EQS-News: Lenzing AG: Lenzing Group with strong operating result in 2021

EQS-News: Lenzing AG / Key word(s): Annual Results/Forecast
Lenzing AG: Lenzing Group with strong operating result in 2021

10.03.2022 / 07:30
The issuer is solely responsible for the content of this announcement.

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• Revenue and earnings performance significantly improved despite considerable cost
increases
• Successful production start at world’s largest lyocell plant in Thailand
• Imminent start-up of world’s largest pulp mill of its kind in Brazil
• Lenzing recognized as „sustainability champion“ several times worldwide – one of
only 14 companies awarded „AAA“ rating by CDP
• New, innovative reporting methods – Lenzing presents its [1]online annual report
for the first time

Lenzing – Thanks to its strategic focus on wood-based specialty fibers and the
predominantly positive market environment, the Lenzing Group recorded a significantly
improved revenue and earnings performance in 2021 compared to the previous year.
Increasing optimism in the textile and apparel industry as a consequence of the
progress made with vaccinations and the continuing recovery in the retail sector
ensured a strong rise in demand and prices on the global fiber market, particularly at
the beginning of the reporting year.

Revenue grew by 34.4 percent to EUR 2.19 bn. In addition to the predominantly positive
market environment, the focus on specialty fibers such as TENCEL(TM), LENZING(TM)
ECOVERO(TM) and VEOCEL(TM) branded fibers also had a positive impact on revenue growth.
Specialty fibers currently account for 72.3 percent of fiber revenues. Significant
increases in energy, raw material and logistics costs occurred throughout the reporting
year. Earnings before interest, tax, depreciation and amortization (EBITDA) almost
doubled compared to the previous year to reach a level of EUR 362.9 mn (after EUR 192.3
mn in 2020). The EBITDA margin rose from 11.8 percent to 16.5 percent. Net profit for
the year amounted to EUR 127.7 mn (after EUR minus 10.6 mn in 2020), and earnings per
share stood at EUR 4.16 (after EUR 0.24 in 2020).

„Lenzing can be pleased with a strong business year. Demand for our wood-based,
biodegradable specialty fibers under the TENCEL(TM), LENZING(TM) ECOVERO(TM) and
VEOCEL(TM) brands continued to perform very well in 2021,“ notes Cord Prinzhorn, Chief
Executive Officer of Lenzing Group. „Strategically, Lenzing remains on course despite
the challenges posed by the global pandemic. With the start of production at our
state-of-the-art lyocell plant in Thailand a few days ago, we are further strengthening
our leading position as a supplier of eco-friendly specialty fibers. The completion of
our pulp mill in Brazil is imminent. We are very proud to be able to realize these
projects – which are so important for Lenzing – both on time and within budget,“
comments Prinzhorn.

Gross cash flow almost tripled to EUR 372 mn in 2021 (compared to EUR 126.8 mn in
2020). This growth primarily reflected the earnings trend. Cash flow from operating
activities amounted to EUR 394 mn (after EUR 48.9 mn in 2020). Free cash flow stood at
EUR minus 445.5 mn (after EUR minus 614.8 mn in 2020), particularly due to investing
activities in connection with the projects in Thailand and Brazil. Capital expenditure
on intangible assets, property, plant and equipment and biological assets (CAPEX)
increased by 26.3 percent to EUR 844.3 mn in the reporting period, approximately half
of which was financed from cash flow from operating activities. The sharp rise in
investment volumes is primarily due to the implementation of the two key projects.

Strengthening special fibers growth

Specialty fibers are Lenzing’s great strength. In 2024, more than 75 percent of fiber
revenues are expected to derive from the wood-based specialty fiber business. In recent
years, the focus of this strategic objective has been on the construction of the new,
state-of-the-art lyocell plant in Thailand, which was officially opened on March 03,
2022. This project was completed both on time and within budget. The new production
plant, which is the largest of its kind in the world with a nominal capacity of 100,000
tonnes per year, will help to better serve growing consumer demand for TENCEL(TM) and
VEOCEL(TM) lyocell fibers.

