As expected, the recovery of the markets relevant to Lenzing proved to be sluggish. Although fiber sales volumes increased, fiber prices remained at a low level. The cost of raw materials and energy remained high. At the same time, logistics costs rose significantly in the reporting period.

Revenue grew by 4.8% year-on-year to EUR 1.31 bn in the first half of 2024, primarily thanks to higher revenue from fibers (+9.3%).

“The Lenzing Group’s business performance continues to point in the right direction, even without a significant recovery in the relevant markets,” comments Stephan Sielaff, Lenzing Group CEO. “We are continuing to place pressure on expenditure within the organization, and at the same time we are focusing on measures to strengthen our global sales activities. We are taking action on a consistent and proactive basis, and we are making the Lenzing Group not only more profitable but also more resilient in the medium term.”

Performance program is showing visible results

Since the end of 2022, the Lenzing Group has been implementing measures to reduce costs and, building on this, has developed a comprehensive performance program with the overriding objective of significantly enhanced long-term resilience to crises and greater agility in the face of market changes. Nico Reiner, Lenzing Group CFO, notes: “The performance initiatives are showing visible results and are primarily aimed at improving EBITDA and generating free cash flow through stronger revenue and margin growth as well as sustainable cost excellence. We expect an excess amount of EUR 100 mn, of which more than 50 percent will be effective from this financial year. The performance program is currently ahead of schedule.”

Capital expenditure on intangible assets, property, plant and equipment, and on biological assets (CAPEX) amounted to EUR 61.6 mn in the first half of 2024 (compared with EUR 136.5 mn in the first half of 2023), which is partly due to reduced investment activities. Compared to December 31, 2023, cash and cash equivalents increased by 13.0%, from EUR 731 mn as of December 31, 2023, to EUR 825.9 mn as of June 30, 2024.

Outlook

The IMF left its growth forecast for 2024 unchanged at 3.2% and raised it to 3.3% for 2025. Nevertheless, a number of risks for the global economy remain.

Forecasting future economic growth is rendered more difficult by smoldering global conflicts, trade disputes, and the uncertain outcome of elections, including the USA and the EU. Consumers are holding back on unnecessary purchases in an environment of rising prices, falling real wages in some cases, and concerns about economic growth. This is hampering a revival of the consumer apparel market, which is important for Lenzing. The currency environment is expected to remain volatile in the regions relevant to Lenzing.

In the trend-setting market for cotton, a reduction in stock levels and a stable price trend at a low level is expected for the remainder of the 2023/2024 harvest season. Earnings visibility remains limited overall.

Revenue and earnings in the first half of the year exceeded Lenzing’s expectations, despite the persistently difficult market. Lenzing is ahead of schedule with the implementation of its performance program. The company

expects that the measures will make a greater contribution to further improving earnings in the coming quarters.

Taking the aforementioned factors into consideration, the Lenzing Group confirms its guidance for the 2024 financial year of year-on-year higher EBITDA.

Structurally, Lenzing continues to anticipate growth in demand for environmentally responsible fibers for the textile and clothing industry as well as for the hygiene and medical sectors. As a consequence, Lenzing is very well positioned with its strategy and is pushing both profitable growth with specialty fibers and the further expansion of its market leadership in the sustainability area.