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Lenzing Doubles Profit in Q1

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Cost-cutting measures, a marketing push for Tencel and Modal and a better product selection helped Austrian fiber manufacturer Lenzing Group more than double its profit in the first quarter of 2015 compared to the previous year.

The company announced Monday that in spite of “unsatisfactory selling prices,” it achieved net earnings of 16.6 million euros, or $18.5 million, skyrocketing by 115.3% from last year’s 7.7 million euros ($8.6 million).

Consolidated revenue rose 5.1 percent to 474.6 million euros, or $527.9 million, for the quarter ended March 31, while earnings before interest, taxes, depreciation and amortization reached 59.6 million euros ($66.3 million), an increase of 28.7% over the year-ago period’s 46.3 million euros ($51.5 million).

“We successfully implemented initial price increases and significantly increased the share of specialty fibers in the product mix. Moreover, we laid the groundwork for generating further earnings improvements against the backdrop of an ongoing difficult market environment thanks to comprehensive structural and cost optimization measures,” Lenzing CEO Peter Untersperger explained in a statement.

He said the cost reduction program, ExcelLenz, which was implemented in 2013, is “proceeding according to plan” and is on track to generate annual savings of up to 160 million euros ($178.2 million) as of 2016. “Furthermore,” he added, “we are adjusting technical services to the declining investment activity of the Lenzing Group, thus serving as the basis for important productivity increases.”

An improved product mix led to Lenzing’s average fiber selling prices before currency effects rising to 1.68 euros per kilogram in Q1 2015, compared with 1.56 euros per kilogram a year ago. The company said that while the viscose fiber market showed a slight uptick at the start of Q2 and that demand for Tencel and Modal was “very gratifying,” it remains to be seen whether this development is sustainable, but it expects to operate at full capacity to meet the “ongoing high volume demand” for its man-made cellulose fibers.

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