Preliminary figures released by Austria based producer of specialty viscose fibres indicate that its consolidated sales declined marginally in 2014 from 2013.
Consolidated revenues of the Lenzing Group slipped slightly to €1.86 billion in 2014 as against €1.91 billion in its previous year.
“This drop can be attributed to the continuing downward pressure on fibre prices as a consequence of the global surplus capacities of viscose fibre producers,” Lenzing said in a statement.
It also added that due to the changed environment, expansion plans at its subsidiaries, PT. South Pacific Viscose (Indonesia) and Lenzing Nanjing Fibers (China) will be adjusted to reflect new market conditions.
In turn, this will lead to adjustments in the measurement of goodwill, property, plant and equipment and other intangible assets of these Group companies of a negative €94 million.
These non-cash measures will not have any negative effect on the liquidity and net financial debt of the Lenzing Group.
According to Lenzing, on a medium-term basis, this will lead to an improvement in the Group’s consolidated balance sheet.
As a result of these one-off effects, Lenzing Group is expected to be post a loss of €14 million and EBIT is expected to amount to about €22 million.
On an operational level, Lenzing said, it succeeded in countering the prevailing trend in the industry.
According to preliminary figures, the Lenzing Group reported consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) of about €240 million in 2014.
This increase of almost 25 per cent year on year was achieved due to sustainable cost savings generated within the context of the excelLENZ program.
Substantial improvements in the product mix and the successful coming on stream of the new Tencel fibre production facility at the Lenzing site also helped the company grow its EBITA.
Additionally, it was also supported by new Tencel applications for denim fabrics, shirts, home textiles and new nonwoven products.
Furthermore, the Supervisory Board of Lenzing AG approved the reorganisation of its engineering and maintenance operations, workshops and Lenzing Technik announced in November 2014.
These measures will lead to additional significant cost savings and productivity increases of about 15 per cent in the company’s technical departments.
These cost reductions will be based on setting up a centralised maintenance unit, adapting engineering capacities to the lower investment activity of the Lenzing Group in the future.
