Lenzing aims to generate growth with Modal and Tencel

Lenzing aims to generate growth with Modal and Tencel

With sustainability a key focus, Austrian cellulosic fibre producer Lenzing has set out a new business strategy to generate profitable growth from its Modal and Tencel eco-friendly fibres and enhance its R&D activities with "new game-changing technologies".

The strategy, termed 'sCore TEN' aims to strengthen the company's core eco-friendly specialty fibres business, intensify cooperation with customers along the value chain, increase the share of specialty fibres to 50% of total revenue by 2020, expand its quality and technological leadership for man-made cellulose fibres, and open up new business areas. 

Lenzing expects demand for man-made cellulose fibres to increase by 5-6% per year until 2020 – nearly twice as fast as the global fibre market, driven by the world's rising population and higher prosperity in the emerging markets.

'sCore TEN' will see the group generate half of its revenue from its eco-friendly and viscose fibres by 2020, adding that it will further increase production capacities for Tencel depending on market requirements. 

It will also selectively enhance its R&D activities along the value chain with "new game-changing technologies", and open up new business areas based on the company's core competencies. 

Meanwhile, Lenzing plans to increase its pulp production volumes and/or expanding strategic co-operations, which is part of a programme that is designed to deliver EBITDA of EUR50m (US$53.3m) by 2017. 

In addition, the business plans to establish regional competence centres for product innovations and will move greater decision-making powers to these regions, bringing it closer to its customers. 

Ultimately, Lenzing aims to increase EBITDA by 10% annually and grow the return on capital employed (ROCE) to more than 10% by 2020. 

"Our objective is to safeguard and expand Lenzing's leadership role on the dynamic growth market for man-made cellulose fibres," says Lenzing CEO Stefan Doboczky. "To achieve this, we will focus more intensively on the most attractive segments in the specialty fibre business. Lenzing will put value before volume in the future. We aim at achieving volume growth." 

The company last week booked a 90.6% increase in net profit for the first nine months of the year, and said expects a "significant" improvement in annual earnings. Net profit reached EUR84.4m, while revenue was up 7.4% to EUR1.46m. 

Strong demand sends Lenzing 9-month profit soaring