Lenzing: 2022 fiscal year hit by inflation and energy crisis
The Austrian cellulose fibre specialist Lenzing saw its operating profit fall by a third in the last financial year, while rising material and energy costs boosted turnover.
The group posted a 16.9% increase in turnover for the year to €2.57 billion, while its Ebitda fell from €362.9 million to €241.9 million over the year. The wood pulp fibre specialist has seen its cost structure change over the past year: energy costs represent 17% of total costs in 2022 compared to 12% in 2021, while the share of costs for the chemicals needed to process the fibres has risen by five points to 20%.
While turnover increased, fibre demand fell by 10.5% year-on-year from 909,000 tonnes in 2021 to 814,000 tonnes in 2022, compared to 899,000 tonnes in the pre-crisis year 2019. The figures also show that demand has dropped by 19.1% between the beginning and the end of 2022. However, Lenzing's fibre business accounts for 80% of its activity, alongside wood pulp production.
"Lenzing has had to face very strong headwinds due to the multiple crises of the past year. Nevertheless, we can look to the future with great confidence, as the medium- and long-term need for sustainable innovations remains intact and the demand for environmentally friendly fibres will continue to grow," says managing director Stephan Sielaff. "We will structurally adapt our cost base and come out stronger from this crisis. Despite all the external challenges to which we have reacted quickly and decisively, we can also be very proud of outstanding successes such as the implementation of our investment projects in Thailand and Brazil."
After increasing the production capacity of its Brazilian and Thai plants in 2022, the group is working this year on the transformation of its sites in Nanjing, China and Purwakarta, Indonesia. More generally, Lenzing will continue to implement measures to adapt to the current difficulties in 2023: in the third quarter, Lenzing announced the implementation of a vast reorganisation and cost reduction programme. These measures should enable the company to save around 70 million euros per year.
In a geopolitical context that remains uncertain for the current financial year, Lenzing is cautious. The company believes that rising energy and raw material costs will continue to challenge the market, but also notes that the 2022/2023 global cotton harvest will be smaller than in previous years. The group estimates that its operating result will be between 320 and 420 million euros in 2023.
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