Lenzing Ag · VIE:LNZ
Lenzing — Q1 2016 Earnings Presentation
68 slides from Lenzing's earnings presentation, May 12, 2016
Slide 1: Leading Fiber Innovation
Leading Fiber Innovation Lenzing Investor Presentation Q1/2016 results May 12, 2016
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: Highlights Q1/2016
Highlights Q1/2016 Very strong start into the year Very solid demand across all products Good organic growth Group revenue up 8.1% Fiber business grew by 14.6% due to pricing and volume EBITDA up 54.7% vs. Q1/2015 Strong specialties demand and good pricing EBITDA margin at 18% compar
Slide 4: sCore TEN implementation well on track
sCore TEN implementation well on track Solid progress on EBITDA improvement program Well on track to achieve EUR 50 mn EBITDA run-rate Business by end of 2016 through commercial and operational Customer excellence Intimacy Progress on asset strategy – further announcement in Q3/2016 Forward Ar
Slide 5: Wood based fiber market
Wood based fiber market VSF1 price trend and inventory of China Supply – demand in better balance than in Q1/2015 due to yuan/mt CCF inventory index d Continuous strong demand for cellulose fibers 14,800 a y 40.0 14,000 and simultaneously lower inventory level 30.0 13,200 Higher operating rate
Slide 6: Cotton market
Cotton market Staple fiber prices - Development in China Cotton market mn tons 25 23.12 24.33 23.77 23.67 USD/kg (incl. VAT) 22.09 21.98 22.96 20.4 5.0 20 19.59 4.5 4.0 3.5 15 3.0 2.5 10 2.0 1.5 1.0 5 0.5 0 2014/15e 2015/16p 2016/17p Viscose Cotton Polyester Production Consumption Ending stocks Cott
Slide 7: Specialties strategy shows first positive results
Specialties strategy shows first positive results Market environment supports Lenzing’s strategy Megatrends intact High demand for specialties fibers China remains the growth engine for global textiles Total revenue share of specialties increase to 41.7% in Q1/2016 from 40.5% by the end of
Slide 8: Lenzing's growth path in TENCEL
Lenzing’s growth path in TENCEL® Lenzing’s growth path in TENCEL® TENCEL® capitalizes on megatrends such as sustainability providing functionality and aesthetics Expanding position in core value markets (e.g. denim, home & interior) New applications in technical segments create interesting n
Slide 9: Revenue (EUR mn)
Revenue (EUR mn) +8.1% 518.0 512.8 503.4 474.6 480.9 9.7% 41.7% 48.6% Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 Total Group revenue Speciality fibers Standard fibers Other business areas 9
Slide 10: Earnings (EUR mn)
Earnings (EUR mn) EBITDA margin EBIT margin 12.6% 13.9% 16.7% 15.4% 18.0% 5.7% 7.0% 10.2% 7.6% 11.6% +54.7% +120.6% 59.5 92.2 84.1 51.5 79.5 66.9 39.1 59.6 33.5 27.0 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 EBITDA EBIT 10
Slide 11: Earnings per share and dividend
Earnings per share and dividend EPS1 (EUR) 0.66 1.33 1.24 1.41 1.63 +165.2% 44.1 39.6 3.00 1 35.0 32.9 2.50 0.9 2.50 0.8 2.00 2.00 2.00 0.7 1.75 0.6 16.6 1.50 3.9% 4.2% 0.5 2.9% 1.00 2.9% 0.4 1.00 0.3 0.50 0.2 1.9% 0.1 0.00 0 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q1/2016 2011 2012 2013 2014 2015 Net profi
Slide 12: Key figures (EUR mn)
Key figures (EUR mn) According to IFRS (EUR mn) March 31, Dec. 31, Change 2016 2015 in % Total assets 2,440.9 2,421.8 0.8 900 875 Liquid assets1 427.7 355.3 20.4 801 800 730 683 thereof liquid funds 422.8 347.3 21.7 700 653 670 600 500 Total liabilities 1,202.9 1,215.1 (1.0) 529 505 500 450 428 ther
