Lenzing Ag · VIE:LNZ
Lenzing — FY2020 Earnings Presentation
50 slides from Lenzing's earnings presentation, Mar 11, 2021
Slide 1: Lenzing Investor Presentation Full Year Results 2020
Lenzing Investor Presentation Full Year Results 2020 March 11th, 2021 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 2020 financial results Outlook and guidance ● Revenue of EUR 1.63 bn (EUR 2.11 bn in 2019) ● Despite Covid-19, market sentiment has ● Specialty share reached 62 % (52 % in 2019) considerably improved in recent weeks ● EBITDA of EUR 197 mn (EUR 327 mn in 2019) ● FY 2021 operating results
Slide 4: Highlights
Highlights www.lenzing.com
Slide 5: COVID-19: taking care of our people, partners and operations
COVID-19: taking care of our people, partners and operations COVID-19 impact on business Measures taken to ensure Protecting our people and operational flexibility business partners ● Global pandemic weighed on textile fiber ● Close interaction and cooperation with up and ● Close cooperation with au
Slide 6: Lenzing is well recognized as a sustainability leader
Lenzing is well recognized as a sustainability leader Strong ESG credentials Ambitious sustainability targets1 up to 50 % Increase digital Higg FSLM at all - 50 % by 2030, recycled post- and physical sites from 2023 net-zero by 2050 consumer traceability onwards content by 2025 ● Lenzing recognized
Slide 7: Lenzing launched first Carbon Neutral fiber in the Textile Industry
Lenzing launched in line with Science Based Target, the first Carbon Neutral fiber in the Textile Industry www.lenzing.com 11/03/21 - 7
Slide 8: TENCEL x REFIBRA fibers are truly circular
TENCEL™ x REFIBRA™ fibers are truly circular and contribute to solving the Textiles industry‘s waste problem ● TENCEL™ x REFIBRA™ fibers with up to 30% of recycled raw material content ● Addresses global textile waste problem in and provides truly circular solution ● First wood-based cellulosic fibe
Slide 9: Blockchain enabled traceability platform for fibers
Collaboration with new Blockchain enabled traceability platform setting Lenzing apart and creating additional pull for fibers Weaving Dyeing Spinning Knitting Finishing Garmenting Brands & Retailers Consumers FABRIC MAKING ● Traceability of textiles over all stages of production and distribution ● T
Slide 10: Strong brands drive growth in eco-friendly specialty fibers
Strong brands drive growth in eco-friendly specialty fibers for apparel, home textiles, hygiene and industrial uses For Nonwovens For Textile For Industrial & Textile B2C Specialties B2C Specialties B2B www.veocel.com www.tencel.com www.lenzingindustrial.com www.ecovero.com www.lenzing.com 11/03/21
Slide 11: TENCEL branding KPIs: strong improvement despite Covid-19
TENCEL™ branding KPIs: strong improvement despite Covid-19 2018 2019 2020 Full Year Full Year Full Year Annual growth in fabric certification application in the new e-branding system1 39 % 36 % Annual growth in license applications in the new e-branding system1 85 % 79 % Annual growth in branded tex
Slide 12: Increasing exposure to specialty fibers drives transformation
Increasing exposure to specialty fibers drives transformation Key rationale for specialization Lenzing’s group revenue composition by type Increased margins with premium pricing FY2020 16% 22% 62% FY2019 15% 34% 52% Reduced earnings volatility with lower exposure to cyclical commodity VSF FY2018 15%
Slide 13: Market update
Market update www.lenzing.com
Slide 14: Lockdowns weigh globally, China back above 2019 levels
Lockdowns weigh globally, China back above 2019 levels North America Apparel Weekly Retail Traffic (% YOY) Retail Sales Garments China (% YOY) 20 20 0 10 -20 0 -40 -10 -60 -20 -80 -30 -100 -40 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Source: B
Slide 15: Strong improvement in commodity prices in recent weeks
Strong improvement in commodity prices in recent weeks USD/kg (excl. VAT) Commodity price trends RMB/ton VSF1 price trend and theoretical profit / loss in China RMB/ton (incl. VAT) 2.50 16,000 3,500 2.25 15,000 2,500 2.00 14,000 1,500 1.75 13,000 1.50 12,000 500 1.25 11,000 -500 1.00 10,000 -1,500 9
