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Lenzing Revenue Jumps on Strong Demand for Specialty Fibers

The Lenzing Group’s revenue growth is on a roll thanks to increasing demand for specialty fibers. The botanic cellulose fiber provider posted its best first-quarter results since 2012.

For the first quarter of 2016, Lenzing said revenue jumped 8.1% to 512.8 million euro ($581.1 million), owed in large part to high demand for its fibers and the market’s higher fiber prices. This adds to the company’s positive growth trend, with revenue rising 6 percent to $1.98 billion euro ($2.24 billion) for the full 2015.

“We are proud that we have got off to a very good start in the year 2016,” Lenzing CEO Stefan Doboczky, said. “The new Group strategy sCore TEN with its clear focus on profitable growth is taking hold. We are implementing the strategy very disciplined, which is having a noticeable effect on earnings already.”

Lenzing launched its new business strategy, sCore TEN, in November with the aim of aligning efforts around strengthening its core business, cooperating more closely with customers along the value chain and increasing the share of total revenue coming from specialty fibers to 50 percent by 2020.

In March, the company introduced a new organizational structure to best implement sCore TEN, adding three regional business units that will focus more closely on the fiber business.

The Group’s earnings before interest, tax, depreciation and amortization (EBITDA) for the first quarter grew 54.7% to 92.2 million euro ($104.5 million). Net profit nearly tripled to 44.1 million euro ($50 million).

“Assuming that the overall business environment remains unchanged, I continue to expect a substantial improvement in earnings for the entire financial year 2016,” Doboczky said.

Lenzing has plans to further increase its production capacities for specialty fibers, including Tencel, and is currently scouting possible locations. Decisions on new sites are expected in the third quarter of this year.

“The macroeconomic situation around the globe is expected to remain volatile,” Lenzing said. “As to the global fiber markets, high cotton inventories and the ongoing low oil prices continue to put downward pressure on cotton and polyester selling prices. However, a balance between supply and demand should prevail in the market segment of wood-based cellulose fiber. In particular, Lenzing expects a strong increase in demand for its specialty fiber.”