Slide 13: Cash flow development and trading working capital
Cash flow development and trading working capital EUR mn +30.3% (Gross CF) +177.2% (Operating CF) +234.0% (Free CF adj.) 600 35.0% 104.3 500 446 448 447 88.4 424 431 83.2 85.3 82.4 400 72.5 65.5 67.2 63.2 62.1 300 23.5% 23.3% 25.0% 47.2 21.0% 21.6% 21.0% 37.6 200 26.5 30.6 100 4.1 0 15.0% Q1/2015 Q2
Slide 14: Outlook 2016 confirmed
Outlook 2016 confirmed Global fiber market to remain volatile High cotton stock and cheap polyester fibers continue to fuel inter-fiber price competition Lenzing’s relevant market segment “wood-based cellulose fibers”1 faces a more positive development than the global fiber market with a favor
Slide 15: Q1/2016 – Financial information
Q1/2016 – Financial information
Slide 16: Q1/2016: Consolidated Group P&L
Q1/2016: Consolidated Group P&L Change Change (EUR mn) Q1/2016 Q4/2015 Q1/2015 Q1/Q4 (%) y-o-y (%) Revenue 512.8 518.0 474.6 (1.0) 8.1 Change in inventories of finished goods and work in progress (10.4) 8.6 (4.2) (221.0) 147.9 Own work capitalized 6.1 8.6 5.9 (29.5) 3.1 Other operating income 11.4 7
Slide 17: Q1/2016: Topline breakdown
Q1/2016: Topline breakdown Change (EUR mn) Q1/2016 Q4/2015 Change Q1/Q4 (%) Q1/2015 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 70.7 71.6 (1.3) 67.1 5.0 Nonwoven fibers (%) 29.3 28.4 3.2 32.9 (11.0) Fibers only 463.0 452.2 2.4 401.6 15.3 Others1 47.8 64.8 (26.0) 43.9 9.0 Total s
Slide 18: Q1/2016 Total Opex structure
Q1/2016 Total Opex structure Q1/2016 (Total Opex EUR 427.7 mn) Q1/2015 (Total Opex EUR 437.0 mn) 59.9 53.5 14.0% 12.2% 75.3 76.3 17.6% 17.5% 292.5 68.4% 307.2 70.3% Cost of material and purchased services Cost of material and purchased services Personnel expenses Personnel expenses Other operating e
Slide 19: Q1/2016: Financials
Q1/2016: Financials EUR mn 1 95.0 2.5 10.1 327.9 16.4 6.6 12.3 242.4 0.1 0.0 0.6 0.0 Change in total working capital EUR 19.0 mn Net Financial Tax Net Interest Gross CF Cash Capex Change in Change in Dividend Transaction Currency Others Net Financial Debts FY 2015 (incl. Fin. Ass.) Trading WC other
Slide 20: Q1/2016: Cash flow
Q1/2016: Cash flow Change Q1/Q4 Change (EUR mn) Q1/2016 Q4/2015 (%) Q1/2015 y-o-y (%) Gross CF (before taxes and interest) 95.0 82.2 15.6 57.8 64.4 Taxes and interest (12.6) (9.7) 30.1 5.4 - Gross CF (after taxes and interest) 82.4 72.5 13.7 63.2 30.3 Change in total working capital1 21.9 (41.9) - (
Slide 21: 2015 – Financial information
2015 – Financial information
Slide 22: FY 2015: Consolidated Group P&L
FY 2015: Consolidated Group P&L Change (EUR mn) 2015 2014 y-o-y (%) Revenue 1.976,8 1,864.2 6.0 Change in inventories of finished goods and work in progress (7.3) (2.6) 184.9 Own work capitalized 29.2 34.6 (15.6) Other operating income 45.7 48.5 (5.8) Cost of material and purchased services (1.218,3
Slide 23: FY 2015: Consolidated Group P&L – Quarters
FY 2015: Consolidated Group P&L – Quarters Change Change (EUR mn) Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q4/Q3 (%) Q4/2014 y-o-y (%) Revenue 474.6 480.9 503.4 518.0 2.9 506.5 2.3 Change in inventories of finished goods and work in progress (4.2) (1.9) (9.8) 8.6 - (16.8) - Own work capitalized 5.9 7.1 7.7 8
