Specialty fibers look set to generate half of Lenzing’s revenue by 2020.
That’s according to a new business strategy unveiled Monday by the Austrian fiber manufacturer. Dubbed “Score Ten,” the plan seeks to expand the market for man-made cellulose fibers such as Tencel, Lenzing Modal and viscose as well as strengthen the company’s core business and intensify cooperation with customers along the value chain.
“Our objective is to safeguard and expand Lenzing’s leadership role on the dynamic growth market for man-made cellulose fibers,” Lenzing’s chief executive officer Stefan Doboczky said in a statement. “To achieve this, we will focus more intensively on the most attractive segments in the specialty fiber business. Lenzing will put value before volume in the future. We aim at achieving volume growth.”
A growing global population and rising prosperity in emerging markets are expected to drive demand for cellulose fibers, which Lenzing said will increase by 5 to 6 percent annually until 2020. In addition, the nonwovens industry is expected to expand at twice the rate of the textiles market.
For those reasons, the company plans to increase its own pulp production volumes, while a program aimed at strengthening commercial processes is designed to deliver positive EBITDA (earnings before interest, taxes, depreciation and amortization) of 50 million euro (or $53.6 million) by 2017.
In a bid to bring Lenzing closer to its customers, it will shift some decision-making powers to regional bases, where “competence centers” will also be set up to spur product innovations.
“Compared to the previous year, we want to continually increase EBITDA by 10 percent annually and aim to increase the return on capital employed (ROCE) to more than 10 percent by 2020,” Doboczky explained, adding, :At the same time, our objective is to keep net financial debt at a level which is less than 2.5 times EBITDA.”
Lenzing said it plans to finance all necessary investments required to implement this strategy from its own capital resources and simultaneously strive for a dividend payout of up to 50 percent of the group’s net profit.