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Lenzing posts H1 2020 revenue decline due to Covid-19

Cellulosic fibre-based specialist Lenzing Group has reported a decline in its revenues for the first half of 2020 due to increased pressure on prices and volumes resulting from the Covid-19 crisis.

In a statement, the company said that the immediate effects of the Covid-19 crisis further increased price pressure on textile fibres across the entire product range. As a result, revenue declined by 25.6% from €1.09 billion to €810.2 million in the first half of 2020.

In addition to price effects, Lenzing said, slightly higher demand for fibres in the medical and hygiene segments reduced the losses, but could not offset them. Earnings before interest, taxes, depreciation (EBITDA) fell by 46.6% to €96.7 million, while the EBITDA margin decreased from 16.6% to 11.9%. Net profit for the period amounted to €1.5 million compared to €78.8 million and earnings per share to €0.06 compared to €2.97 in the first half-year of 2019.

“The Covid-19 crisis has an impact on the entire textile and apparel industry and further increased the price and volume pressure on the global fiber market. Likewise, Lenzing (@LenzingAG) was also confronted with this historically difficult market environment,” said Stefan Doboczky, Chief Executive Officer of the Lenzing Group.

He added: “Strategically, we are still fully on track and the implementation of our key projects in Thailand and Brazil is progressing according to plan. The successful conclusion of the financing agreements for the construction of the pulp plant in Brazil was a highlight of the first half of the year.”

Looking forward

The Lenzing Group suspended on 24 March its result forecast for 2020 as a consequence of the global Covid-19 crisis and the resulting very limited visibility; at that time, Lenzing expected the result for 2020 to be below the level of 2019.

The company cited the International Monetary Fund and said that the IMF projects “the greatest recession of the global economy in the course of a century”. Global economic output is expected to contract by 4.9% in 2020.

Whilst it remains difficult to give a precise outlook for 2020, Lenzing assumes from today’s perspective that the revenue generation and operating performance of the remaining two quarters will exceed those of the second quarter.

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