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Lenzing Group Reports Successful First Half of 2015

The Lenzing Group released results for the first half of 2015 Tuesday, noting increased revenues, higher sales and improved earnings.

Consolidated revenue grew by 6.2% in the first half-year from 900 million euro ($1.03 billion) to 955.4 million euro ($1.09 billion), crediting currency effects, slightly higher sales volumes and an improved product mix for this increase.

“Lenzing delivered a solid performance in the first half of 2015. The underlying reasons were the currency effects which turned out to be very positive for us due to the weakness of the euro, good fiber demand in the second quarter and our improved cost position,” Stefan Doboczky, CEO and chairman of the management board of Lenzing AG, said.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 37.7% to 126.5 million euro ($145.1 million), up from 91.9 million euro ($105.4 million) last year. The EBITDA margin was 13.2%, compared to 10.2% in 2014’s first half.

Investments in intangible assets, property, plant and equipment (CAPEX) totaled 26 million euro ($29.8 million) in the first half of 2015, a drop from 64.2 million euro ($73.6 million) in the first half-year of 2014.

Following completion of the expansive Tencel fiber production facility in Lenzing, Austria last year, the company cut its investment activity. Investments were focused on mandatory maintenance work and quality and optimization measures in fiber and pulp production. The company is currently focused on investments that will optimize costs and quality in order to combat continuously uncertain market conditions and increasing quality demands.

Lenzing also reported further development of the market for Tencel in the first half of 2015. Demand for Tencel used in jeans (denim) was consistently strong and the number of processors integrating it into their denim fabrics doubled over the last year.

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According to the company, the market environment for the man-made cellulose fiber industry improved in the middle of 2015, compared to the end of the first quarter.

Until now, solid volume demand was followed by an initial spike in fiber selling prices. The company identifies the troubled geopolitical situation, the economic situation in China and the unforeseeable exchange rate fluctuations as factors of uncertainty for the second half of the year.

“Viscose fiber prices in China, the world’s largest sales market for fibers, increased towards the end of the second quarter due to a more favorable supply-demand ratio related to several local viscose fiber production plants being shut down for environmental reasons. We remain cautious concerning prospects for the rest of 2015, in light of the fact that these capacities could be put into operation again,” Doboczky said.

However, looking ahead the Lenzing Group is predicting further improvement in its operating results compared to 2014 and an increased reduction in its net financial debt.

Medium and long-term growth rates in the man-made cellulose fiber sector are also expected to be higher than that of the global fiber market.