The Lenzing Group continued its dynamic growth trend of the previous
years by posting record results in 2011. Despite a significant
weakening of the global fiber market in the second half of 2011,
Lenzing once again achieved double-digit growth rates in sales and
earnings, and surpassed the threshold of EUR 2 billion in consolidated
sales for the first time in its history. Operating margins also
improved again from the already high level achieved in 2010 and set a
new, absolute record.
Consolidated sales in 2011 rose by 21.2 per cent to EUR 2.14 billion,
up from EUR 1.77 billion in the prior year. This dynamic sales growth
can be attributed to higher average selling prices in its core fiber
business, higher fiber shipment volumes, the first-time full-year
consolidation of the pulp plant Biocel Paskov acquired in May 2010 as
well as higher sales in all other business areas.
“Our dynamic growth path and specialty strategy led by the fibers
Lenzing Modal and TENCEL once again paid off in 2011. Whereas sales
with standard viscose fibers increased by close to 20 per cent
year-on-year, we sold some 30 per cent more TENCEL fibers and close to
40 per cent more Lenzing Modal fibers than in the prior year”,
explains Lenzing Chief Executive Officer Peter Untersperger.
The large-scale market success of these two specialty fibers enabled
the company to partially detach itself from the volatile market trends
of 2011, according to CEO Untersperger.
Lenzing rigorously pressed ahead with its capacity expansion program
in 2011. As a result, the annual nominal production capacity of the
Lenzing Group rose by about 8 per cent, from 710,000 tons of man-made
cellulose fibers at the beginning of 2011 to 770,000 tons at the turn
of 2011-12. Capital expenditures of the group totalled EUR 196.3
million in 2011, somewhat below the comparable prior-year figure of
EUR 230 million which had also included the acquisition costs for
Biocel Paskov. This development was due to the postponement of
investment projects as at the reporting date.
Despite the current level of investments, the net financial debt of
the Lenzing Group was reduced by almost half, declining to EUR 159.1
million at the end of 2011 from the previous year’s figure of EUR
307.2 million. The cash flow still reached a level of EUR 113.4
million despite the investments made. “With an adjusted equity ratio
of close to 45% and a net financial debt comprising one-third of
annual EBITDA, we are very well positioned financially. Lenzing is
largely autonomous with respect to its ability to finance growth steps
in the upcoming years”, says Chief Financial Officer Thomas G.
Winkler.
Segment Fibers full capacity use
According to preliminary estimates, global fiber production rose by
4.1 per cent to a new record level of 79.1 million tons in 2011.
Production of man-made cellulose fibers also reached an all-time high
of 4.6 million tons, up 4.2 per cent from 2010.
The business development of the Segment Fibers in 2011 was
characterized by strong demand for Lenzing fibers, which was fuelled
even more by record cotton prices in the first half of the year. The
market for standard textile viscose fibers significantly cooled off in
the second half of the year, which did not impact fiber shipment
volumes but affected selling prices.
The specialty fibers Lenzing Modal and TENCEL as well as the nonwovens
sector were hardly impacted by this development. Throughout the year
Lenzing succeeded in raising average prices for all Lenzing fibers by
close to 17 per cent compared to the previous year, to EUR 2.22 per
kg.
“All our fiber production facilities were running at full capacity
throughout the year. The additional fiber volumes generated in the
course of the year by the second expansion stage of the plant in
Nanjing (China), the capacity expansion for Lenzing Modal fibers
produced at the Lenzing site and TENCEL fibers manufactured at the
Heiligenkreuz (Burgenland) facility were very successfully placed on
the market”, reports Chief Operating Officer Friedrich Weninger, a
member on the Management Board.
The pulp plant Biocel Paskov (Czech Republic) acquired within the
context of the Lenzing Group’s further backward integration was
rapidly expanded in the reporting year to enable production of both
paper pulp and dissolving pulp. Some 60,000 tons of dissolving pulp
were already produced in Paskov in 2011 and largely used for fiber
production within the Lenzing Group.
The Segment Plastics Products developed satisfactorily in 2011,
showing an EBITDA margin of 9.5 per cent. A new record for shipment
volumes was posted during the year under review against the backdrop
of very good demand.
The Segment Engineering was also able to optimally take advantage of
the fundamentally positive mood in the capital goods market during the
year, achieving an EBITDA margin of 8.4 per cent. Lenzing Technik
profited from both the extensive investment activity of the Lenzing
Group as well as from growing demand on the part of external
customers.
Outlook
Once again the Lenzing Group expects a good year in 2012, which should
see quarterly development in a mirror-inverted manner. However, in
terms of margins the current financial year will not be able to fully
match the exceptional record year of 2011.
For the time being prices for Lenzing’s standard viscose fibers should
stabilize at a low level. In the course of 2012 Lenzing anticipates a
higher price level than in the first quarter as a result of rising
demand for both textile and nonwoven applications.
Good volume demand is expected for Lenzing Modal, which should
continue to ensure a fair price premium vis-à-vis standard viscose
fibers and cotton. However, the considerable increase in the supply of
modal is resulting in temporary price adjustments compared to the 2011
price levels. With respect to TENCEL, Lenzing foresees ongoing strong
demand for textile and nonwoven applications and a largely stable
price premium vis-à-vis standard viscose fibers.
As a consequence of significantly higher fiber shipment volumes but in
the light of lower average prices in comparison to the prior year
level, sales should rise to a level of between EUR 2.2 billion and EUR
2.3 billion in 2012. EBITDA should range between EUR 400 million and
EUR 480 million and EBIT is expected to range between EUR 285 million
and EUR 365 million, depending on the development of fiber and raw
material prices as well as the overall global economic environment.
Lenzing will press ahead with its dynamic expansion program as
planned, involving investments totalling EUR 350 million in 2012. The
good earnings situation and continued high liquidity will enable the
company to propose a dividend to the shareholders amounting to EUR
2.50 per share, i.e., about 25 per cent of the consolidated net income
for the 2011 financial year.