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    LNZ   AT0000644505

LENZING AG

(LNZ)
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PRESS RELEASE : Lenzing AG / Earnings more than doubled in the first half of 2021

08/04/2021 | 01:31am EDT
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  Corporate news transmitted by euro adhoc with the aim of a Europe-wide 
  distribution. The issuer is responsible for the content of this announcement. 
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Mid Year Results/Company Information 
 
Highlights - 
 
* Strong operating result: EBITDA at EUR 217.8 mn, cash flow from operating 
  activities at EUR 199.8 mn 
* Major strategic projects continue fully on track - production start of the 
  lyocell plant in Thailand in the fourth quarter of 2021 
* Start of strategic cooperation agreement for textile recycling with Södra 
* New milestones in the implementation of group-wide carbon neutrality: EUR 200 
  mn investment in existing locations in Asia 
* Guidance 2021: Lenzing expects EBITDA of at least EUR 360 mn 
 
Lenzing - The Lenzing Group reported a significant improvement in revenue and 
earnings in the first half of the year. Growing optimism in the textile and 
apparel industry and the ongoing recovery in retail caused a substantial 
increase in demand and prices on the global fiber market, in particular at the 
beginning of the current financial year. 
 
Revenue rose by 27.5 percent to EUR 1.03 bn in the first half of 2021. This 
increase is primarily attributable to higher viscose prices, which stood at more 
than RMB 15,000 in May thanks to significantly higher demand for fibers, 
especially in Asia. The focus on wood-based specialty fibers such as TENCEL(TM), 
LENZING(TM) ECOVERO(TM) and VEOCEL TM(TM) branded fibers also had a positive 
impact on the revenue development; the share of specialty fibers in fiber 
revenue rose to 72.8 percent in the reporting period. The negative impact of 
more unfavorable currency effects was consequently more than offset. The 
earnings development essentially reflects the positive market development and 
was additionally reinforced by measures to improve efficiency. Energy and 
logistics costs increased significantly throughout the entire reporting period. 
EBITDA (earnings before interest, tax, depreciation and amortization) more than 
doubled and amounted to EUR 217.8 mn in the first half of 2021 (compared to EUR 
95.6 mn in the first half of 2020). The EBITDA margin rose from 11.8 percent to 
21.1 percent. Net profit for the period amounted to EUR 96.1 mn (compared to a 
net loss of EUR minus 14.4 mn in the first half of 2020) and earnings per share 
to EUR 3.06 (compared to EUR 0.06 in the first half of 2020). 
 
"Lenzing had a very strong first half-year. The demand for our sustainably 
produced specialty fibers once again developed excellently," says Stefan 
Doboczky, CEO of the Lenzing Group. "Strategically, we remain fully on track. 
The largest investment program in the company's history is proceeding according 
to plan and we still expect to start up the new lyocell plant in Thailand in the 
fourth quarter. The cooperation with Södra and our significant investment in the 
existing locations are the next milestones on our path towards a carbon-free 
future. With our climate goals, we are a frontrunner in the production industry 
and in the fiber industry in particular," Doboczky adds. 
 
Gross cash flow more than tripled to EUR 199.5 mn in the first half of 2021 
(compared to EUR 63.9 mn in the first half of 2020). This increase was above all 
due to the earnings development. Cash flow from operating activities amounted to 
EUR 199.8 mn (compared to EUR minus 17.7 mn in the first half of 2020). Free 
cash flow amounted to EUR minus 224.3 mn (compared to EUR minus 285.7 mn in the 
first half of 2020) due to the investment activities related to the projects in 
Thailand and Brazil. CAPEX (expenditures for intangible assets, property, plant 
and equipment and biological assets) increased by 58.5 percent to EUR 426 mn 
during the reporting period, of which roughly half was financed out of cash flow 
from operating activities. The renewed strong increase in investments is 
attributable to the implementation of the key projects. 
 
Zwtl.: Strengthening specialty fiber growth 
 
The construction of the pulp mill in Brazil continues to proceed according to 
plan despite the challenging developments related to COVID-19. The start-up of 
the pulp mill is still scheduled for the first half of 2022. The new mill will 
strengthen backward integration and, consequently, Lenzing's specialty fiber 
growth in line with the sCore TEN strategy. 
 
Specialty fibers are Lenzing's great strength. The objective is to generate more 
than 75 percent of fiber revenues from business with wood-based specialty fibers 
such as lyocell and modal fibers by 2024. The focus of this strategic target is 
on the construction of a new state-of-the-art lyocell plant in Thailand. The 
investment for the new plant with a capacity of 100,000 tons amounts to roughly 
EUR 400 mn. Construction work started in the second half of 2019 and went 
according to plan in the reporting period. The recruiting and onboarding of new 
employees is also progressing successfully. Production is scheduled to start 
towards the end of 2021. 
 
