UpdateLenzing places hope in specialty fibres, new plant in Austria

21 March 2014 10:33  [Source: ICIS news]

LONDON (ICIS)--Lenzing attributed a sharp decline in sales and net profit to falling fibre prices but was confident it will see a recovery in 2014 with the aim of expanding the share its specialty fibres business has in relation to total sales, the Austrian textile and polymer manufacturer said on Friday. 

Lenzing reported earlier on Friday net profit at €50m in 2013, a fall of 72.4% compared with the previous year, while sales slipped by 8.68% to €1.91bn. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 36% year on year to €225.4m, said Lenzing.

Most of the decline in sales was attributable to a drop in fibre prices, which declined by 13% year on year to €1.70/kg, as well as the divestment of its plastics division.

The company said “hardly any change” had been noticed in the first weeks of 2014 given the “difficult business environment” in which it operates.

“No major improvement is in sight with respect to the price situation on the global fibre market. The reasons are the historically high cotton inventories, high cotton production and surplus capacities in China for manufacturing man-made cellulose fibres,” added Lenzing.

Nevertheless, the company said it had already felt positive results in the first months of 2014 from its cost savings programme and a “marketing offensive” for specialty fibres as well as adjustments in its strategy to “minimise risk.”

The company places hope in the start-up of its new fibres plant in Lenzing, Austria, according to Friedrich Weninger, head of fibre production.

Lenzing's CEO, Peter Untersperger, said: “We are massively reducing costs at the same time adding impetus to the marketplace by promoting our specialty fibres Tencel and Lenzing Modal. Our market and quality offensive is being supported since the beginning of the year by the newly created functional Group organization.”

According to the company, two-thirds of the cost savings will come from reducing material costs and overhead expenses as well as reducing operating expenses. The company already undertook redundancies at the end of 2013.

Additional reporting by Nurluqman Suratman

By: Jonathan Lopez
+44 208 652 3214

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