Lenzing’s 2024 First Half Revenue Grew by 4.8%
The Lenzing Group, a supplier of regenerated cellulose fibres for the textile and nonwovens industries, announced a gradual improvement in its business performance in the first half of 2024. The company’s revenue grew by 4.8% year-on-year to EUR 1.31 billion in the first half of 2024 primarily thanks to higher revenue from fibers (+9.3 percent).
As expected, the recovery of the markets relevant to Lenzing proved to be sluggish. Although fiber sales volumes increased, fiber prices remained at a low level. The cost of raw materials and energy remained high. At the same time, logistics costs rose significantly in the reporting period.
The trend in the operating result primarily reflects the positive effects of the comprehensive performance program. Earnings before interest, tax, depreciation and amortization (EBITDA) rose by 20.4 percent from EUR 136.5 mn in the first half of 2023 to EUR 164.4 mn in the same period of 2024. The EBITDA margin increased from 10.9 to 12.5 percent.
“We Focus on Measures to Strengthen Our Global Sales Activities”
“The Lenzing Group’s business performance continues to point in the right direction, even without a significant recovery in the relevant markets,” comments Stephan Sielaff, Lenzing Group CEO. “We are continuing to place pressure on expenditure within the organization, 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.”
Since the end of 2022, the Lenzing Group has been implementing measures to reduce costs and, building on this, has developed a comprehensive performance program with the overriding objective of significantly enhanced long-term resilience to crises and greater agility in the face of market changes. Nico Reiner, Lenzing Group CFO, notes: “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 EUR 100 mn, of which more than 50 percent will be effective from this financial year. The performance program is currently ahead of schedule.”
Lenzing Suspends Existing Dividend Policy Indefinitely
On April 11, the Lenzing Group Managing Board passed a resolution to indefinitely suspend the existing dividend policy of at least EUR 4.50 per share. B&C Group and Suzano S.A. 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% interest in Lenzing from B&C.
The IMF left its growth forecast for 2024 unchanged at 3.2 percent and raised it to 3.3 percent for 2025. Nevertheless, a number of risks for the global economy remain. Forecasting future economic growth is rendered more difficult by smoldering global conflicts, trade disputes, and the uncertain outcome of elections, including the USA and the 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.
Lenzing Group New CEO; Rohit Aggarwal
In addition, Lenzing recently announced changes to its Board of Directors. Effective 1 September 2024, Rohit Aggarwal will join the Management Board as CEO. Stephan Sielaff, outgoing CEO of the company, will leave Lenzing at the end of August 2024 by mutual agreement with the Supervisory Board.
Incoming CEO Rohit Aggarwal is a strategic business economist and global leader in the industry, has several decades of experience in leading positions in the textile and chemical industry. Rohit Aggarwal has a sound understanding of the strategic development of international markets and the establishment of efficient management teams through global management positions in Europe, the USA and Asia. Thanks to his broad experience in the global textile, non-woven and fiber markets, he is well versed with Lenzing’s core business in all its facets, both in terms of content and geography.
Lenzing Supervisory Board Chairman Cord Prinzhorn: “This summer, we have managed a highly professional and smooth transition from Stephan Sielaff to his successor. I would like to thank Stephan for his achievements in paving a path of strong improvements during a period of multiple challenges for the company. With Rohit Aggarwal, we have found the right person to manage the ambitious tasks that still lie ahead.”
Stephan Sielaff: “Today we see a better Lenzing as a result of the massive efforts of the whole team worldwide in a still highly challenging market environment. I would like to express my greatest respect for all those who accompanied me on my journey in Lenzing – I am convinced that we have laid the foundation for an outstanding future for Lenzing.”
Rohit Aggarwal: “I would like to thank Stephan Sielaff for the careful handover and look forward to working very closely with the Lenzing team in the future. Together with the entire management board and all Lenzing colleagues we will guide the company towards a successful future as a leading player in the sustainable textile industry. However, we must not forget that the markets remain challenging, and we must continue to put all our efforts into the turnaround of Lenzing.”
