EANS-News: Lenzing AG / COVID-19 impacts revenue and earnings of the Lenzing Group in the first half of 2020 CNE

Wednesday, 05. August 2020 07:30
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Mid Year Results/Company Information

-

* Fiber prices and demand under pressure
* Measures to protect employees, customers and suppliers and to keep plants
  operational implemented successfully
* Joint venture Hygiene Austria established for industrial production of
  protective masks in the fight against the COVID-19 pandemic - new distribution
  channel via shop.hygiene-austria.at [https://shop.hygiene-austria.at/]
* Strategic investment projects progress according to plan - financing
  agreements for construction of pulp plant in Brazil concluded as planned
* Revenue and operating result in the remaining quarters of 2020 expected to
  exceed that of the second quarter

Lenzing - In the first half of 2020, the Lenzing Group faced a historically
difficult market environment with increased pressure on prices and volumes
resulting from the COVID-19 crisis. To counteract that, Lenzing intensified its
cooperation with partners along the value chains and adjusted its production
volumes and sales prices to market reality. The disciplined implementation of
the sCore TEN corporate strategy and the focus on specialty fibers continued to
have a positive impact.

The immediate effects of the COVID-19 crisis further increased price pressure on
textile fibers across the entire product range. As a result, revenue declined by
25.6 percent from EUR 1.09 bn to EUR 810.2 mn in the first half of 2020. In
addition to price effects, Lenzing also felt the decline in demand for textile
fibers in all regions. The slightly higher demand for fibers in the medical and
hygiene segments reduced the losses, but could not offset them. The earnings
development essentially reflects the decline in revenue. The implementation of
measures for structural earnings improvements in all regions and making use of
the short-time work model, which was temporarily introduced by the Austrian
Federal Government, mitigated this negative effect. EBITDA (earnings before
interest, tax, depreciation and amortization) fell by 46.6 percent to EUR 96.7
mn in the first half of 2020. The EBITDA margin decreased from 16.6 percent to
11.9 percent. Net profit for the period(1) amounted to EUR 1.5 mn (compared to
EUR 78.8 mn in the first half-year of 2019) and earnings per share to EUR 0.06
(compared to EUR 2.97 in the first half-year of 2019).

"The COVID-19 crisis has an impact on the entire textile and apparel industry
and further increased the price and volume pressure on the global fiber market.
Likewise, Lenzing was also confronted with this historically difficult market
environment and focused on the health and safety of their employees, the
continuation of long-term partnerships and ensuring their sustainable business
development", says Stefan Doboczky, Chief Executive Officer of the Lenzing
Group. "Strategically, we are still fully on track and the implementation of our
key projects in Thailand and Brazil is progressing according to plan. The
successful conclusion of the financing agreements for the construction of the
pulp plant in Brazil was a highlight of the first half of the year", says
Doboczky.

Zwtl.: Strengthening specialty fiber growth

CAPEX (expenditures for intangible assets and property, plant and equipment and
biological assets) roughly tripled to EUR 268.7 mn in the first half of 2020.
This increase is a consequence of the progress of the major projects in Brazil
and Thailand. The implementation of the two most important long-term investment
projects to strengthen internal pulp supply and to increase the share of
specialty fibers in line with the sCore TEN corporate strategy is progressing
according to plan.

After the decision to build the dissolving wood pulp plant in Brazil with a
capacity of 500,000 tons was made in December, the Duratex Group acquired a 49
percent share in the joint venture LD Celulose as agreed in the first quarter of
2020. Lenzing holds 51 percent of the shares. The expected Industrial CAPEX will
be USD 1.38 bn. The project is predominantly financed through long-term debt.
The corresponding financing contracts were concluded in the second quarter of
2020 as planned. IFC, a member of the World Bank Group, and IDB Invest, a member
of the IDB Group, are co-leading a USD 1.1 billion financing to the joint
venture LD Celulose. The export credit agency Finnvera and seven commercial
banks are participating in the financing.

