Lenzing Ag · VIE:LNZ
Lenzing — Q3 2020 Earnings Presentation
40 slides from Lenzing's earnings presentation, Nov 4, 2020
Slide 1: Lenzing Investor Presentation Results 01-09/2020
Lenzing Investor Presentation Results 01-09/2020 November 4, 2020 www.lenzing.com
Slide 2: Disclaimer
Disclaimer ● The information contained in this document has not been independently verified and no representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this information or opinions contained herein.
Slide 3: At a glance
At a glance 01-09/2020 financial results 2020 guidance confirmed: Q2-2020 marked the ● Revenue of EUR 1,195mn (EUR 1,618mn in 01-09/2019) trough, further QOQ improvement in Q4-2020 likely ● EBITDA of EUR 140.4mn (EUR 266.9mn in 01-09/2019) ● Covid-19 related uncertainty remains but sentiment ● Net p
Slide 4: Covid-19: taking care of our people, partners and operations
Covid-19: taking care of our people, partners and operations Protecting our people and business partners Measures taken to ensure business continuity ● Close cooperation with authorities ● Close interaction and cooperation with up- and ● Home office rolled out globally, except for downstream value c
Slide 5: Hygiene Austria LP – status update
Hygiene Austria LP – status update At a glance: ● Joint Venture: Hygiene Austria LP GmbH Lenzing (50.1%) and Palmers (49.9%) ● Scope: Production and distribution of high-quality, certified hygiene & protective equipment in Austria and abroad ● Main products include: ● Protective/surgical masks (Type
Slide 6: Retail sales recover further, China back at pre-Covid levels
Retail sales recover further, China back at pre-Covid levels North America Apparel Retail Traffic (% YOY) Retail Sales Clothing US (% YOY) 60 20 40 0 20 -20 0 -20 -40 -40 -60 -60 -80 -80 -100 -100 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-2
Slide 7: VEOCEL™ supports EU Single-Use Plastics Directive
VEOCEL™ supports EU Single-Use Plastics Directive Enhanced transparency and increased awareness in wipes and feminine hygiene products Requirements Obligations Incentives Opportunity Clear and standardized Producers must help to Industry incentives to 100% cellulosic labelling cover costs develop le
Slide 8: Market update
Market update www.lenzing.com
Slide 9: Improving fiber demand triggers commodity price inflection
Improving fiber demand triggers commodity price inflection Commodity price trends VSF1 price trend and theoretical profit / loss in China USD/kg RMB/ton RMB/ton (excl. VAT) (incl. VAT) 2.50 2.30 14,000 500 2.10 13,000 0 1.90 1.70 12,000 -500 1.50 11,000 -1,000 1.30 1.10 10,000 -1,500 0.90 9,000 -2,0
Slide 10: Specialty prices remained comparatively resilient
Specialty prices remained comparatively resilient 120 115 110 Lenzing Specialties1,2 105 (Include Lenzing specialty 100 viscose which is priced 95 on “VSF plus“ basis) 90 85 Cotton Index1 80 75 70 65 60 55 VSF (TX) CCF high1 0 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May
Slide 11: Expansion projects
Expansion projects www.lenzing.com
Slide 12: LDC at a glance: pulp expansion project in Brazil
LDC at a glance: pulp expansion project in Brazil ● JV LD Celulose (LDC): Lenzing holds 51%, Duratex 49% JV fully consolidated by Lenzing Key facts: Financing details: ● 500 kt single line DWP mill ● JV financing structure: 37% equity, 63% debt Largest of its kind Fully committed debt financing: ~US
Slide 13: LDC: construction diary
LDC: construction diary Evaporation Recovery and biomass boilers Wood handling Water intake www.lenzing.com 04/11/2020 - 13
Slide 14: LDC: construction diary
LDC: construction diary Fiberline White liquor plant Turbogenerators building Pulp dryer www.lenzing.com 04/11/2020 - 14
