A significantly more challenging market environment led to a decline in revenue as well as earnings compared with the record results of the previous year. This was primarily caused by lower selling prices for standard viscose, exchange rate effects as well as higher raw material and energy costs.
Group revenue declined by 3.7 percent compared with the previous year to EUR 2.18 bn. The predicted challenging market environment for standard viscose, plus less favorable exchange rates and a slight decline in sales volume were the key contributing factors. EBITDA (earnings before interest, tax, depreciation and amortization) was down by 24 percent to EUR 382 million due to price increases for key raw materials and higher energy and personnel costs. The EBITDA margin dropped from 22.2 percent in the 2017 financial year to 17.6 percent in the reporting year. EBIT (earnings before interest and tax) fell by 36 percent to EUR 237.6 mn, leading to a lower EBIT margin of 10.9 percent (2017: 16.4 percent). Net profit for the year after one-off effects dropped by 47.4 percent from EUR 281.7 mn in the previous year to EUR 148.2 mn. Earnings per share
equaled EUR 5.61 (2017: EUR 10.47). The Management Board and the Supervisory Board will pro- pose a stable dividend of EUR 3.00 per share plus a special dividend of EUR 2.00 per share at the upcom- ing Annual General Meeting. In total, the paid dividend will amount to EUR 5.00 per share, corresponding to a dividend payment to shareholders of roughly EUR 133 mn.
“Although 2018 proofed to be more challenging than the preceding years, it was, nevertheless, the fourth best year in the company’s history. We consistently worked on the strategic imperatives of our sCore TEN corporate strategy in order to raise our pulp integration, enhance customer intimacy, increase the share of specialty fibers in revenue and to invest in new technologies and business areas”, says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “The very positive development of our specialty business in an expected challenging market environment for standard viscose confirms our strategic direction and our ambitious plans. Thanks to its specialty strategy and its strong brands based on innovation and sustainability, the Lenzing Group is significantly more resilient today than only a few years ago. However, we are not immune to global developments, and further efforts and investments in specialty fibers are required to become even more resistant to market fluctuations”, Doboczky adds.
SOLID BALANCE SHEET, FURTHER INCREASE IN CAPEX
Adjusted equity increased by 1.7 percent to EUR 1.55 bn. The adjusted equity ratio decreased from 61.2 percent as at December 31, 2017 to 59 percent as at December 31, 2018. ROCE (return on capital employed) declined to 10.3 percent in 2018 (2017: 18.6 percent). Despite higher capital expenditures, net financial debt remained at a low level, totaling EUR 219.4 mn at the end of 2018 (December 31, 2017: EUR 66.8 mn). Capital expenditures (CAPEX) of the Lenzing Group continued to increase to EUR 257.6 mn in 2018 (2017: EUR 238.8 mn.)
Trading working capital rose by 7.2 percent to EUR 444.4 mn and cash flow from operating activities increased by 3.3 percent to EUR 280 mn.
SUSTAINABILITY DRIVEN BY INNOVATION
The textile and nonwoven industries are faced with fundamental ecological challenges, and as a leading producer of wood-based specialty fibers, the Lenzing Group bears a special responsibility. In 2018, the company decided to continue along its ambitious path and to invest roughly EUR 100 mn in sustainable manufacturing technologies and production facilities by 2022 in order to further strengthen its closed-loop model and support its customers in replacing resource-intensive and environmentally harmful solutions.