Zwtl.: Stand up! Against business as usual

On March 21, Lenzing presented its Sustainability Report 2019, which was also
the International Day of Forests. The report sets out how the company is
actively dealing with the global challenges. Under the motto "Stand up! Against
business as usual", Lenzing emphasizes its wider responsibilities over and above
its products. With the implementation of the science-based target, Lenzing
actively contributes to mastering the problems caused by climate change. The
Lenzing Group is committed to reducing its greenhouse gas emissions per ton of
product by 50 percent by 2030 (baseline: 2017) and to become climate-neutral by
2050.

Zwtl.: Production of high-quality protective masks: Hygiene Austria LP GmbH

To meet the increased demand for high-quality hygiene and protective equipment,
Lenzing AG and Palmers Textil AG founded Hygiene Austria LP GmbH in late April,
in which Lenzing AG holds 50.1 percent and Palmers Textil AG 49.9 percent. The
company started producing and selling mouth-nose and FFP2 masks from May 2020.
In a next step, the product range was extended to include masks for children. In
July, Hygiene Austria LP GmbH launched an online shop (shop.hygiene-austria.at
[https://shop.hygiene-austria.at]), thus making another contribution to the
security of Austrian supply. Based on its modern production infrastructure, the
company can currently produce up to 12 million masks per month.

Zwtl.: Virtual Annual General Meeting on June 18, 2020

The 76th Annual General Meeting of Lenzing AG, which was held in a virtual form
via livestream due to the COVID-19 pandemic, followed the proposal of the
Management Board and resolved on June 18, 2020, not to distribute a dividend for
the 2019 financial year.

Zwtl.: Guidance 2020

The Lenzing Group suspended on March 24 its result forecast for 2020 as a
consequence of the global COVID-19 crisis and the resulting very limited
visibility; at that time, Lenzing expected the result for 2020 to be below the
level of 2019.

For 2020, the International Monetary Fund currently projects the greatest
recession of the global economy in the course of a century. Global economic
output is expected to contract by 4.9 percent in 2020.

Whilst it remains difficult to give a precise outlook for 2020, Lenzing assumes
from today's perspective that the revenue generation and operating performance
of the remaining two quarters will exceed those of the second quarter.

The comparatively solid business development in the first half of the year
reassures the Lenzing Group in its chosen corporate strategy sCore TEN. Lenzing
will continue to implement its strategy with great discipline with a particular
focus on the strategic investment projects which both will yield a significant
contribution to earnings starting from 2022.

Selected indicators of the
Lenzing Group                              01-06/2020                 01-06/2019
EUR mn
Revenue                                         810.2                    1,088.5
EBITDA (Earnings before
interest, tax,                                   96.2                      181.2
depreciation and
amortization)
EBITDA margin                                  11.9 %                     16.6 %
Net profit for the period                         1.5                       78.8
(1)
Earnings per share in EUR                        0.06                       2.97
CAPEX(2)                                        268.7                       95.1
Free cash flow                                (285.1)                       28.8


                                          30.06.2020                  31.12.2019
Net financial debt                             701.4                       400.6
Adjusted equity ratio(3)                      41.8 %                      50.0 %
Number of employees                            7,225                       7,036


1) Attributable to Lenzing AG shareholders
2) Capital expenditures: Investitionen in immaterielle Anlagen, Sachanlagen und
biologische Vermögenswerte laut Konzern-Kapitalflussrechnung
3) Prozent-Verhältnis bereinigtes Eigenkapital zur Bilanzsumme

Photo download [https://mediadb.lenzing.com/pinaccess/
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Further inquiry note:
Filip Miermans
Vice President Corporate Communications & Public Affairs
Lenzing AG
Phone: +43 664 8477802
E-mail: f.miermans@lenzing.com

end of announcement                         euro adhoc
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issuer:       Lenzing AG

A-4860 Lenzing
phone:        +43 7672-701-0
FAX:          +43 7672-96301
mail:         office@lenzing.com
WWW:          http://www.lenzing.com
ISIN:         AT0000644505
indexes:      ATX, WBI
stockmarkets: Wien
language:     English

EAX0005    2020-08-05/07:30

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