“The COVID-19 crisis has a severe impact on the entire textile and apparel industry and has further increased the pressure on prices and volumes in the global fibre market.”
Cellulosic fibre-based specialist Lenzing Group has reported a decline in its revenues for the first quarter of 2020.
The company’s revenue declined by 16.7% in comparison with the prior-year quarter and amounted to €466.3 million.
In a statement, the company said that the main reason was the development of prices for standard viscose and other standard fibres and the impact of the Covid-19 crisis further increased pressure on prices and volumes.
Earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter decreased by 24.3% to €69.6 million and the EBITDA margin declined from 16.4% to 14.9%. Net profit for the period was down 58.6% to €17.7 million and earnings per share amounted to €0.84 compared with €1.65 in the first quarter of the previous year.
“The COVID-19 crisis has a severe impact on the entire textile and apparel industry and has further increased the pressure on prices and volumes in the global fibre market. Lenzing held its ground in this extremely difficult market environment and continues to drive the implementation of its key projects in Brazil and Thailand,” said Stefan Doboczky, Chief Executive Officer of the Lenzing Group (@LenzingGroup).
He added: “To meet the strong demand for hygiene and protective products for the population and for medical personnel, we intensified the collaboration with partners along the value chain in the first quarter of 2020. Today we are proud that we have achieved our goal of an industrial production of high-quality protective masks together with our partner Palmers and have therefore been able to support Austria and Europe in combating the pandemic as best possible.”
Investing in speciality fibres
CAPEX (expenditures for intangible assets and property, plant and equipment and biological assets) more than tripled to €138.6 million in the first quarter of 2020. This increase is a consequence of the progress of the major projects in Brazil and Thailand, Lenzing said.
The company also said that the implementation of the two most important long-term investment projects to strengthen internal pulp supply and to increase the share of specialty fibres in line with the sCore TEN corporate strategy is progressing according to plan. After the decision to build the dissolving wood pulp plant in Brazil with a capacity of 500,000 tons, the Duratex Group acquired a 49% share in the joint venture LD Celulose as agreed in the first quarter of 2020. Lenzing holds 51% of the shares.
In the first quarter of 2020, Lenzing completed the second pilot production plant for its Tencel Luxe branded filament yarn. According to the company, the new facility at the Lenzing site with a total investment of €30 million provides sufficient capacity for the development of commercial programs and further fibre applications.
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