(Q1- 3 2011: € 289.7 mm).

This corresponded to an EBIT margin of 13.0 percent for the Lenzing Group in the first nine months of 2012, compared to 18.2 percent in the prior-year period.

“In spite of the difficult market conditions, we were able to achieve record sales of 590,000 tons of fibers in the first three quarters of 2012 against the backdrop of the full utilization of our production capacities. This underlines the world market leadership of the Lenzing Group based on quality, innovation, a global presence and optimal service“, says Lenzing’s Chief Executive Officer Peter Untersperger.

Adjusted Group equity totaled €1.l5 billion as at the end of Sept. 2012, a rise of 9.9 percent from the comparable figure of €1.05 billion at the end of 2011. The adjusted equity ratio was 48.5 percent as at Sept. 30, 2012 (Dec. 31, 2011: 44.8 percent). As a result of the lively investment activity within the Group, net financial debt increased to €295.3 mm at the end of the third quarter (Dec. 31, 2011: € 159.1 mm). Accordingly, net gearing continued to be a very low level of 25.6 percent (Dec. 31, 2011: 15.2 percent).

OutlookLenzing confirms its guidance for the entire year 2012, which was published as part of the half-year results. As a consequence, Lenzing is well on track to achieve the second best business results in the company’s history in 2012 as a whole. However, due to the current market developments, a decline of average fiber selling prices to about €1.85 per kilogram is expected. Accordingly, Lenzing now expects that it will likely reach the lower end of the targeted range with respect to its performance indicators for the entire year 2012. This means consolidated sales are anticipated to be within a range of €2.1-2.15 billion, whereas EBITDA will amount to €350-400 million and EBIT will total somewhere between €240-290 million. Capital expenditure for 2012 is budgeted to be about €325 million.

Long-term megatrends such as population growth, increasing per capita fiber consumption in the emerging markets and growing demand for resource-saving, environmentally compatible fibers remain intact, and are good arguments in favor of man-made cellulose fibers. However, this long-term growth trend does not exclude the possibility of repeated phases of delayed or accelerated economic growth. Lenzing remains committed to its long-term growth strategy.

( SportsOneSource Media )