Leading producer of regenerated cellulosic fibers for the textile and nonwovens sectors worldwide, Lenzing Group of Austria, reported steady revenue of €2.52 billion (about $2.74 billion) in fiscal 2023, a tiny decrease from €2.57 billion the year before. Tensel, Lenzing Ecovero, and Veocel, the company’s major brands, kept their premium price despite a minor decline in demand for specialty fibers from brands and retailers and the availability of more market capacity. Throughout the year, revenue from co-products, the biorefinery, and dissolving wood pulp increased.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by a substantial 25.4% for the company to reach €303.3 million. However, compared to the €16.5 million earned in 2022, earnings before interest and tax (EBIT) declined, posting a loss of €476.4 million. This loss was mainly caused by €464.9 million in non-cash impairment losses, which were ascribed to persistent economic uncertainty and an increase in discount rates that reflected modifications in the interest rate environment. As a result, according to a press release from Lenzing, earnings after tax fell to a loss of €593 million from a loss of €37.2 million in 2022, with earnings per share falling to negative €20.02 from minus €2.75.

“To date, the Lenzing Group’s expected recovery in the key markets has not materialized. Stephan Sielaff, chief executive officer of the Lenzing Group, stated, “We are not satisfied with the result in 2023 due to subdued demand and the still sharply increased raw material and energy costs.” “In light of this, it is even more important that we took decisive action early on to keep Lenzing on course and strengthen its crisis resilience.”

The performance program’s implementation is going above and above schedule. The main goals of the program’s objectives are to increase EBITDA and produce free cash flow by fostering sustained cost excellence, higher revenue and margin expansion, and both. Apart from the evident benefits at the revenue level, the managing board anticipates yearly cost reductions exceeding €100 million, of which more than 50% will be realized starting in the current fiscal year.
“This performance program is an effective tool for addressing the present economic issues and strengthening Lenzing’s crisis-resilience. We are rather happy with how the program has developed thus far. According to Nico Reiner, CFO of Lenzing Group, “the cash flow trend in the second half of the year shows that these measures are taking effect.”

Lenzing produced positive free cash flow of €27.3 million in the third quarter of FY23 and €15.4 million in the fourth (as opposed to negative free cash flow of €132.3 million in the first quarter and negative free cash flow of €33.1 million in the second quarter of 2023).

In FY23, capital expenditures (CAPEX) on biological assets, property, plant and equipment, and intangible assets totaled €283.6 million, down from €698.9 million in FY22.