EANS-News: Lenzing AG / Lenzing reports improved results in the third quarter and remains strategically on course CNE

11/4/2020, 7:30 AM (Source: euro adhoc)
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Analysts Comments/Quarterly Report/Company Information

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* Significant improvement in the third quarter after COVID-19-related slump on
  the fiber market
* Measures for structural earnings improvement with positive impact
* Strategic investment projects remain on track
* Hygiene Austria joint venture: Successful growth and continued focus on
  certified protective masks
* Lenzing wins the Austrian State Prize for Innovation with LENZING(TM) Web
  Technology

Lenzing - In the first three quarters of 2020, the Lenzing Group successfully
responded to the extremely difficult market environment of increased pressure on
prices and volume due to the COVID-19 crisis by implementing a broad package of
measures and remains fully on track in terms of its strategy. The cooperation
with partners along the value chains was intensified and Lenzing was agile and
flexible in adjusting production volume to demand. In addition, Lenzing also
intensified measures for structural earnings improvement to mitigate the effect
of the pressure on fiber prices and demand for fibers, and reduced its operating
costs significantly as a result.

The immediate effects of the COVID-19 crisis increased the pressure on prices
and volumes in the textile fiber segment, in particular in the second quarter of
2020. The increase in demand towards the end of the third quarter, primarily for
wood-based specialty fibers such as TENCEL(TM) Modal and LENZING(TM) ECOVERO
(TM), had a positive impact on the revenue and earnings development, but was
still below the level of the previous year. As a result, revenue declined by
26.1 percent to EUR 1.19 bn in the first three quarters of 2020. The earnings
development essentially reflects the decline in revenue. The implementation of
measures for structural earnings improvements in all regions mitigated this
effect. EBITDA (earnings before interest, tax, depreciation and amortization)
fell by 47.4 percent to EUR 140.4 mn in the first three quarters of 2020. The
EBITDA margin decreased from 16.5 percent to 11.7 percent. Net loss for the
period(1) amounted to EUR minus 2.8 mn (01-09/2019: net profit of EUR 117.1 mn)
and earnings per share to EUR minus 0.10 (01-09/2019: EUR 4.41).

"Lenzing reacted quickly to the increased pressure on prices and volume caused
by the COVID-19 crisis and consequently held its ground in this extremely
difficult market environment due to a comprehensive set of measures. In the
third quarter, we saw a broad recovery of the fiber market; in particular,
demand for our sustainably produced specialty fibers increased significantly",
says Stefan Doboczky, CEO of the Lenzing Group. "Strategically, we remain fully
on track despite the pandemic, and the implementation of our key projects in
Thailand and Brazil is progressing as planned," says Doboczky.

Zwtl.: Strengthening specialty fiber growth

CAPEX (expenditures for intangible assets and property, plant and equipment and
biological assets) roughly tripled to EUR 449.8 mn in the first three quarters
of 2020. This increase is a consequence of the progress of the major projects in
Brazil and Thailand. The Lenzing Group's investment activities continued to
focus on expanding the internal production of pulp, increasing the share of
specialty fibers and implementing the climate targets in line with the sCore TEN
corporate strategy during the reporting period.

The construction of the dissolving wood pulp plant in Brazil continues to
progress according to plan. After the final investment decision in December
2019, the Duratex Group acquired a 49 percent share in the in the joint venture
LD Celulose in the first quarter of 2020 as agreed. Lenzing holds 51 percent of
the shares. The expected Industrial CAPEX will be USD 1.38 bn. The project is
predominantly financed through long-term debt. The corresponding financing
contracts were concluded in the second quarter of 2020 as planned. IFC, a member
of the World Bank Group, and IDB Invest, a member of the IDB Group, support the
investment program of the joint venture LD Celulose. The export credit agency
Finnvera and seven commercial banks are also participating in the financing in
the amount of USD approx. 1.1 bn. The commissioning of the pulp plant is
scheduled for the first half of 2022.

Specialty fibers are Lenzing's great strength. The strategic target to generate
roughly 50 percent of revenue with specialty fibers in 2020 has already been
met. Lenzing aims for further organic growth in this area in order to be even
more resilient to volatile markets in the future. The focus of the coming years
will clearly be on the construction of the new, state-of-the-art lyocell plant
in Thailand, with the objective to increase the share of specialty fibers in the
revenue generated by the Segment Fibers to more than 75 percent by 2024. 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 during the reporting period. Production is expected to be
launched at the end of 2021.

Zwtl.: Sustainability at Lenzing - Stand up! Against business as usual

In its Sustainability Report 2019 [https://www.lenzing.com/sustainability-
report-2019], which was presented under the title "Stand up! Against Business as
usual" in March, the company sets out in detail how it is actively dealing with
the global challenges and contributing to mastering the problems caused by
climate change. With the implementation of the two key projects in Brazil and
Thailand, Lenzing is achieving an important milestone in its carbon neutrality
strategy. Both projects are designed as CO2 neutral plants. In addition, the
pulp plant in Brazil will be one of the world's most productive and most
efficient plants and feed more than 40 percent of the electricity generated into
the public grid as "green energy". In 2019, Lenzing committed to reducing its
greenhouse gas emissions per ton of product by 50 percent by 2030 (baseline:
2017) and to become climate neutral by 2050.

