Austrian cellulosic fibre producer Lenzing has seen increased price pressure on textile fibres across its range as a result of the pandemic which weighed on sales and earnings in its first-half.
Revenue declined by 25.6% to EUR810.2m (US$960m) in the six months ended 1 June. In addition to price effects, Lenzing also felt the decline in demand for textile fibres in all regions.
The slightly higher demand for fibres in the medical and hygiene segments reduced the losses, but could not offset them. As such, net profit amounted to EUR1.5m, compared to EUR78.8m a year earlier.
The implementation of measures for structural earnings improvements in all regions and making use of a short-time work model, which was temporarily introduced by the Austrian Federal Government, mitigated the negative effect.
“The Covid-19 crisis has an impact on the entire textile and apparel industry and further increased the price and volume pressure on the global fibre market,” says CEO Stefan Doboczky. “Likewise, Lenzing was also confronted with this historically difficult market environment and focused on the health and safety of their employees, the continuation of long-term partnerships and ensuring their sustainable business development.
“Strategically, we are still fully on track and the implementation of our key projects in Thailand and Brazil is progressing according to plan. The successful conclusion of the financing agreements for the construction of the pulp plant in Brazil was a highlight of the first half of the year.”
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By GlobalDataWhile not being able to provide a precise outlook for 2020, from today’s perspective Lenzing expects revenue generation and operating performance of the remaining two quarters to exceed those of the second quarter.
