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Lenzing swings to loss as pandemic pressures textile fiber prices

March 15/2021

MOSCOW (MRC) -- Fibers producer Lenzing swung to a net loss of EUR10.6 million (USD12.7 million) in 2020 from a net profit of EUR114.9 million the year before, on sales of EUR1.6 billion, down 22.4%, said Chemweek.

EBITDA fell 39.9% to EUR196.6 million. The EBITDA margin decreased from 15.5% to 12.0%. Fourth-quarter figures have not been disclosed. The immediate effect of the pandemic on Lenzings business was to increase pressure on prices and volumes in the textile fiber segment, in particular in the second quarter of 2020. There was a recovery of demand in the second half of the year, primarily for wood-based specialty fibers including Tencel, which had a positive impact on revenue and earnings, but could not compensate for losses, Lenzing says.

Lenzing says it responded to the tough market environment caused by COVID-19 by implementing a package of measures and says it remains on track in terms of its strategy. The company adjusted production volumes. It also intensified measures for structural earnings improvement to mitigate the effect of the pressure on fiber prices and demand, and reduced its operating costs.

"2020 was largely dominated by the COVID-19 pandemic, says Stefan Doboczky, CEO of Lenzing. Lenzing responded quickly and with determination to the increased pressure on prices and volumes. In the second half of the year, we saw a broad recovery of the fiber market."

Lenzing says that in 2020 the company reached its target to generate 50% of revenue from specialty fibers. The company says it aims to generate more than 75% of its fiber revenue from specialties by 2024. Lenzing says it is on track to start up a lyocell fiber plant in Thailand at the end of 2021. The EUR400-million plant will have a capacity of 100,000 metric tons/year.

The project in Thailand, and a dissolving wood pulp plant under construction in Brazil, also form part of Lenzings target to reduce its greenhouse gas emissions per ton of product 50% by 2030 and be climate-neutral by 2050. The plant in Brazil will feed more than 50% of the electricity it generates into the public grid as renewable energy.

Lenzing says the outlook for its business is unclear because of uncertainty surrounding the pandemic, but that there are signs of an upturn. Meanwhile, the currency environment is expected to remain volatile in the regions relevant to Lenzing, the company says.

"The significant recovery of demand from the third quarter of 2020 onwards, starting in China, continued into the first quarter of 2021 and is currently providing a friendly market environment, Lenzing says. With the prospect of a broad population being vaccinated against COVID-19 in the near future, optimism and confidence in an early return to normality are also growing within the textile value chain."

As a result, earnings visibility remains limited, Lenzing says. The company expects its 2021 operating result to develop at a similar level in 2021 as in the pre-crisis year 2019."

As per MRC, textile fiber manufacturer Lenzing reports a steep fall in net profit for the first half of 2020, to EUR1.5 million (USD1.8 million) from EUR78.8 million in the first half of 2019, on revenue down 25.6% from EUR1.09 billion to EUR810.2 million.

According to ICIS-MRC Price report, on Wednesday, 10 March, 1,500 tonnes of Turkmenbashi refinery"s PP raffia grade were put up for export sale at the State Commodity and Raw Materials Exchange of Turkmenistan. The starting price was set at USD1,515/tonne FOB/FCA. PP prices were growing dynamically during the trades and finally reached another record - USD1,775/tonne FOB/FCA, the total volume of PP was sold in one day.
Author:Anna Larionova
Tags:PP, PP block copolymer, homopolymer PP, PP random copolymer, fibers/filaments.
Category:General News
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