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Lenzing Sees Record-High Profits in First Half

Thanks to the right product mix, the right capacity utilization and higher selling prices, The Lenzing Group pulled profits higher than it’s ever had.

For the first half of the year, revenue jumped 11 percent to 1.15 billion euro ($1.36 billion), earnings before interest, tax, depreciation and amortization (EBTIDA) were up 38.8% to 270.7 million euro ($320 million), and profits soared 58.9% over the prior year period to 150.3 million euro ($177.68).

“The first half-year developed very well for the Lenzing Group, and we are pleased with the best half-year period in the company’s history. We will continue our disciplined implementation of the sCore TEN strategy,” Lenzing Group CEO Stefan Doboczky said.

The sCore TEN strategy, which Lenzing partially credits for its current success, has been about getting closer to the customer and further expanding its offering of specialty fibers.

Addressing that expansion, Doboczky said, “The expansion of new state-of-the-art production capacities for our specialty fibers is proceeding well and will support our customers in their own expansion efforts for products made of our botanic fibers. The decision to set up a subsidiary and acquire a respective landplot in Thailand is the next step in the implementation of this strategy.”

Lenzing said the subsidiary in Thailand, which will produce TENCEL, is scheduled for completion by the end of 2020, and will be part of helping Lenzing increase its share of specialty fibers as a percentage of revenue to 50 percent by 2020. The company is also expanding its Lenzing and Heiligenkreuz plants in Austria as well as its Mobile, Alabama facility.

“As of the middle of next year, customers will have an additional 25,000 tons of specialty fibers at their disposal,” Lenzing said. “The first buildings are also already being built in Mobile in order to complete the new production facility for TENCEL fibers by 2019.”

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When it comes to innovations, Lenzing followed its first cellulose fiber using recycled materials (which Inditex has already tapped for its product), Refibra, with the launch of EcoVero, a high-performance fiber with a favorable eco footprint.

Looking ahead, Lenzing sees a sign of greater growth to come.

“Assuming that fiber market conditions remain at current levels, we expect a substantial earnings improvement in 2017 compared to 2016,” Doboczky said.

As the company continued, “The demand for these cellulose fibers was very good in the first half year of 2017, with the long-term trend pointing towards further growth in viscose and, above all, wood-based cellulose specialty fibers. On the supply side, the market is not expected to see the entry of any notable new production capacity in 2017.”