Slide 16: Specialty price momentum has recently improved
Specialty price momentum has recently improved 120 115 110 105 100 Cotton Index1 95 90 Lenzing Specialties1,2 85 (Include Lenzing specialty viscose which is priced 80 on “VSF plus“ basis) 75 70 VSF (TX) CCF high1 65 60 55 0 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 1) In China;
Slide 17: Cotton and synthetics face structural issues, growth for WBCF
Cotton and synthetics face structural issues, providing growth opportunities for WBCF, especially lyocell fibers Growth by fiber type (CAGR %, 2019-2025) Cotton – limited growth potential Lyocell ● Cotton competes with food crops for Water consumption, % WBCF ~3-5 arable land 100 Synthetics ~2 ● Req
Slide 18: Developments support adoption of sustainable cellulosic fibers
Recent developments support accelerated adoption of sustainable cellulosic fiber solutions in textile industry Xinjiang cotton imports banned by the USA “Fossil Fashion” report by Changing Markets due to forced labor Foundation criticizes use of synthetic fibers ● Xinjiang region supplies (incl. rec
Slide 19: Expansion projects
Expansion projects www.lenzing.com
Slide 20: LDC remains on time and in budget
LDC remains on time and in budget ● 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: ~USD 1.15 bn Brazil
Slide 21: LDC: construction diary
LDC: construction diary Fiberline Water Treatment plant Workshop and Warehouse Turbogenerators Building www.lenzing.com 11/03/21 - 21
Slide 22: 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 Strong boost to specialty exposure ● ~EUR 400 mn industrial capex ● Financing: ~25% equity, ~75% debt ● Debt financing fully committed ● First debt repayments from mid-2023 Project f
Slide 23: FY2020 Financials
FY2020 Financials www.lenzing.com
Slide 24: P&L – Revenue
P&L – Revenue Group revenue (EUR mn) Group revenue by application Group revenue by type in 2020 +13.8% +11.9% 487 466 438 385 28% 33% 33% 344 39% 53% 16% 72% 67% 61% 67% 47% 22% 62% Q4/2019 Q1/2020 Q2/2020 Q3/2020 Q4/2020 Q4/2019 Q1/2020 Q2/2020 Q3/2020 Q4/2020 Textile fibers Nonwoven fibers 2,134 2
Slide 25: 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% 395.9 High double-digit EUR mn cost savings1 in 2020 355.8 Key achievements: ● Perso
Slide 26: FY2020: Earnings development
FY2020: Earnings development EBITDA margin EBIT margin 20.1 % 22.2 % 17.6 % 15.5 % 12.0 % 13.9 % 16.4 % 10.9 % 7.7 % 2.3 % EUR mn EUR mn 502 428 382 371 327 296 238 197 162 38 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 EBITDA EBIT EBITDA margin EBIT margin 12.3 % 14.9 % 7.9% 11.4 % 12.8 % 1.8
Slide 27: P&L – Net earnings and dividend per share
P&L – Net earnings and dividend per share EPS1 (EUR) DPS (EUR) 8.48 10.47 5.61 4.63 0.24 4.20 5.00 5.00 0.00 0.00 EUR mn EUR 278 225 149 123 6 2016 2017 2018 2019 2020 Group net profit after minorities 1 EPS1 (EUR) 2.0 2.0 1.2 0.21 0.84 (0.78) (0.16) 0.34 EUR mn 3.0 3.0 3.0 22.2 0.0 0.0 5.7 9.0 2016
Slide 28: Cash flow and trading working capital development
Cash flow and trading working capital development EUR mn EUR mn (4.9) % Trading Working Capital 473 419 500 0.40 386 366 271 304 280 294 450 245 83 444 0.35 127 400 404 49 384 33 24 1 350 380 0.30 414 2016 2017 2018 2019 2020 300 250 0.25 200 20.8% 20.6% 20.7% 21.9% 0.20 150 19.4% (615) 100 0.15 201
Slide 29: Balance sheet metrics
Balance sheet metrics Change According to IFRS (EUR mn) 31 Dec. 20203 31 Dec. 2019 in % Total assets 4,163.0 3,121.1 33.4 471 Liquid assets1 1,081.1 581.0 86.1 Total liabilities 2,281.6 1,583.2 44.1 401 401 thereof financial liabilities 1,552.5 981.6 58.2 380 Adjusted equity2 1,907.0 1,559.3 22.3 Ad
Slide 30: Economic net financial debt reflects underlying situation
Economic net financial debt reflects underlying situation EUR 380 mn EUR 471 mn • Economic net financial debt • IFRS reported net financial debt per Q4-20 per Q4-20 • Reflects 51% economic share • Fully consolidated Brazil JV of Brazil JV debt debt included • Economic net financial debt / • Reported
Slide 31: Secured liquidity through the expansion phase
