Austrian firm Lenzing’s revenue at $2.74 bn in FY23

Austria’s Lenzing Group, a leading global producer of regenerated cellulosic fibres for the textile and nonwovens industries, has reported a stable revenue of €2.52 billion (approximately $2.74 billion) in fiscal 2023, slightly down from €2.57 billion in the previous year. Despite a slight decrease in demand for specialty fibres from brands and retailers and the presence of additional market capacity, the company’s flagship brands—Tencel, Lenzing Ecovero, and Veocel—maintained their price premium. Revenue from dissolving wood pulp, biorefinery, and co-products saw growth during the year.

The company experienced a significant 25.4 per cent increase in earnings before interest, tax, depreciation, and amortisation (EBITDA), reaching €303.3 million. However, earnings before interest and tax (EBIT) suffered, recording a loss of €476.4 million, a stark contrast to the €16.5 million earned in 2022. This loss was primarily due to non-cash impairment losses of €464.9 million, attributed to ongoing economic uncertainties and a rise in discount rates reflecting changes in the interest rate environment. Consequently, earnings after tax plummeted to a loss of €593 million from a loss of €37.2 million in 2022, with earnings per share dropping to minus €20.02 from minus €2.75, Lenzing said in a press release.

“The anticipated recovery of markets relevant to the Lenzing Group has failed to materialise to date. Subdued demand and the still sharply increased raw material and energy costs have led to a result in 2023 that we are not satisfied with,” said Stephan Sielaff, chief executive officer of the Lenzing Group. “This makes the measures we have taken decisively and at an early stage to keep Lenzing on track and further boost its resilience to crises all the more significant.”

The implementation of the performance programme is exceeding plan. The programme initiatives are primarily aimed at improving EBITDA and at generating free cash flow through stronger revenue and margin growth, as well as sustainable cost excellence. In addition to the clearly positive effects at the revenue level, the managing board expects annual cost savings in excess of €100 million, of which well over 50 per cent will be effective from the current financial year onwards.
“This performance programme is a powerful instrument to tackle the current economic challenges and enhance Lenzing’s resilience to crises. We are very satisfied with how the programme has unfolded so far. The cash flow trend in the second half of the year shows that these measures are taking effect,” said Nico Reiner, Lenzing Group CFO.

In the third and fourth quarters of FY23, Lenzing generated positive free cash flow of €27.3 million and €15.4 million respectively (compared with minus €132.3 million in the first quarter and minus €33.1 million in the second quarter of 2023).

Capital expenditure on intangible assets, property, plant and equipment, and on biological assets (CAPEX) amounted to €283.6 million in FY23 (compared with €698.9 million in FY22).