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Lenzing Leaps in First Half With 83.9% Profit Increase

Austrian fiber supplier Lenzing, which manufactures Tencel, modal and viscose, said Wednesday that its sCore Ten strategy, announced earlier this year, is already paying off.

Despite largely unchanged production volumes, the group’s consolidated revenue rose 8.3% to 1.03 billion euros ($1.2 billion) in the first half of 2016, as a result of higher fiber selling prices and an improved product mix compared to the same period a year ago. Lenzing also gained from the increase of spot market prices for viscose fibers.

Net profit for the first half rallied by 83.9% to reach 94.6 million euros ($106 million) versus last year’s 51.4 million euros ($58 million), while earnings per share were up 76.2% to 3.49 euros ($3.92).

“The Lenzing Group looks back at a very successful first half-year 2016,” said Stefan Doboczky, chairman and chief executive officer. “On the one hand, we benefitted from a positive market environment. On the other hand, we continued our implementation of sCore Ten, our new group strategy, in a very disciplined and intense fashion. We further optimized the product mix and profited from higher selling prices thanks to ongoing strong demand for all Lenzing fibers. All this was clearly reflected in our half-year 2016 business results, and therefore we also expect a substantial improvement of our business performance for the full year compared to 2015.”

In early August Lenzing announced plans to invest 100 million euros ($112 million) to expand its production capacities for specialty fibers by a total of 35,000 tons by 2018, mainly in Austria. The company also revealed the next generation of Tencel fibers, using cotton fabric waste as a key raw material, and said Zara parent company Inditex would be the first retailer to test it out.

Looking ahead to the second half of the year, Lenzing expects “a friendly market environment for the global fiber industry.” To that end, the company projects “excellent business results in the financial year 2016 and consequently a substantial earnings improvement compared to the financial year 2015.”