Lenzing has been working on its sCore Ten strategy

Lenzing has been working on its sCore Ten strategy

Austrian cellulosic fibre producer Lenzing  has offered an optimistic outlook as it revealed a "substantial increase" in both revenue and earnings in the first nine months of 2016, thanks to significant improvements in cash flow and the continued implementation of a new group strategy.

Earnings in the period climbed to EUR162.2m (US$174m) from EUR84.8m in the year ago period. The positive impact of Lenzing's sCore Ten strategy, which focuses on profitable growth based on environmentally friendly speciality fibres, reflected in the results, it says.

"The Lenzing Group continues to implement the sCore TEN strategy with great discipline and the excellent business performance further helped our already strong balance sheet," says CEO Stefan Doboczky. "These nine months underpin our confidence and are an excellent basis for the implementation of our ambitious growth program."

Improved earnings boosted EBITDA margin to 20.3% in the first nine months compared to the prior year level of 14.4%. 

Consolidated revenue rose 8.2% in the period to EUR1.58bn. Next to slightly higher sales volumes it was primarily higher selling prices of all three fibre generations, Viscose, Modal and Tencel, and a more attractive product mix that contributed to higher revenues. In the third quarter it was specifically the sharp increase in viscose prices that fuelled the results, said Lenzing.

Looking to the remainder of the year, Lenzing said it expects to deliver "excellent business results" but noted viscose prices are expected to be notably lower than the high peaks of the third quarter due to seasonality effects.

Last month Lenzing, and Indian conglomerate Aditya Birla – who together produce 35% of the world's rayon-viscose – rose to the top of a global ranking that rates companies on their efforts to conserve forests.

Lenzing leads the field in forest-free viscose ranking

The company is also investing  EUR100m in its wood pulp production facilities in Europe, in a move that will see it increase its capacity by around 35,000 tons by early 2019.

Lenzing invests EUR100m in European pulp production