In addition, Lenzing is investing more than EUR 200 mn in its production sites 
in Purwakarta (Indonesia) and Nanjing (China) to convert existing standard 
viscose capacity into capacity for environmentally responsible specialty fibers. 
In Nanjing, Lenzing will establish the first wood-based fiber complex in China 
that is independent from coal as an energy source. At the same time a line of 
standard viscose will be converted to a TENCEL TM branded modal fibers line 
making the Chinese plant a 100 percent wood-based specialty fiber site by the 
end of 2022. Investments in Lenzing's site in Indonesia will make this facility 
fully compliant with the EU Ecolabel standards. As a result, the site will 
become a pure specialty viscose supplier as of 2023. Upon completion of these 
investments Lenzing will boost its share in specialty fibers as a percentage of 
fiber revenues to well above the targeted 75 percent already by 2023. 
 
Zwtl.: Vision of a zero-carbon future 
 
With the implementation of its science-based targets, the Lenzing Group actively 
contributes to combating the problems caused by climate change. In 2019, Lenzing 
made a strategic commitment to reducing its greenhouse gas emissions per ton of 
product by 50 percent by 2030. The vision is to be climate-neutral by 2050. The 
two key projects in Brazil and Thailand are important milestones on this 
journey. Thanks to its excellent infrastructure, the location in Thailand can be 
supplied with sustainable biogenic energy. In addition, the mill in Brazil will 
feed more than 50 percent of the electricity generated into the public grid as 
renewable energy. The investments at the existing Asian locations are also in 
line with Lenzing's decarbonization goals. 
 
In the first half of 2021, the company announced the construction of the largest 
ground-mounted photovoltaic plant in Upper Austria on an area of 55,000 m² at 
the Lenzing site. Construction is scheduled to start in the second half of 2021. 
In addition, Lenzing is investing GBP 20 mn (equal to EUR 23.3 mn) to build a 
new, state-of-the-art wastewater treatment plant at its site in Grimsby (United 
Kingdom). The investment is part of the company's plans to reduce wastewater 
emissions by 2022. 
 
The cooperation with Södra, a Swedish pulp producer, marks another milestone in 
Lenzing's efforts to achieve its ambitious climate and sustainability goals. The 
two leading global suppliers, which have been proactively driving circular 
economy in the fashion industry for many years, are joining forces to give the 
issue another boost and to make a decisive contribution to addressing the global 
textile waste challenges. A capacity expansion for pulp from post-consumer waste 
is also planned. The goal is to recycle 25,000 tons of textile waste per year by 
2025. 
 
The presentation of the first TENCEL(TM) branded lyocell fiber made of orange 
pulp and wood sources as part of the new TENCEL(TM) Limited Edition initiative 
with the Italian company Orange Fiber as well as the introduction of the first 
carbon-neutral cellulosic fibers on the global nonwovens market under the VEOCEL 
(TM) brand are other recent results of product innovation, which serve as 
examples for the ambitious efforts of Lenzing and its partners on the issues of 
climate change and circular economy. 
 
Zwtl.: Momentum through legislation 
 
Pollution of the environment - especially marine pollution - is one of the 
biggest problems of our time. The fashion industry has an extremely negative 
impact on the environment with its fast fashion business model and the growing 
consumption of fossil resources. The use of fossil-based synthetic fibers in 
textiles has roughly doubled over the last 20 years. More than half of all 
textiles worldwide contain polyester today, and the share keeps increasing. This 
is also demonstrated by a report of the non-profit organization Changing Markets 
Foundation. 
 
Consequently, Lenzing welcomes specific measures taken by the EU in fighting 
plastic waste, for example those related to the Single-Use Plastics Directive 
(EU) 2019/904[1] [#_ftn1]. The EU Commission specifies in the recently issued 
guidelines for implementation of the directive which products fall within the 
scope of the directive, thus providing clarity in the joint fight of the EU 
member states against environmental pollution from plastic waste. Lenzing's 
wood-based, biodegradable cellulosic fibers such as those of the VEOCEL(TM) 
brand comprise a sustainable and innovative solution to this man-made problem. 
The Single-Use Plastics Directive stipulates uniform labelling requirements for 
some of the single-use plastic products on the packaging or the product itself 
starting in July 2021. They encompass feminine hygiene products and wet wipes 
for personal and household care containing plastic. 
 
Zwtl.: EcoVadis Platinum status 
 
Lenzing received several awards for its achievements during the reporting 

(MORE TO FOLLOW) Dow Jones Newswires

August 04, 2021 01:30 ET (05:30 GMT)

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Financials
Sales 2021 2 203 M 2 582 M 2 582 M
Net income 2021 132 M 155 M 155 M
Net Debt 2021 1 204 M 1 411 M 1 411 M
P/E ratio 2021 20,4x
Yield 2021 0,49%
Capitalization 2 697 M 3 159 M 3 162 M
EV / Sales 2021 1,77x
EV / Sales 2022 1,47x
Nbr of Employees 7 633
Free-Float 50,0%
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Number of Analysts 5
Last Close Price 101,60 €
Average target price 122,58 €
Spread / Average Target 20,7%
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Managers and Directors
Stefan Doboczky Chief Executive Officer
Thomas Obendrauf Chief Financial Officer
Peter Edelmann Chairman-Supervisory Board
Stephan Sielaff Chief Technology Officer
Helmut Bernkopf Member-Supervisory Board