Slide 15: LDC: on track and in budget
LDC: on track and in budget • Covid-19 with no significant negative impact on project • Milestone achieved: critical piling works and preparation of • USD 520 mn capex infrastructure completed 2020 • USD 325 mn debt draw down Start of erection phase ahead of rainy season • USD 166 mn Lenzing econ. s
Slide 16: LDC: cost leadership creates highly profitable venture
LDC: cost leadership creates highly profitable venture ● Long-term average DWP price: USD 900/mt ● LDC capacity: 500kt; LDC cash cost: < USD 300/mt; LDC ramp-up: Q2-2022; almost fully ramped by Q4-2022 ● 1 ton of DWP yields ~1 ton of fiber (viscose, modal, lyocell) Commodity grade dissolving wood pu
Slide 17: LDC: financing details
LDC: financing details • 37% equity / 63% debt Financing size & • Lenzing: ~80% (USD 250 mn) of committed equity already injected structure • IFC/IDB financing, supported by ECA (Finnvera) • USD 1.15 bn of debt fully committed (includes contingency) Parent guarantee • Debt guaranteed on a pro-rata b
Slide 18: Lyocell expansion project in Thailand (T3) fully on track
Lyocell expansion project in Thailand (T3) fully on track Key facts: ● 100 kt lyocell fiber plant Largest of its kind • USD 230 mn capex Strong boost to specialty exposure 20201) • USD 210 mn debt draw down ● ~EUR 400 mn industrial capex ● EUR 250 mn remaining (of which ~EUR 70 mn in Q4-2020) • USD
Slide 19: T3: construction diary
T3: construction diary www.lenzing.com 04/11/2020 - 19
Slide 20: Expansion projects with strong financial merits
Expansion projects with strong financial merits • Strong, immediate FCF generation from both expansion projects from 2022 Strong FCF generation from • T3 (Lyocell) full run-rate expected by H2-2022 – LDC (pulp) by Q4-2022 2022 onwards • Group margin expansion due to backward integration and higher s
Slide 21: Financials
Financials www.lenzing.com
Slide 22: P&L – Revenue
P&L – Revenue EUR mn Group revenue by application Group revenue by type 01-09/2020 1,618 529 487 +11.9% 1,195 17% 466 29% 28% 33% 385 40% 344 53% 22% 61% 71% 72% 67% 60% 47% Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 01-09/2019 01-09/2020 Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 Specialty fibers1 Standa
Slide 23: Focus on cost efficiency in 2020, more to come in 2021/22
Focus on cost efficiency in 2020, more to come in 2021/22 Focus on cost efficiency in 2020: Opex Development [in EUR mn] In Q4-2019, launch of Heartbeat for Endurance (HB4E) Efficiency program Personnel Costs -10.1% 299.9 High double-digit EUR mn cost savings1 in 2020 269.5 Key achievements so far:
Slide 24: P&L – EBITDA
P&L – EBITDA EBITDA margin EBITDA margin 16.2 % 12.3 % 14.9 % 7.9% 11.4 % 16.5% 11.7% EUR mn EUR mn 266.9 85.7 69.6 60.0 +61.3% 140.4 43.7 27.1 Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 01-09/2019 01-09/2020 EBITDA EBITDA www.lenzing.com 04/11/2020 - 24
Slide 25: P&L – EBIT
P&L – EBIT EBIT margin EBIT margin 9.0 % 1.8 % 6.5 % (3.7) % 1.2 % 9.5% 1.8% EUR mn EUR mn 47.9 153.5 30.4 8.8 4.5 22.1 (12.8) Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 01-09/2019 01-09/2020 EBIT EBIT www.lenzing.com 04/11/2020 - 25
Slide 26: P&L – Net profit and earnings per share
P&L – Net profit and earnings per share EPS1 (EUR) EPS1 (EUR) 1.45 0.21 0.84 (0.78) (0.16) 4.41 (0.10) EUR mn EUR mn 38.4 117.1 22.2 5.7 (4.3) (20.7) (2.8) Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 01-09/2019 01-09/2020 Group net profit1 Group net profit 1 1) Attributable to Lenzing AG shareholders ww
Slide 27: Quarterly cash flow and working capital development
