Lenzing, a producer of specialty fibres from renewable materials, posted 3.3 per cent decline in its revenue to 2.11 bn euro in FY19. The company reported that the decrease in performance was driven by lower selling prices as well as standard fibre volumes. Net profit decreased 22.4 per cent to 114.9 mn euro compared to 148.2 mn euro in FY18. Due to positive mix effects and more resilient specialty fibre prices in FY19, the share of specialty fibres reportedly increased from 45.5 per cent to 51.6 per cent of revenue.
“Lenzing and the entire textile value chain operated in a historically difficult market environment in 2019, which had a negative impact on our revenue and earnings development. The focus on specialty fibres has been contributing to the company’s resilience in the reporting period and we feel very well positioned with our corporate strategy. Our goals for 2024 underpin this confidence in our future”, Stefan Doboczky, Chief Executive Officer of the Lenzing Group, said.
The group reported that the expansion and modernisation of the dissolving wood pulp plants in Lenzing and Paskov, which started in 2017, will increase pulp production capacities by roughly 35,000 tons annually. The expansion in Lenzing was successfully implemented in the second half of 2019.
In 2019, Lenzing also started the construction of a state-of-the-art lyocell production facility in Thailand. Lenzing aims to achieve stable and profitable growth and to improve the ecological footprint of the textile and nonwovens industry by expanding the production of specialty fibres, as reported.
Compared with the previous year, the number of end products labelled with the Tencel brand nearly doubled to 173 mn. During the reporting year Lenzing announced its goal of a substantial reduction in CO2 emissions, for which investments of more than 100 mn euro in sustainable technologies and production facilities are earmarked in the coming years.
The group in its outlook for upcoming fiscal stated that the International Monetary Fund expects a slight recovery of global economic growth to 3.3 per cent in 2020, while at the same time warning of several risks. The increased frequency of extreme weather events and currently also the coronavirus crisis could have a strong impact on the global economy in 2020. The currency environment in the regions relevant to Lenzing is expected to remain volatile.
Demand on the global fibre markets is currently difficult to predict due to the spreading of the coronavirus, which is paralysing large parts of the textile value chain, especially in China. According to preliminary calculations, cotton stock levels will remain high in the 2019/2020 season. The price levels for cotton and polyester are expected to remain subdued, as group reported.