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Lenzing Group surpassed 2 Bn euro sales for the first time

22 Mar '12

7 min read

The Lenzing Group continued its dynamic growth path of previous years by posting record results in 2011. Despite a significant weakening of the global fiber market in the second half of 2011, Lenzing once again achieved double-digit growth rates in sales and earnings, and surpassed the threshold of EUR 2 bn in consolidated sales for the first time in the company's history. Operating margins also improved again from the already high level achieved in 2010 and set a new, absolute record.

Consolidated sales in the reporting year 2011 rose by 21.2% to EUR 2.14 bn, up from EUR 1.77 bn in the prior year. This dynamic sales growth can be attributed to higher average selling prices in its core fiber business, higher fiber shipment volumes, the first-time full-year consolidation of the pulp plant Biocel Paskov acquired in May 2010 as well as higher sales in all other business areas.

Consolidated EBITDA (earnings before interest, tax, depreciation and amortization) amounted to EUR 480.3 mn, a rise of 45.3% from the comparable figure of EUR 330.6 mn in the previous year. Earnings before interest and tax (EBIT) climbed by 56.9% to EUR 364.0 mn (2010: EUR 231.9 mn). The EBITDA and EBIT margins reached an all-time high in 2011 at 22.4% (2010: 18.7%) and 17.0% (2010: 13.1%) respectively.

“Our dynamic growth path and specialty strategy led by the fibers Lenzing Modal® and TENCEL® once again paid off in 2011. Whereas sales with standard viscose fibers increased by close to 20% year-on-year, we sold some 30% more TENCEL® fibers and close to 40% more Lenzing Modal® fibers than in the prior year”, explains Lenzing Chief Executive Officer Peter Untersperger. The large-scale market success of these two specialty fibers enabled Lenzing to partially detach itself from the volatile market trends of 2011, according to CEO Untersperger.

Lenzing rigorously pressed ahead with its capacity expansion program in 2011. As a result, the annual nominal production capacity of the Lenzing Group rose by about 8%, from 710,000 tons of man-made cellulose fibers at the beginning of 2011 to 770,000 tons at the turn of the year 2011/12. Capital expenditures of the Lenzing Group totaled EUR 196.3 mn in the 2011 financial year, somewhat below the comparable prior-year figure of EUR 230.0 mn, which had also included the acquisition costs for Biocel Paskov. This development was due to the postponement of investment projects as at the reporting date.

Despite the current level of investments, the net financial debt of the Lenzing Group was reduced by almost half, declining to EUR 159.1 mn at the end of 2011 from the previous year's figure of EUR 307.2 mn. The cash flow still reached a level of EUR 113.4 mn despite the investments made. “With an adjusted equity ratio of close to 45% and a net financial debt comprising one-third of annual EBITDA, we are very well positioned financially. Lenzing is largely autonomous with respect to its ability to finance growth steps in the upcoming years, says Chief Financial Officer Thomas G. Winkler.

Full capacity utilization in the Segment Fibers

According to preliminary estimates, global fiber production rose by 4.1% to a new record level of 79.1 mn tons in 2011. The production of man-made cellulose fibers also reached an all-time high of 4.6 mn tons, up 4.2% from 2010.

The business development of the Segment Fibers in 2011 was characterized by strong demand for Lenzing fibers, which was fueled even more by record cotton prices in the first half of the year. The market for standard textile viscose fibers significantly cooled off in the second half of 2011, which did not impact fiber shipment volumes but affected selling prices. The specialty fibers Lenzing Modal® and TENCEL® as well as the nonwovens sector were hardly impacted by this development. Throughout the year, Lenzing succeeded in raising average prices for all Lenzing fibers by close to 17% compared to the previous year, to EUR 2.22 per kilogram.

“All our fiber production facilities were running at full capacity throughout the entire year. The additional fiber volumes generated in the course of the year by the second expansion stage of the plant in Nanjing (China), the capacity expansion for Lenzing Modal® fibers produced at the Lenzing site and TENCEL® fibers manufactured at the Heiligenkreuz (Burgenland) facility were very successfully placed on the