The managing board of Lenzing AG and its leadership team have carried out a comprehensive review of corporate strategy to maximize the use of growth opportunities and enhance the company’s position in sustainability and circularity.
As a result, Lenzing will sharpen its corporate focus, and prioritize projects that best serve its customers’ needs, while contributing positively to society and the environment. The core outcome of the corporate strategy has led to higher financial targets for 2027.
These include earnings before interest, taxes, depreciation and amortization (EBITDA) above 1 billion euros ($1.06 billion) versus 363 million euros ($383.54 million) in 2021, return on capital employed (ROCE) above 12 percent compared to 8.1 percent in 2021, and net financial debt/EBITDA below 2.5x versus 2.7x as of Dec. 31, 2021.
“We will continue to drive excellence and make significant investments while maintaining a balanced risk profile at all times,” Stephan Sielaff, CEO of Lenzing AG, said. “Based on this strategy, we will further enhance our financial performance by significantly increasing both EBITDA and ROCE by 2027, allowing us to drive up total shareholder returns substantially while consistently paying attractive dividends, assuming a healthy economic environment prevails.”
The strategy is aimed at improving financial performance and yielding attractive returns on investments. Lenzing will continue to leverage its leading position in the growing market for sustainable cellulosic fibers by innovating, developing, manufacturing and distributing high-quality premium products. As a key value driver, Lenzing will intensify its ingredient branding activities, as this has proven to be an effective means of communicating the “superior properties and sustainability advantages” of its nature-based fibers more broadly in the customer and consumer spheres.
By repositioning its product brands, the Lenzing Group said it has been sending a strong message to consumers since 2018. With Tencel and Lenzing Ecovero as umbrella brands for all specialty products in the textile segment, Veocel as the umbrella brand for all specialty nonwoven products and Lenzing for all industrial applications, the company is showcasing its strengths in a targeted manner.
“We will maintain our pioneering role by further strengthening the integration of recycling and thereby accelerate the transformation of the textile business from a linear to a circular model,” Robert van de Kerkhof, chief commercial officer, fibers, said. “As champions of sustainability, we know that moving towards a circular economy is vital in the textile and nonwoven industries.”
Christian Skilich, chief pulp officer, said as part of the strategy process, the company also reviewed its current energy mix. The result of this analysis is that, following the construction of the largest photovoltaic plant in Upper Austria, Lenzing will also invest in sustainable energy sources at all other sites.
After the successful start-up and market launch of key investments in Brazil and Thailand, as well as sustainability investments in existing plants during the last two years, the new corporate strategy is based on positive resonance within the market.
The managing board also decided to revise its dividend policy. As of the 2023 financial year, with payment scheduled for 2024, Lenzing plans to pay an annual dividend of at least 4.50 euro ($4.75) per share, adjusted for inflation.