03 September 2001 12:30 [Source: ICIS news]
LONDON (CNI)--Austrian fibres producer Lenzing warned on Monday that 2001 earnings are expected to fall below last year's levels despite improvements in the first half.
It said that as a result of the slowdown in fibres demand and no signs of a recovery in the global economy, Lenzing's results for the six months to 30 June cannot be extrapolated into the second half.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) increased 7% to Euro45m ($41m) for the first half of the year, on sales also up 7% at Euro334.3m. Operating profits were 13% higher at Euro24.4m.
Jochen Werz, Lenzing's board spokesman, said: "The good development during the first semester is especially positive against the background of more difficult overall conditions, with dramatically higher raw material costs and declining cyclical fibre activities."
He added that prices for caustic soda, an important raw material for Lenzing, have more than doubled since last year, leading to a negative impact of Euro13.5m.
A Lenzing spokeswoman said most of the improvements in first half earnings were attributed to positive developments at the fibres sites in Lenzing. In addition, Lenzing Plastics registered particularly positive results, she added. Full financial details were not disclosed at divisional level.
Lenzing AG, the parent company which comprises the fibres and paper businesses in Upper Austria, reported higher sales for the six month period. The new viscose fibre production line at the Lenzing site started up on schedule in the summer (Q2/Q3), the group said.
Development of the loss-making Lyocell division was slowed by slacker demand from textile customers particularly in the US. However, Lenzing said the division achieved a one third increase in sales. Sales of non-wovens and ProViscose "are taking a satisfactory course", it said, and marketing activities for Lyocell fibres are continuing intensively.
Lenzing Fibres Corp (LFC) continued to fight a shrinking US market, with imports of low price textiles from Asia and the cyclical downswing in the US slowing demand. The results, which are still negative, were also hit by higher raw material and energy costs.
The Indonesian unit South Pacific Viscose (SPV) was impacted by lower sales volumes and high caustic soda prices. "On account of the difficult market environment, it was impossible to pass on the high raw material costs," Lenzing stated.
Lenzing Technik, the engineering and systems construction division, increased sales by some 50%, boosted by a doubling in orders since the beginning of the year. The results were "above plan", thanks to "the satisfactory development of the profit contributions and contained fixed costs", the group said.
Profits and sales increased at Lenzing Plastics, driven by strong demand for polytetrafluoroethylene (PTFE) products. The division's good results are expected to continue, aided by an increased focus on more profitable products, Lenzing said.
At Lenzing Paper, the first half results "increased considerably", buoyed by lower pulp prices and lower waste paper prices.
Lenzing added: "After international competitors withdrew from the market, a growing demand for Lenzing fibres is expected, of which the site at Lenzing and the US subsidiary LFC, in particular, should benefit."
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