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 "significantly improved" first-half earnings and sales thanks to the disciplined implementation of its new group strategy. 

Earnings in the six months to the end of June climbed to EUR94.6m (US$106.8m) from EUR51.4m 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, is reflected in the results, it says. 

"The Lenzing Group looks back at a very successful first half-year 2016," says CEO Stefan Doboczky. "On the one hand, we benefited from a positive market environment. On the other hand, we continued our implementation of sCore Ten, our new group strategy, in a very disciplined and intense fashion. We further optimised the product mix and profited from higher selling prices thanks to ongoing strong demand for all Lenzing fibres. All this was clearly reflected in our half-year 2016 business results, and therefore we also expect a substantial improvement of our business performance for the full year compared to 2015." 

Improved earnings boosted EBITDA margin to 18.9% in the first half compared to the prior-year level of 13.2%. 

With largely unchanged production volumes, consolidated revenue rose 8.3% to EUR1.03bn, thanks to higher fibre selling prices and an attractive product mix. The company also profited from the increase of spot market prices for viscose fibres.

Looking to the second half of the year, Lenzing said it expects "a friendly market environment" for the global fibre industry, with the market for wood-based cellulose fibres "developing especially favourably" due to strong demand and stable supply.

Last month, Lenzing launched a new recycled Tencel fibre using cotton fabric waste as a key raw material. Inditex will be the first retailer to test the fibre, with other brands expected to follow.

New Tencel fibre based on cotton waste fabrics

The company has also invested more than EUR100m (US$111.5m) in its production facilities in Europe, in a move that will see it increase its capacity for speciality fibres by 35,000 tons by mid-2018.

Lenzing invests EUR100m in speciality fibre expansion