The construction of the pulp mill in Brazil strengthens the Group’s own supplies of
dissolving wood pulp, and thereby also specialty fiber growth in line with the sCore
TEN strategy. Implementation of the project continues to progress to schedule despite
the challenges posed by COVID-19.

Aiming for a carbon-free future

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 EUR 200
mn, Lenzing continues to march purposefully towards 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 be climate neutral by 2050. This carbon
reduction target has been recognized by the Science Based Targets Initiative.

The partnership with Swedish pulp producer Södra marks a further milestone in Lenzing’s
efforts to realize its ambitious climate and sustainability goals. These two global
market leaders, which have been proactively promoting the circular economy in the
fashion industry for many years, are joining forces to give the issue a further boost
and to make a decisive contribution to resolving the global textile waste problem. An
expansion of capacities for pulp recovery from waste textiles is also planned. The goal
is to be able to recycle 25,000 tonnes of used textiles per year by 2025.

Sustainability is not only a very important element of strategy at Lenzing, but also a
guiding principle for innovation and product development. Lenzing continued to expand
its product offering for the textile and nonwovens sectors in 2021. The third quarter
saw the presentation of the first TENCEL(TM) lyocell fibers made from wood- and
orange-based fiber pulp. The upcycling of orange peels as part of the TENCEL(TM)
Limited Edition initiative represents a further successful step by Lenzing to develop
new closed loop solutions together with partners along the value chain. The
introduction of the first carbon neutral fibers on the global nonwovens market under
the VEOCEL(TM) brand comprises a further product innovation from the reporting year
that exemplifies Lenzing’s ambitious path in climate protection and the circular
economy.

Alternative to fossil-based fibers

With its wood-based, biodegradable VEOCEL(TM) fibers, Lenzing’s nonwoven business also
benefits from new regulations such as the Single-Use Plastics Directive (EU)
2019/904.^[2][1] The EU Commission published its implementation guidelines in the
second quarter, specifying which products fall within the directive’s scope. Lenzing
welcomes the measures taken by the EU in the joint fight by member states against
plastic waste pollution. Since July 03, 2021, the Single-Use Plastics Directive also
provides for uniform labeling requirements for certain products on either packaging or
on the product itself. These include feminine hygiene products and wet wipes for
personal and household care that contain plastics.

In a study published in October 2021,^[3][2] scientists from the renowned academic
research institute Scripps Institution of Oceanography (SIO) at the University of
California, San Diego, confirmed that wood-based cellulosic fibers biodegrade in the
ocean within a short time frame at the end of their life cycle, making them a
significantly better alternative to fossil-based synthetic fibers. The study was the
result of an independent project aimed at understanding „end-of-life“ scenarios for
textiles and nonwovens disposed of in the environment. While wood-based cellulosic
fibers completely biodegraded within 30 days, the fossil-based fibers that were tested
showed almost no change even after more than 200 days.

Plastic pollution of the environment is a major problem of our time, which may continue
to affect many future generations. The fashion industry, with its „fast fashion“
business model, places a particularly extreme burden on the environment. For example,
the use of fossil-based synthetic fibers in garments has approx. doubled over the past
20 years. Fossil-based fibers account for around two-thirds of global fiber consumption
today – with an upward trend.^[4][3]

Honored as global „sustainability champion“

Lenzing received several awards worldwide in 2021 for its achievements, especially in
the sustainability area: Lenzing was one of only 14 companies worldwide to receive a
„AAA“ rating from global non-profit environmental organization CDP for its
environmental leadership in climate change, water security and forest conservation. CDP
is recognized as the gold standard of environmental reporting worldwide.

