Austrian firm Lenzing Group's revenue surges 4.8% in H1 FY24

Austria’s Lenzing Group, a leading supplier of regenerated cellulose fibres for the textile and nonwovens industries, has reported a 4.8 per cent year-on-year (YoY) revenue growth for the first half of fiscal 2024 (H1 FY24), reaching €1.31 billion (approximately $1.429 billion), driven primarily by increased revenue from fibres.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) saw a substantial rise of 20.4 per cent, climbing from €136.5 million in H1 FY23 to €164.4 million in the same period of 2024. Consequently, the EBITDA margin improved from 10.9 per cent to 12.5 per cent, the company said in a press release.

The operating result (EBIT) showed a significant turnaround, amounting to €18.9 million, compared to a negative EBIT of €12 million in H1 FY23. The EBIT margin increased to 1.4 per cent from minus 1 per cent in the previous year. Earnings before tax (EBT) also improved markedly, standing at minus €22.3 million, up from minus €76.1 million in the prior-year period. Earnings per share reflected this positive trend, improving to minus €1.84 from minus €3.92 in H1 FY23.

Cash flow from operating activities surged to €202.8 million in the first half of the year, a remarkable turnaround from minus €29.2 million in the same period of 2023. Free cash flow also showed a clearly positive trend, increasing to €141.5 million, compared to minus €165.4 million in H1 FY23.

The IMF left its growth forecast for 2024 unchanged at 3.2 per cent and raised it to 3.3 per cent for 2025. Nevertheless, a number of risks for the global economy remain. Forecasting future economic growth is rendered more difficult by smouldering global conflicts, trade disputes, and the uncertain outcome of elections, including the US and the European Union (EU).

Consumers are holding back on unnecessary purchases in an environment of rising prices, falling real wages in some cases, and concerns about economic growth. This is hampering a revival of the consumer apparel market, which is important for Lenzing. The currency environment is expected to remain volatile in the regions relevant to Lenzing.

In the trend-setting market for cotton, a reduction in stock levels and a stable price trend at a low level is expected for the remainder of the 2023-2024 harvest season. Earnings visibility remains limited overall.

Revenue and earnings in the first half of the year exceeded Lenzing’s expectations, despite the persistently difficult market. Lenzing is ahead of schedule with the implementation of its performance programme. The company expects that the measures will make a greater contribution to further improving earnings in the coming quarters.

Lenzing Group has reaffirmed its guidance for the 2024 financial year, anticipating higher year-on-year EBITDA. The company continues to see structural growth in demand for environmentally responsible fibres, particularly in the textile, clothing, hygiene, and medical sectors. With its strategic focus on profitable growth through specialty fibres and further expansion of its market leadership in sustainability, Lenzing is well-positioned for continued success.

“The Lenzing Group’s business performance continues to point in the right direction, even without a significant recovery in the relevant markets,” said Stephan Sielaff, Lenzing Group CEO. “We are continuing to place pressure on expenditure within the organisation, and at the same time we are focusing on measures to strengthen our global sales activities. We are taking action on a consistent and proactive basis, and we are making the Lenzing Group not only more profitable but also more resilient in the medium term.”

“The performance initiatives are showing visible results and are primarily aimed at improving EBITDA and generating free cash flow through stronger revenue and margin growth as well as sustainable cost excellence. We expect an excess amount of €100 million, of which more than 50 per cent will be effective from this financial year. The performance programme is currently ahead of schedule,” said Nico Reiner, Lenzing Group CFO.

On April 11, the Lenzing Group managing board passed a resolution to indefinitely suspend the existing dividend policy of at least €4.50 per share.

B&C Group and Suzano SA announced on June 12 that they are entering a long-term partnership in relation to B&C’s majority interest in Lenzing AG. On the basis of this agreement, Suzano is acquiring a 15 per cent interest in Lenzing from B&C.

Also, Lenzing recently announced personnel changes on its managing board. The supervisory board of Lenzing AG has appointed Walter Bickel as member of the managing board and chief transformation officer of Lenzing until December 31, 2025, with effect as of April 15, 2024.

Stephan Sielaff, Lenzing CEO, will leave the company, at the latest, when his contract expires at the end of March 2025, in order to devote himself to new tasks. The Lenzing Group supervisory board has appointed Rohit Aggarwal as a new member of the managing board of the Lenzing Group.

He will take over responsibility for the fibres business area in the course of the third quarter and will succeed Stephan Sielaff as CEO of the Lenzing Group after his onboarding. Aggarwal, a graduate in business administration, possesses decades of professional experience in leading positions in markets relevant to Lenzing and is consequently fully familiar with Lenzing’s core business in all its content-related and geographical facets.

Fibre2Fashion News Desk (DP)