EQS-News: Lenzing Group continued its recovery course in the 2024 financial year

• Revenue up 5.7 percent year-on-year to EUR 2.66 bn in 2024
• Performance program shows positive effect: EBITDA increased by 30.4 percent to EUR 395.4 mn, free cash flow of EUR 167 mn (after minus EUR 122.8 mn in 2023)
• Net result after taxes at minus EUR 138.3 mn (after minus EUR 593.0 mn in 2023) negatively impacted by one-off effects

Lenzing – The Lenzing Group, a leading provider of regenerated cellulose fibers for the textile and nonwoven industries, continued to improve its business performance in 2024 despite the expected slow market recovery. While Lenzing was able to significantly increase its sales volumes, the price level remained below that of the previous year. Logistics costs have risen significantly, and raw material and energy costs also remained high.

Revenue grew by 5.7 percent year-on-year to EUR 2.66 bn in 2024, mainly reflecting a higher level of revenue generated from fibers (+10 percent). The positive effects of the holistic performance program were the main factor driving the operating earnings trend. Earnings before interest, tax, depreciation and amortization (EBITDA) rose by 30.4 percent year-on-year to EUR 395.4 mn in 2024. The EBITDA margin increased from 12.0 percent to 14.8 percent. The operating result (EBIT) amounted to EUR 88.5 mn (compared with minus EUR 476.4 mn in 2023) and the EBIT margin stood at 3.3 percent (compared with minus 18.9 percent in 2023). The result before tax (EBT) amounted to minus EUR 42.0 mn (compared with minus EUR 585.6 mn in 2023).

“Thanks to the decisive measures taken, we were able to achieve a significant recovery in fiber volumes sold and a strong performance in the pulp business despite the weak market situation. These successes clearly show that our performance program is working. For this reason, our business performed better in 2024 than in 2023,” says Rohit Aggarwal, CEO of the Lenzing Group. “The markets remain challenging and uncertain, and fiber prices have not yet fully recovered. We will therefore continue to execute our program in a very focused manner. The Lenzing Group is and remains the leading integrated fiber company and, thus, the innovative force in the industry.”

The Lenzing Group Managing Board is currently executing the implemented comprehensive performance program with the overriding objective of achieving significantly enhanced long-term resilience to crises and greater agility in the face of market changes. The program initiatives are aimed primarily at an improvement in EBITDA and free cash flow generation through higher profitability and sustainable cost excellence. Extensive actions are being undertaken to strengthen sales activities, such as the acquisition of new customers for the most important fiber types and expansion in new markets, which are already having a positive impact in terms of revenue. In addition, the Managing Board anticipates significant cost savings, of which over EUR 130 mn were already realized in 2024.

In addition to the positive effects on revenue and earnings development, the performance program also significantly improved cash flow from operating activities to EUR 322.5 mn (after EUR 160.3 mn in 2023). Free cash flow also showed a clearly positive trend with an increase to EUR 167 mn (compared with minus EUR 122.8 mn in 2023).

Liquid assets decreased by 38.2 percent compared to December 31, 2023, to a level of EUR 451.7 mn as of December 31, 2024, mainly due to the repayment of private placements and other loans and borrowings. Capital expenditures for intangible assets, property, plant and equipment, and biological assets (CAPEX) amounted to EUR 156.3 mn in 2024 (compared with EUR 283.6 mn in 2023) due to a clear focus on maintenance and license-to-operate projects as part of the performance program, following significant investments in previous years.

The income tax expense amounted to EUR 96.3 mn in 2024 (compared with EUR 7.3 mn in 2023). Among other factors, this reflected the retroactive withdrawal from the Austrian tax group because of the interest of B&C Holding Österreich GmbH (group parent) falling below 50 percent for the 2022 assessment year. As a consequence, the Lenzing Group was required to pay a tax allocation of EUR 22.2 mn to the group parent in accordance with the group tax allocation agreement. This tax allocation was expensed in the reporting year. In addition, the income tax expense was influenced by the value adjustment of tax assets of individual Group companies and by currency effects due to the translation of tax items from the local currency into the functional currency^[1] in a volume of EUR 47.5 mn.

As a result, the Lenzing Group recorded a net result after taxes of minus EUR 138.3 mn (after minus EUR 593.0 mn in 2023). Earnings per share were minus EUR 4.06 (after minus EUR 20.02 in 2023).

Outlook

The IMF recently slightly upgraded its growth forecast for 2025 to 3.3 percent, but emphasizes the continued high extent of variation between regions as well as the high level of uncertainty. The latter is mainly due to geopolitical tensions, increasing protectionist tendencies, and a potential return of inflation.

In times of uncertainty, consumers are remaining cautious and thrifty, which is exerting a negative impact on consumer sentiment and on their propensity to spend.

The currency environment is expected to remain volatile in the regions relevant to Lenzing.

In the trend-setting market for cotton, analysts anticipate a slight increase of stock levels to around 18.7 mn tonnes in the current 2024/2025 harvest season, following a reduction of 0.9 mn tonnes in the previous season, according to preliminary estimates.

Earnings visibility remains limited overall.

Lenzing is still ahead of schedule with the implementation of the performance program. The company expects that the measures will also contribute to further earnings improvement in the coming quarters.

Taking the aforementioned factors into consideration, the Lenzing Group expects EBITDA to be higher in 2025 than in the previous year.

In structural terms, Lenzing continues to expect growth in demand for environmentally responsible fibers for the textile and apparel industry, as well as for the hygiene and medical sectors. As a consequence, Lenzing is very well positioned with its strategy and is driving ahead with not only profitable growth in specialty fibers but also the further expansion of its market leadership in the sustainability area.

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^[1] Predominant currency of the primary economic environment of a subsidiary