The Lenzing Group had a positive revenue and earnings development in the first quarter of 2021. Growing optimism in the textile and apparel industry as a result of the vaccination progress and the continuing recovery in retail led to a significant increase in demand and higher prices in the global fiber market.
“Lenzing benefited from the growing optimism in the textile value chain and the strong recovery of the fiber markets in the first quarter of 2021. Demand for our sustainably produced specialty fibers such as TENCEL™ and LENZING™ ECOVERO™ saw a positive development again”, says Stefan Doboczky, CEO of the Lenzing Group. “Strategically, we remain fully on track. The implementation of the pulp project in Brazil proceeds according to plan despite the challenges related to COVID-19, and the new lyocell plant in Thailand will start up as planned in the fourth quarter of 2021”, Doboczky adds.
Revenue rose by 4.9 percent to EUR 489.3 mn in the first quarter of 2021. This is mainly attributable to a strong increase in demand from China and the resulting higher viscose prices. The focus on wood-based specialty fibers such as TENCEL™ and LENZING ECOVERO™ branded fibers had a positive impact on revenue development; the share of specialty fibers in fiber revenue rose from 72.2 percent to 72.6 percent. The negative impact of more unfavorable currency effects was consequently more than offset. The earnings development essentially reflects the increase in revenue. The continued focus on structural earnings improvements in all regions reinforced this positive effect. EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 36.8 percent to EUR 94.5 mn in the first quarter of 2021. The EBITDA margin rose from 14.8 percent to 19.3 percent. Net profit for the period amounted to EUR 29.9 mn (01-03/2020: EUR 17.7 mn) and earnings per share to EUR 1.06 (01-03/2020: EUR 0.84).
Gross cash flow in the first quarter of 2021 increased by 117.5 percent to EUR 84.3 mn compared to the first quarter of the previous year. This increase is primarily due to the earnings development. Cash flow from operating activities more than tripled to EUR 111.5 mn. (01-03/2020: 31.9 mn). Free cash flow amounted to EUR minus 99 mn (01-03/2020: EUR minus 106.7 mn) due to investment activities related to the projects in Thailand and Brazil.
The International Monetary Fund expects global growth of 6 percent for 2021. However, the economic recovery after the deep recession caused by COVID-19 is subject to risks and largely depends on the vaccination progress and successful containment of the pandemic. The currency environment is expected to remain volatile in the regions relevant to Lenzing.
Lenzing expects a continued increase in demand for sustainably produced fibers for the textile and apparel industry as well as for the hygiene and medical industry. This trend is likely to continue unabated after the COVID-19 pandemic, not least due to several legislative initiatives.