The introduction of the first TENCEL(TM) branded CarbonNeutral® fibers and the
foundation of the Renewable Carbon Initiative with the objective to speed up the
transition from fossil carbon to renewable carbon are another two successful
examples from the reporting period showing the path Lenzing and its partners are
taking towards carbon neutrality.

Zwtl.: First direct complete train from Vienna to China

Lenzing is currently testing shifting more freight traffic to rail in order to
optimize its own logistics processes with a view to achieving its climate
targets, and to further improve the delivery service level. In the third
quarter, Lenzing was the first Austrian company to send goods 100 percent "Made
in Austria" by train directly to China. Transport by rail is roughly twice as
fast as by the usual sea freight, which takes several weeks.

Zwtl.: State Prize for Innovation for LENZING(TM) Web Technology

The award of the Austrian State Prize for Innovation further underlines
Lenzing's achievements and its strategy to grow exclusively on the basis of
sustainable innovation. Lenzing convinced the jury with its LENZING(TM) Web
Technology. The novel process is a pioneering achievement and combines fiber and
nonwovens production in only one step, setting new standards in terms of
efficiency, circularity and ecological sustainability.

Zwtl.: Hygiene Austria joint venture: Production of high-quality hygiene and
protective equipment

Lenzing proved that it looks beyond fibers and meets the needs of its customers
and partners as well as consumers when the company founded Hygiene Austria LP
GmbH in the second quarter of 2020 to meet the population's increased demand for
high-quality hygiene and protective equipment. The new company, in which Lenzing
holds 50.1 percent and Palmers 49.9 percent, started producing and selling
mouth-nose and FFP2 masks from May 2020. In a next step, the product range was
extended to include masks for children. Hygiene Austria LP GmbH launched an
online shop [www.hygiene-austria.at], thus making another contribution to the
security of Austrian supply. Since the third quarter, the high-quality
protective masks for children and adults have also been available at Spar, Hofer
and the retailers of REWE Group in Austria. Based on its current production
infrastructure, the company can produce up to 12 mn protective masks per for the
population and the medical sector. The monthly capacity for CE-certified FFP2
masks currently amounts to up to 5 mn pieces.

Zwtl.: Guidance for 2020

The International Monetary Fund currently expects global economic output to
decline by 4.4 percent in 2020, thus revising its forecast of June slightly
upwards. The fiber market and the market for dissolving wood pulp came under
considerable pressure in the first half of 2020, and especially in the second
quarter of the year, as a result of the COVID-19 crisis. In the third quarter,
the fiber markets recorded a noticeable improvement, which was associated with a
positive development in demand and prices.

The further development will primarily depend on the impact of the COVID-19
pandemic on the global textile value chains and the effects on the consumer
sentiment, as well as on the currency markets. From today's perspective, the
Lenzing Group assumes that the positive trend will continue in the fourth
quarter and the revenue generation and operating performance in the fourth
quarter will exceed those of the third quarter of 2020. However, if the number
of infections should continue to rise and trigger lockdowns in more countries
and regions in the coming weeks and months, this could have a negative impact on
the revenue and earnings development of the Lenzing Group.

The comparatively solid business development in the first three quarters of the
year reassures the Lenzing Group in its chosen corporate strategy sCore TEN.
Lenzing will continue to implement its strategy with great discipline with a
particular focus on the strategic investment projects which both will yield a
significant contribution to earnings starting already from 2022.

Selected indicators of the
Lenzing Group                              01-09/2020                 01-09/2019
EUR mn
Revenue                                       1,194.9                    1,617.9
EBITDA (Earnings before
interest, tax,                                  140.4                      266.9
depreciation and
amortization)
EBITDA margin                                   11.7%                      16.5%
Net profit/loss for the                          -2.8                      117.1
period(1)
Earnings per share in EUR                       -0.10                       4.41
CAPEX(2)                                        449.8                      159.7
Free cash flow                                 -460.8                       11.4


                                          30.09.2020                  31.12.2019
Net financial debt                             823,3                       400.6
Adjusted equity ratio(3)                       40.1%                       50.0%
Number of employees                            7,241                       7,036


1) Attributable to Lenzing AG shareholders
2) Capital expenditures: expenditures for intangible assets and property, plant
and equipment and biological assets as per statement of cash flow
3) Ratio of adjusted equity to total assets in percent

Photo download [https://mediadb.lenzing.com/pinaccess/
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Further inquiry note:
Filip Miermans
Vice President Corporate Communications & Public Affairs
Lenzing AG
Phone: +43 664 8477802
E-mail: f.miermans@lenzing.com

end of announcement                         euro adhoc
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issuer:       Lenzing AG

A-4860 Lenzing
phone:        +43 7672-701-0
FAX:          +43 7672-96301
mail:         office@lenzing.com
WWW:          http://www.lenzing.com
ISIN:         AT0000644505
indexes:      WBI, ATX
stockmarkets: Wien
language:     English

EAX0001    2020-11-04/07:30

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