Slide 24: FY 2015: Topline breakdown
FY 2015: Topline breakdown Change Change Change (EUR mn) Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q4/Q3 (%) Q4/2014 y-o-y (%) 2015 2014 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 67.1 69.3 70.1 71.6 1.5 69.9 1.7 69.6 68.4 1.2 Nonwoven fibers (%) 32.9 30.7 29.9 28.4 (1.5) 30.1 (1.7) 30.4
Slide 25: Financials 2015 – Earnings (EUR mn)
Financials 2015 – Earnings (EUR mn) EBITDA margin EBIT margin EPS (EUR) 22.4% 16.9% 11.8% 12.9% 14.7% 17.0% 11.1% 4.5% 1.2% 7.6% 9.88 6.61 1.89 (0.51) 4.63 480 +20.7% 364 267 352 290 232 181 225 240 151 124 86 50 22 (14) 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 EBIT
Slide 26: Financials 2015 – Earnings per quarter (EUR mn)
Financials 2015 – Earnings per quarter (EUR mn) EBITDA margin EBIT margin EPS (EUR) 15.9% 12.6% 13.9% 16.7% 15.4% -9.4% 5.7% 7.0% 10.2% 7.6% -2.18 0.66 1.33 1.24 1.41 -1.2%1 80.5 84.1 79.5 66.9 59.6 51.5 39.1 33.5 39.6 27.0 35.0 32.9 16.6 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q4/2014 Q1/2015 Q2/20
Slide 27: FY 2015: OPEX as of total sales
FY 2015: OPEX as of total sales Change Change Change (EUR mn) Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q4/Q3 (%) Q4/2014 y-o-y (%) 2015 2014 y-o-y (%) Total sales 474.6 480.9 503.4 518.0 2.9 506.5 2.3 1,976.8 1,864.2 6.0 Total OPEX1 (437.1) (434.4) (419.5) (463.4) 10.5 (431.0) 7.5 (1,754.4) (1,704.5) 2.9 Tot
Slide 28: FY 2015: Solid balance sheet
FY 2015: Solid balance sheet as at Dec. 31, 2015 Change According to IFRS (EUR mn) 31 Dec. 2015 31 Dec. 2014 in % ∑ 2,421.8 EUR mn 3000 ∑ 2,421.8 EUR mn Total assets 2,421.8 2,375.1 2.0 Liquid assets1 355.3 280.3 26.8 thereof liquid funds 347.3 271.8 27.8 2500 Total liabilities 1,215.1 1,329.4 (8.6)
Slide 29: FY 2015: Cash flow
FY 2015: Cash flow Change Change Change (EUR mn) Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q4/Q3 (%) Q4/2014 y-o-y (%) 2015 2014 y-o-y (%) Gross CF (before taxes and interest) 57.8 94.81 87.0 82.2 (5.6) 95.8 (14.2) 321.8 253.3 27.1 Taxes and interest 5.4 (11.5) (21.5) (9.7) (54.9) (4.6) 110.2 (37.4) (22.5) 66
Slide 30: Financials 2015 – Cash flow (EUR mn)
Financials 2015 – Cash flow (EUR mn) EUR mn Positive free cash flow development y-o-y influenced by +26.2% 21.3% 21.6% Higher revenue 19.5% 17.0% 17.4% Lower investments (CAPEX EUR 70.9 mn) Special dividend 145.0 116.3 114.8 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Trading working cap
Slide 31: Financials 2015 – Free cash flow and trading working capital per quarter
Financials 2015 – Free cash flow and trading working capital per quarter (EUR mn) EUR mn Negative Q4 development due to -93.9% Longer payment terms for receivables Shorter payment terms for liabilities 67.2 23.5% 23.3% 21.0% 21.6% 19.5% 47.2 40.3 26.5 4.1 Q4/2014 Q1/2015 Q2/2015 Q3/2015 Q4/2015
Slide 32: Appendix – Equity story
Appendix — Equity story QLENZING
Slide 33: Lenzing – Market leader in wood-based cellulosic fibers
Lenzing – Market leader in wood-based cellulosic fibers Our mission: “Lenzing is a performance materials company that turns CO2 and sunlight into highly functional, emotional and aesthetic products across the globe” 33
Slide 34: Lenzing - Market leader in all three fiber generations
Lenzing - Market leader in all three fiber generations Competitive Market Position Intensity #1 Low #1 Medium #2 High Source: Lenzing data, CCFG, CCFEI TENCEL®, Lenzing Modal® and Lenzing Viscose® are registered trademarks of the Lenzing Group 34
