⬤ Revenue up 5 percent year-on-year to EUR 2 bn in the first three quarters of 2024
⬤ Performance program well ahead of budget: EBITDA up +20.3 percent to EUR 263.7 mn, free cash flow of EUR 191.8 mn (compared with minus EUR 138.2 mn in the first three quarters of 2023)
⬤ External costs – raw materials, energy, logistics – remain challenging
⬤ Lenzing confirms EBITDA guidance for 2024
Lenzing – In the first three quarters of 2024, the Lenzing Group, a major provider of regenerated cellulosic fibers for the textile and nonwovens industries, kept improving its business performance bit by bit. In contrast, the markets that were important to Lenzing recovered slowly. Fiber prices stayed low during the reporting period, despite a sustained increase in fiber sales volumes. The cost of electricity and raw materials remained high, and logistical expenses increased dramatically as well.
In the first three quarters of 2024, revenue increased by 5% year over year to EUR 2 billion. The main driver of this growth is higher fiber revenue (+10.9 percent).
The performance program’s beneficial benefits were the primary determinants of the operating earnings trend. In the first three quarters of 2024, earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 20.3% year over year to EUR 263.7 million. From 11.7 percent to 13.5 percent, the EBITDA margin grew. The EBIT margin was 2 percent, up from 0.6 percent in the first three quarters of 2023, and the operating result (EBIT) was EUR 38.3 million, up from – EUR 10.5 million in the first three quarters of 2023. EBT (earnings before tax) was down EUR 33.4 million, down from EUR 86.9 million in the first three quarters of 2023.
The Lenzing Group’s CEO, Rohit Aggarwal, states that the company is “continuing its recovery course.” “We are concentrating on bolstering our international sales efforts while maintaining stringent cost control. At the same time, we are reinforcing the Lenzing Group’s position as a leading integrated fiber group by adjusting our organizational structure to the altered market conditions.
Due to a tax effect, the net loss after tax dropped to minus EUR 111.1 million (from minus EUR 96.7 million in the first three quarters of 2023). Compared to EUR 9.8 million in the first three quarters of 2023, the income tax expense for the first three quarters of 2024 was EUR 77.7 million. The exit from the Austrian tax group was primarily caused by B&C Holding Österreich GmbH (the group parent) dropping its participation percentage to less than 50%. According to the group tax allocation agreement, which was expensed in the third quarter, the Lenzing Group must thus pay a tax transfer of EUR 25.8 million to the group parent. The value adjustment of each Group company’s tax assets and currency impacts from the conversion of local currency tax items into the functional currency also had an impact on the income tax expense.
Compared to − EUR 4.90 in the first three quarters of 2023, earnings per share came to minus EUR 3.50. Compared to EUR 61.1 million in the first three quarters of 2023, the reporting period’s substantially improved cash flow from operating activities came to EUR 287 million. With an increase of EUR 191.8 million (from – EUR 138.2 million in the first three quarters of 2023), free cash flow showed a distinctly positive trend.
With the primary goal of greatly increasing long-term resilience to crises and increased agility in the face of market changes, the Lenzing Group has been adopting cost-cutting measures since the end of 2022 and has since built upon this by developing a complete performance program.
Nico Reiner, Lenzing Group CFO, notes: “The implementation of our performance program is currently well ahead of schedule. The program initiatives are aimed at improving EBITDA and at generating free cash flow through enhanced profitability, as well as sustainable cost excellence. We expect annual cost savings in excess of EUR 100 mn, of which more than 50 percent will already be effective from this financial year onward.”
Capital expenditure on intangible assets, property, plant and equipment, and on biological assets (CAPEX) amounted to EUR 95.5 mn in the first three quarters of 2024 (compared with EUR 199.7 mn in the first three quarters of 2023), partly due to a reduced level of investment activities. Compared with December 31, 2023, liquid assets increased by 16.4 percent to EUR 851.2 mn as at September 30, 2024.
