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Lenzing Profits Leap in 2016 on Higher Fiber Prices

Thanks to higher selling prices for its fibers, The Lenzing Group had a successful 2016.

“In a very positive market environment for wood-based cellulose fibers we successfully expanded our market position in specialty fibers. Furthermore, we optimized our production processes, which also contributed to the better earnings and enhanced our financial strength,” Lenzing Group CEO Stefan Doboczky said.

Revenue grew 8% in fiscal 2016 to 2.13 billion euro ($2.3 billion). Earnings before interest, tax, depreciation and amortization (EBITDA) jumped 47.6% to 428.3 million ($461.75 million). Profit for the group in the year swelled 78.9% to 229.1 million euro ($247 million). The strong performance also helped Lenzing double its cash flow from operating activities in the year.

The company sold 1.4% more fibers, or 978,000 tons. Specialty fibers as a share of total group revenue rose to 42%, up from 40.5% the prior year period. Revenue from specialty fibers for garments went up as a result of greater use of Tencel in high quality applications, Lenzing said.

Looking even further into the future and expanding Tencel’s scope, Lenzing presented Refibra last year, which it also refers to as “reborn Tencel fiber.”

“In addition to wood, this new generation of lyocell fibers uses recycled scraps from the textile industry as the basic raw material,” Lenzing said. Zara, the world’s fast fashion leader, was the first to bring to market garments made with Refibra.

For 2017, Lenzing will continue to build on the success of its sCore TEN strategy launched in 2015. The aim was to focus on the company’s core business of man-made cellulose fibers, intensify cooperation with customers along the value chain and increase the share of specialty fibers to 50% of total revenue by 2020. So far, it seems, things are working out well.

“We will continue our disciplined implementation of sCore TEN and put particular focus on the expansion of our specialty fiber capacities and on sustainability-drive innovation,” Doboczky said. “We look positively at the year 2017 and expect a considerable earnings improvement once again provided there is no significant change in the business environment.”