Slide 35: Lenzing culture – from forest to fiber
Lenzing culture – from forest to fiber
Slide 36: Global fiber market at a glance
Global fiber market at a glance 2015e consumption numbers Wool Cellulose- & 1.2% protein-based fibers Cotton 25.2% 95.6 mn tons Other natural fibers1 5.1% Wood-based fibers2 Synthetic fibers Viscose/Rayon 62.1% Wood-based Modal fibers2 6.4% TENCEL®/Lyocell 1) Incl. bast, flax, hemp, jute, silk
Slide 37: The only player with European roots in the viscose staple fibers market
… is the only player with European roots in the viscose staple fibers market1 (2015e) Source: CIRFS, FEB, Trade statistics, Company estimates 1) Viscose staple fibers (including Modal and TENCEL®), excluding viscose filaments, acetate tow, cigarette filters 2) Based on latest available company infor
Slide 38: Lenzing is the global leader in cellulose fibers…
Lenzing is the global leader in cellulose fibers… Balanced exposure to matured and Global network of production sites and emerging markets sales offices Fiber revenue by region 2015 footprint Americas RoW 10% 2% Europe incl. Turkey 25% Asia 63% Source: Lenzing data as at March 31, 2016 38
Slide 39: Capacity 2016: A global footprint
Capacity 20161: A global footprint Europe2 China Total capacity at year end CAGR 6.1% CAGR 2.7% CAGR 3.2% 444 444 453 992 996 1005 373 921 357 887 172 172 181 222 223 232 105 155 155 105 103 107 110 110 110 103 107 110 110 110 160 178 178 178 178 149 161 162 162 162 629 659 660 663 663 2012 2013 201
Slide 40: Lenzing's pulp mills are bio-refineries
Lenzing’s pulp mills are bio-refineries Lenzing and Biocel Paskov achieve 100% wood utilization by generating pulp, bio-based chemicals and energy. Bio-refinery products Customers & Products ~39% Pulp Pulp Acetic acid production ~11% Furfural Xylose Lenzing ~50% Energy etc. 40
Slide 41: Fiber production fully secured by a robust pulp supply
Fiber production fully secured by a robust pulp supply Level of backward integration: Own pulp supply in percentage of annual fiber capacity >50% secured by own pulp production Remaining pulp is secured Total annual through long-term contracts fiber capacity (100%) 58% 56% 56% 45% 46% 2011 2012
Slide 42: Lenzing is the innovation leader
Lenzing is the innovation leader Industry leading R&D spend (EUR 29.81 mn in 2015) R&D expenses (2005-2015) Intellectual property EUR mn % As of December 2015, Lenzing owned approx. 35 3.5 1,250 patent applications and patents in 57 30 3 countries belonging to 215 patent families 25 2.5 All sign
Slide 43: Lenzing is innovation leader in lyocell with TENCEL
Lenzing is innovation leader in lyocell with TENCEL®… TENCEL® fiber: Outstanding functionality and highly eco-friendly Lenzing has strong global footprint and cost leadership Excellent in shaping and creating lyocell market through Branding: TENCEL® Application development and downstream p
Slide 44: Distinct trends are emerging
Distinct trends are emerging Textiles Need for sustainable supply chains across the globe Fast fashion Focus on functionality Nonwovens Need for higher cleanliness Need to improve eco-footprint of downstream products High innovation headroom 44
Slide 45: Textile and Nonwovens are the two main applications…
