• Lenzing has reported record FY revenue and earnings due to a better product mix and higher selling prices in combination with a generally favourable market environment.
  • But it now expects "a challenging market environment in the standard viscose fibre business during the coming quarters."
Lenzing plans to increase the share of speciality fibres as a percentage of revenue to 50% by 2020

Lenzing plans to increase the share of speciality fibres as a percentage of revenue to 50% by 2020

Austrian cellulosic fibre producer Lenzing has reported a record performance during 2017 but warned its results for the year ahead will be lower than the last two years.

While expecting further strong demand in the wood-based cellulose fibre segment, Lenzing foresees a challenging market environment in the standard viscose fibre business during the coming quarters. The company cites anticipated negative exchange rate fluctuation, growing protectionist tendencies, and high prices for several key raw materials, including caustic soda, as among the challenges it will have to navigate. 

Its cautious outlook comes as net profit in the 12 months to 1 December climbed to EUR281.7m (US$348.2m), a rise of 23% from EUR229.1m in the year-ago period. The group continued to implement its sCore Ten strategy, which focuses on profitable growth based on environmentally-friendly speciality fibres.

Improved earnings boosted EBITDA margin to 22.2% in the period, up from 20.1% in the 2016 financial year.

Meanwhile, group revenue increased 5.9% to EUR2.26bn compared to EUR2.13bn last year.

Lenzing highlighted a series of  sustainability innovations launched during the year, including Tencel branded lyocell fibres with Refribra technology, Lenzing Ecovero branded viscose fibres, and Tencel Luxe branded lyocell filaments. The firm also opened a new textile application innovation centre (AIC) in Hong Kong, where new applications for Lenzing fibres will be developed and tested.

In addition, as part of its plans to increase the share of speciality fibres as a percentage of revenue to 50% by 2020, Lenzing plans to construct the next world-scale plant to produce its branded lyocell fibres in Thailand, alongside the capacity expansion in Heiligenkreuz, Austria, and the new plant in Mobile, Alabama.

"We are very positive about our chosen strategy as it will help us to be more resilient as we expect more headwinds in the upcoming quarters," said CEO Stefan Doboczky.