Quarterly cash flow and working capital development EUR mn EUR mn Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 500 474 0.45 78.9 73.6 453 439 47.2 51.5 450 436 0.40 38.8 404 31.9 25.1 19.5 400 31.7% 0.35 3.7 28.5% 350 0.30 (10.7) 24.3% (17.4) 300 22.4% 20.7% 0.25 (49.6) 250 0.20 (106.7) 200 0.15 Q3/2019
Slide 28: Economic net debt reflects underlying situation
Economic net debt reflects underlying situation € 787 mn € 823 mn • Economic net debt per Q3-20 • IFRS reported net debt per Q3-20 • Reflects 51% economic share • Fully consolidated Brazil JV of Brazil JV debt debt included www.lenzing.com 04/11/2020 - 28
Slide 29: Balance sheet metrics
Balance sheet metrics Change According to IFRS (EUR mn) 30 Sept. 2020 31 Dec. 2019 in % Total assets 3,478.4 3,121.1 11.5 823 Liquid assets1 563.7 581.0 (3.0) 787 thereof liquid funds 554.9 571.5 (2.9) 701 701 Total liabilities 2,111.4 1,583.2 33.4 thereof financial liabilities 1,387.0 981.6 41.3 56
Slide 30: Outlook
w.lenzing.com Outlook e | Lenzing Innovative by nature
Slide 31: Outlook
Outlook 2020 guidance: Q2-2020 marked the trough, further QOQ improvement in Q4-2020 likely ● Improving sentiment, but uncertainty remains due to Covid-19 pandemic ● Textile fiber markets recover, but with heterogeneous development ● Nonwoven fibers still benefit from increased hygiene awareness ● P
Slide 32: sCore TEN targets 2024
sCore TEN targets 2024 sCore TEN value drivers 2024 targets Financial targets EBITDA (EUR mn) 800 Specialization ROCE1 > 10 % Leverage < 2.5x Vertical integration Strategic targets Specialty share2 > 75 % Sustainability DWP integration > 75 % CO2 emission reduction3 > 40 % 1) Adjusted for plants und
Slide 33: for your attention!
for your attention! www.lenzing.com
Slide 34: Appendix
Appendix 01-09/2020 detailed financials www.lenzing.com
Slide 35: 01-09/2020: Group P&L
01-09/2020: Group P&L Change Change Change (EUR mn) Q3/2020 Q2/2020 Q3/Q2 (%) Q3/2019 Q3/Q3 (%) 01-09/2020 01-09/2019 y-o-y (%) Revenue 384.7 343.9 11.9 529.4 (27.3) 1,194.9 1,617.9 (26.1) Change in inventories of finished goods and work in progress (36.0) (7.1) 404.5 5.0 - (28.3) 21.6 - Own work ca
Slide 36: 01-09/2020: Topline breakdown
01-09/2020: Topline breakdown Change Change Change (EUR mn) Q3/2020 Q2/2020 Q3/Q2 (%) Q3/2019 Q3/Q3 (%) 01-09/2020 01-09/2019 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 60.0 47.5 26.3 71.0 (15.5) 58.0 70.6 (17.8) Nonwoven fibers (%) 40.0 52.5 (23.8) 29.0 37.9 42.0 29.4 42.7 Fib
Slide 37: 01-09/2020: Cash flow development
01-09/2020: Cash flow development Change Change Change (EUR mn) Q3/2020 Q2/2020 Q3/Q2 (%) Q3/2019 Q3/Q3 (%) 01-09/2020 01-09/2019 y-o-y (%) Gross cash flow (before taxes and interest) 34.0 29.8 14.2 91.8 (63.0) 116.3 290.8 (60.0) Taxes and interest (14.5) (4.7) 211.6 (12.9) 12.3 (33.0) (48.3) (31.7)
Slide 38: 01-09/2020: Net debt bridge
01-09/2020: Net debt bridge Net Financial Cash Capex2 Change in Change Net Financial Debt FY incl. Fin. Trading in other Currency IFRS 16 Capital Debt 01-09 2019 Tax Net Interest Gross CF1 Assets WC WC Dividend Translation Leasing Increase Others 2020 400.6 25.4 7.6 116.3 Change in total working cap
Slide 39: Q3/2020: Net debt bridge
Q3/2020: Net debt bridge Net Financial Cash capex2 Change in Change Net Financial Debt Q2 incl. fin. Trading in other Currency IFRS 16 Capital Debt Q3 2020 Tax Net Interest Gross CF1 assets WC WC Dividend Translation Leasing Increase Others 2020 Change in total working capital EUR (13.4) mn3 701.4 1
Slide 40: Contact and financial calendar
Contact and financial calendar Investor contact Financial calendar Stephan Trubrich, CFA Results 01-09/2020 November 4, 2020 Vice President Capital Markets Annual results 2020 March 11, 2021 77th Annual General Meeting April 14, 2021 Phone: +43 7672 701 3416 E-mail: s.trubrich@lenzing.com Results 01