Textile and Nonwovens are the two main applications… Textile Nonwovens Size 86 mt (~90% of fiber market) 8 mt (~10% of fiber market) Regional Over 90% in China, India and Asia-Pacific Mainly a regional market (due to high logistic costs) focus High Low: Top 5 to 10 players hold between 60-80% share
Slide 46: Lenzing is THE trusted long-term partner for global consumer brands
Lenzing is THE trusted long-term partner for global consumer brands Global consumer brands trust Lenzing as long-term partner due to our quality leadership and deep technical expertise, resulting in several “co-branding” initiatives Textiles Others Key accounts 65% 35% Nonwovens Others Key accounts
Slide 47: Megatrends foster growth perspectives
Megatrends foster growth perspectives
Slide 48: China remains the growth engine in global textiles
China remains the growth engine in global textiles Global textile demand by value (2003-2020) CAGR EUR bn (2013-2020e) 1,515 25% China 9.2% 1,144 18% 15% Rest of Asia 3.1% 842 7% 16% 19% North America 1.4% 17% 23% 31% 27% Europe 2.4% 31% 36% 12% 13% ROW 5.3% 8% 2003 2013 2020e Source: ICAC World Tex
Slide 49: Megatrends support fiber demand growth
Megatrends support fiber demand growth Population growth and higher purchasing power in the emerging markets drive overall fiber growth Industrial world Developing world CAGR CAGR 2010-2020 5.99 6.75 2010-2020 5.27 Population +1.2% 0.85 0.91 0.96 in bn +0.5% 42.1 33.4 36.3 5.2 GDP growth +1.5% 3.4 2
Slide 50: The key growth drivers for fibers
The key growth drivers for fibers Population ▪ Growing population demanding more fabrics growth-driven Overall fiber market growth Wealth-related ▪ Higher per-capita consumption of fibers with increasing income growth Wealth impact ▪ People exit extreme poverty and can afford garments: Strong increa
Slide 51: Sustainability is gaining importance
Sustainability is gaining importance Less than 1% of global water resources is available as fresh Arable land is decreasing due to Oil is a finite resource causing water for people erosion and urbanization negative externalities ▪ But water consumption is rising ▪ With a growing global population, ▪
Slide 52: Green footprint of wood-based fibers: Very environmentally friendly
Green footprint of wood-based fibers1: Very environmentally friendly Renewable raw material - cellulose is nature‘s most important construction material and available in abundance More than 50% of Lenzing’s fuel consumption sourced from renewable resources Certified wood and pulp sources 100
Slide 53: Megatrend: Sustainability
Megatrend: Sustainability TENCEL® - a sustainable production process Direct solving process Closed-loop process Complete recovery of solvent 53
Slide 54: Wood-based fibers outgrow market
Wood-based fibers1 outgrow market Expected growth of global fiber demand until 2020 Million metric tons2 120 CAGR (2015e – 2020p) 100 Wood-based 80 5-6% p.a. fibers1 60 Synthetic fibers 3-4% p.a. 40 Cotton 1-2% p.a. 20 Total fiber market 3-4% p.a. 0 2000 2005 2010 2015e 2020p 1) Wood-based and cotto
Slide 55: The new strategy – driving value growth
The new strategy – driving value growth Business Customer Intimacy Areas New Forward Strengthen Solutions the Core Specialization 55
Slide 56: Lenzing went through a difficult period in the recent past
