LENZING – The Lenzing Group’s latest financial report paints a mixed picture of modest growth overshadowed by significant challenges. Revenue rose by 5 per cent to €2bn for the first three quarters of 2024, largely driven by a 10.9 per cent uptick in fibre revenue. However, Lenzing’s bottom line reflects continued struggles, with a net loss after tax swelling to €111.1m, deepening from €96.7m during the same period in 2023. This increase in losses, despite revenue growth, indicates the company’s operations are still heavily impacted by external cost pressures and weak demand recovery.
High costs for raw materials, energy, and logistics weighed on Lenzing’s performance. These persistent expenses eroded profitability, even as Lenzing implemented a “performance programme” aimed at boosting operating margins and streamlining costs. Earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 20.3 per cent to €263.7m, yet these improvements were offset by escalating operational expenses, leaving the company in the red.
Additionally, Lenzing incurred an income tax expense of €77.7m due to restructuring within its ownership and tax setup, as well as unfavourable currency effects. This financial strain added to the company’s mounting challenges as it works to stabilise its position in a volatile global market.
While Lenzing pointed to its successful issuance of a US$650m green bond through its Brazilian joint venture, LD Celulose, this move has been somewhat overshadowed by structural issues within the company. Ongoing adjustments to Lenzing’s management board include a recent CEO change and appointment of a chief transformation officer.
The company’s guidance remains cautiously optimistic, citing an expectation for improved EBITDA by year’s end. However, Lenzing’s reliance on the sluggish consumer apparel market, coupled with global economic uncertainties and rising production costs, suggests achieving this could be an uphill battle.