Renowned rating agency MSCI upgraded Lenzing’s rating from „A“ to „AA“. Lenzing thereby
ranks among the top six percent of companies evaluated in its peer group. This improved
MSCI ESG rating also leads to a reduction in interest expenses for Lenzing. Lenzing
placed a bonded loan of EUR 500 mn in November 2019, which is linked to its own
sustainability performance.

In the EcoVadis CSR rating, Lenzing achieved platinum status for the first time in
2021, ranking it among the top one percent of companies evaluated worldwide in terms of
the environment, fair working conditions and human rights, as well as ethics and
sustainable procurement.

Online Annual Report 2021: „Linear to Circular“

Lenzing is also taking new, innovative paths in terms of its financial and
non-financial reporting. It will offer both its annual report and its sustainability
report in digital form from 2022. „We have set ourselves the goal of also reflecting
Lenzing’s high level of innovation in terms of its communications, and we are breaking
new and innovative ground in this area. This year, we are pleased to be able to present
our reports in digital and thereby interactive form for the first time. This not only
makes our reporting more user-friendly, but also takes place exactly where the majority
of our users are – online,“ comments Dominic Köfner, Vice President Corporate
Communications & Public Affairs. With the 2021 Annual Report bearing the title „Linear
to Circular“, the company is emphasizing its focus on carefully balancing its needs
with those of nature in the spirit of the circular economy. „Our innovations in
relation to the circular economy and biodegradability stem from a deep sense of
responsibility to our planet and a desire to act in ways that future generations can be
proud of. We hope that you will discover and share this sense of responsibility when
you read the Lenzing Annual Report 2021,“ notes Köfner. The Lenzing Annual Report 2021
is available at the following link: [5]https://reports.lenzing.com/annual-report/2021.

Outlook

The International Monetary Fund expects global growth of 4.4 percent for 2022. However,
the economic recovery from the deep recession caused by COVID-19 entails risks, and
continues to depend on the further course of the pandemic and its implications for
individual economic sectors. The sharp rise in energy costs and the problems of global
supply chains pose further economic challenges. In addition, it has become increasingly
important to monitor geopolitical risks. In particular, the military conflicts in
Ukraine will have a negative impact on the global economy. The currency environment is
expected to remain volatile in the regions relevant to Lenzing.

The extensive recovery in demand in the global textile and apparel industry also led to
a recovery in demand and rising prices on the world fiber market in 2021. In the
trend-setting market for cotton, signs are emerging of a slight increase in stocks in
the current 2021/2022 harvest season, although dynamics on international commodity
markets and problems in the global supply chain are likely to continue to have a
significant bearing on price trends in 2022. Prices for dissolving pulp increased by
more than 50 percent at the peak in 2021. The price as of December 31, 2021 amounted to
USD 905 per tonne.

Lenzing continues to anticipate rising demand for environmentally compatible fibers for
the textile and clothing industry as well as the hygiene and medical sectors. However,
the current positive market environment continues to be characterized by uncertainty
due to the ongoing pandemic. Visibility remains limited as a consequence. Following
significant cost increases in 2021, cost pressure on the energy, raw materials and
logistics sides is also expected to continue in the first quarters of 2022.

Taking into consideration the aforementioned factors and the imminent commissioning and
completion of the key strategic projects, which will already make an initial
contribution to earnings from the current financial year, the Lenzing Group expects
EBITDA for 2022 to lie significantly above the level of 2021.