Lenzing went through a difficult period in the recent past - But several issues are already solved Portfolio optimization Revenue Divestiture of Lenzing Plastics 1,766 2,140 2,090 1,909 1,864 Divestiture of Dolan GmbH and European Carbon Fiber GmbH First wave of restructuring Lenzing Technik
Slide 57: Strengthen the Core
Strengthen the Core Further strengthen pulp Business position via backward integration and/or strategic co-operations 1 Customer Intimacy Maintain quality leadership Deliver EUR 50 mn EBITDA Areas New by 2017 with commercial and Forward Strengthen Solutions the Core operational excellence prog
Slide 58: Customer Intimacy, Specialization, Forward Solutions and New Business Areas
Customer Intimacy, Specialization, Forward Solutions and New Business Areas Increase management Business presence and decision power in the regions Customer Establish two additional Intimacy regional application and Select and establish new 2 customer innovation centers emerging business areas
Slide 59: 2020 financial targets
2020 financial targets EBITDA Net financial debt/ ROCE growth of 10% p.a. EBITDA ≥10% (vs. 2014 base) <2.5 59
Slide 60: Lenzing share information
Lenzing share information Oberbank AG 5.0% ISIN LNZ / AT0000644505 Bloomberg LNZ:AV Reuters LNZNF.PK ATX Prime, ATX Global Players, VÖNIX Indices Sustainability Index Number of shares 26,550,000 mn Free float 27.4% Share price March 31, 2016 69.57 EUR B&C Privatstiftung Market capitalization EUR 1,8
Slide 61: Back-up
QLENZING
Slide 62: Our production sites
Our production sites Lenzing AG – Lenzing – PT. South Pacific Viscose – Biocel Paskov a.s. – Austria (fiber and pulp) Austria (TENCEL® ) Indonesia (viscose) Czech Republic (pulp) Grimsby – Heiligenkreuz – Mobile – Lenzing (Nanjing) Fibers Great Britain (TENCEL®) Austria (TENCEL®) USA (TENCEL®) Co. L
Slide 63: Sales and marketing
Sales and marketing Customer concentration Textiles % of sales by customers Nonwoven % of sales by customers (2015 01-121) (2015 01-121) 70% 70% 64.1% 60% 60% 49.9% 50% 45.9% 50% 40% 40% 33.1% 33.2% 30% 30% 22.3% 20% 20% 10% 10% 0% 0% Top 5 Top 10 Top 20 Top 5 Top 10 Top 20 Source: LAG 1) Due to
Slide 64: Where our fibers end up
Where our fibers end up Apparel - Ladies’ wear – close to skin 100% Jacket: 35% TENCEL® / Asymmetric Hem Dress 100% TENCEL® 65% TENCEL® / TENCEL® 18% Ramie / 47% 100% TENCEL® 35% Cotton Organic cotton, Jumpsuit: 100% TENCEL® 64
Slide 65: Where our fibers end up
Where our fibers end up Home and Interiors 100% TENCEL® Lenzing Modal® bedlinen towels duvets bathrobes mattresses …. 65
Slide 66: Where our fibers end up
Where our fibers end up Nonwovens TENCEL® TENCEL® TENCEL® wash cloth face masks hygiene articles 66
Slide 67: Where our fibers end up
Where our fibers end up New Business Development & Technical TENCEL® in automotive Packing solutions with Botanic Shoe with TENCEL® (car seats, tires, injection Lenzing Modal® COLOR TENCEL® shoe complete (shoe soles, molding, …) (vegetable and fruit nets – lining, upper fabric and shoe laces)
Slide 68: Contacts and financial calendar
Contacts and financial calendar Investor Relations contact Financial calendar Stephanie Kniep Full year results March 23, 2016 Head of Investor Relations 71st Annual General Meeting April 20, 2016 Corporate Communications & Investor Relations Results 1st quarter May 12, 2016 Phone: +43 7672 701