 

Selected indicators of the Lenzing Group
EUR mn 2021 2020
Revenue 2,194.6 1,632.6
EBITDA (operating profit before depreciation and amortization) 362.9 192.3^1
EBITDA margin 16.5 % 11.8 %^1
Net profit/loss for the year 127.7 -10.6
Earnings per share in EUR 4.16 0.24
Cash flow from operating activities 394.0 48.9
CAPEX^2 844.3 668.8

 

  31/12/2021 31/12/2020
Net financial debt 977.0 471.4
Adjusted equity ratio^3 39.7 % 45.8 %
Number of employees (headcount) 7,958 7,358

 

1) Reclassification of capitalized borrowing costs, net interest from defined benefit
plans and commitment fees from EBIT/EBITDA to the financial result (see note 2 of the
consolidated financial statements as at December 31, 2021)
2) Capital expenditures: investments in intangible assets, property, plant and
equipment, and biological assets as per the consolidated statement of cash flows
3) Ratio of adjusted equity to total assets in percent

Photo download:
[6]https://mediadb.lenzing.com/pinaccess/showpin.do?pinCode=mmkn9snDWglK
PIN: mmkn9snDWglK

Your contact for Investor Relations:
Public Relations:
Sébastien Knus
Dominic Köfner Vice President Capital Markets
Vice President Corporate Communications & Public Lenzing Aktiengesellschaft
Affairs Werkstrasse 2, 4860 Lenzing, Austria
Lenzing Aktiengesellschaft
Werkstrasse 2, 4860 Lenzing, Austria Phone +43 664 8281576
E-mail [9]s.knus@lenzing.com
Phone +43 7672 701 2743 Web [10]www.lenzing.com
E-mail [7]media@lenzing.com
Web [8]www.lenzing.com

 

 

About the Lenzing Group

The Lenzing Group stands for the ecologically responsible production of specialty
fibers made from the renewable raw material wood. As an innovation leader, Lenzing is a
partner to global textile and nonwoven manufacturers and drives many new technological
developments. The Lenzing Group’s high-quality fibers form the basis for a variety of
textile applications ranging from elegant clothing to versatile denims and
high-performance sports clothing. Thanks to their consistent high quality,
biodegradability and compostability, Lenzing fibers are also highly suitable for
hygiene products and agricultural applications.

The Lenzing Group’s business model extends far beyond that of a traditional fiber
producer. Together with its customers and partners, Lenzing develops innovative
products along the value chain and creates added value for consumers. The Lenzing Group
strives for the efficient utilization and processing of all raw materials and offers
solutions to help redirect the textile and nonwovens sector towards a closed loop
economy. In order to slow the rate of global warming and to accomplish the targets of
the Paris Climate Agreement and the EU Commission’s „Green Deal“, Lenzing has developed
a clear vision: namely to make a zero carbon future come true.

Lenzing Group facts & figures 2021
Revenue: EUR 2.19 bn
Nominal capacity: 1,145,000 tonnes
Number of employees (headcount): 7,958

TENCEL(TM), VEOCEL(TM), LENZING(TM), REFIBRA(TM), ECOVERO(TM), LENZING MODAL(TM),
LENZING VISCOSE(TM), MICROMODAL(TM) and PROMODAL(TM) are trademarks of Lenzing AG.
Disclaimer: The above financial indicators are derived primarily from the Lenzing
Group’s IFRS consolidated financial statements. Additional details are provided in the
section „Notes on the financial performance indicators of the Lenzing Group“, in the
glossary to the Annual Report and in the Lenzing Group’s consolidated financial
statements.

 

^[1] Directive (EU) 2019/904 of the European Parliament and of the Council of June 5,
2019 on the reduction of the impact of certain plastic products on the environment
^[2] https://www.sciencedirect.com/science/article/pii/S0048969721031314
^[3]
http://changingmarkets.org/wp-content/uploads/2021/01/FOSSIL-FASHION_Web-compressed.pdf

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10.03.2022 This Corporate News was distributed by EQS Group AG. www.eqs.com

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Language: English
Company: Lenzing AG
4860 Lenzing
Austria
Phone: +43 7672-701-0
Fax: +43 7672-96301
E-mail: office@lenzing.com
Internet: www.lenzing.com
ISIN: AT0000644505
Indices: ATX
Listed: Vienna Stock Exchange (Official Market)
EQS News ID: 1298555

 
End of News EQS News Service

1298555  10.03.2022 

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