Secured liquidity through the expansion phase Comfortable liquidity position and maturity profile EUR mn Debt Maturities1 Debt funding for expansion Expected Cash & Cash projects fully committed Undrawn Brazil Equivalents Credit Lines ramp-up (Q2-2022) No affirmative financial covenants Limited debt
Slide 32: Hybrid bond – transaction summary
Hybrid bond – transaction summary 1 • Euro 500mn unrated hybrid bond Instrument • Market-standard perpetual non-call 5yr, listed on the unregulated market of the Luxembourg Stock Exchange • Fixed rate at 5.75% up to the First Reset Date • Thereafter resets every 5yrs to 5y Mid Swaps + Initial Margin
Slide 33: Outlook
w.lenzing.com Outlook e | Lenzing Innovative by nature
Slide 34: Outlook
Outlook 2021 guidance: Operating results at pre-crisis level expected ● Strongly improving sentiment, but uncertainty remains due to Covid-19 pandemic ● Due to ongoing lockdowns heterogeneous development across markets ● Generally, strong demand for sustainable fiber solutions in textile and nonwove
Slide 35: Strategic focus on backward integration and specialization, carbon neutral
Strategic focus on increasing backward integration and specialization, while becoming carbon neutral Key focus areas ● Increase backward integration in DWP ● 500kt greenfield project in Brazil ● Absolute cost leader, start up in Q2-2022 ● Further specialization of portfolio ● State-of-the-art 100kt
Slide 36: 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 37: 2021 strategic milestones
2021 strategic milestones Further steps to Conversion of VSF decarbonize portfolio Start-up of lyocell Modal expansion commodity into ● Lenzing fiber plant in ECOVERO™ Thailand (T3) ● Nanjing expansion ● Prachinburi www.lenzing.com 11/03/21 - 37
Slide 38: Hygiene Austria
Hygiene Austria www.lenzing.com
Slide 39: Hygiene Austria LP GmbH
Hygiene Austria LP GmbH ● The Hygiene Austria project was co-founded by Lenzing in Q2 2020 with the deep conviction that Austrian quality could make an important contribution to protecting the population in the biggest pandemic of the last hundred years ● The newly established company was setup as a
Slide 40: Back-up
w.lenzing.com Back-up e | Lenzing Innovative by nature
Slide 41: FY2020: Group P&L
FY2020: Group P&L (EUR mn) 2020 2019 Change y-o-y (%) Revenue 1,632.6 2,105.2 (22.4) Change in inventories of finished goods and work in progress (41.3) 18.4 - Own work capitalized 60.5 56.3 7.5 Other operating income 59.1 78.6 (24.7) Gains or losses from the fair value measurement of biological ass
Slide 42: FY2020: Quarterly P&L development
FY2020: Quarterly P&L development Change Change (EUR mn) Q1/2020 Q2/2020 Q3/2020 Q4/2020 Q4/Q3 (%) Q4/2019 Q4/Q4 (%) Revenue 466.3 343.9 384.7 437.7 13.8 487.3 (10.2) Change in inventories of finished goods and work in progress 14.8 (7.1) (36.0) (13.0) - (3.2) 305.0 Own work capitalized 17.3 14.0 12
Slide 43: FY2020: Quarterly topline breakdown
FY2020: Quarterly topline breakdown Change Change Q4/Q3 Q4/Q4 Change (EUR mn) Q1/2020 Q2/2020 Q3/2020 Q4/2020 (%) Q4/2019 (%) 2020 2019 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 66.9 47.5 61.0 67.0 9.8 71.8 (6.7) 62.0 70.3 (11.8) Nonwoven fibers (%) 33.1 52.5 39.0 33.0 (15.4)
Slide 44: FY2020: Quarterly OPEX development
FY2020: Quarterly OPEX development Change Change Q4/Q3 Q4/Q4 Change (EUR mn) Q1/2020 Q2/2020 Q3/2020 Q4/2020 (%) Q4/2019 (%) 2020 2019 y-o-y (%) Revenue 466.3 343.9 384.7 437.7 13.8 487.3 (10.2) 1,632.6 2,105.2 (22.4) Total cost of material and purchased (275.1) (191.6) (189.7) (242.0) 27.6 (282.6)
Slide 45: FY2020: Quarterly cash flow development
FY2020: Quarterly cash flow development Change Change Q4/Q3 Q4/Q4 Change (EUR mn) Q1/2020 Q2/2020 Q3/2020 Q4/2020 (%) Q4/2019 (%) 2020 2019 y-o-y (%) Gross cash flow (before taxes and interest) 52.6 29.8 34.0 61.7 81.7 66.4 (7.0) 178.1 357.2 (50.1) Taxes and interest (13.8) (4.7) (14.5) (18.2) 25.6
Slide 46: Quarterly cash flow and working capital development
Quarterly cash flow and working capital development EUR mn EUR mn Q4/2019 Q1/2020 Q2/2020 Q3/2020 Q4/2020 500 73.6 453 57.0% 439 51.5 62.9 450 436 38.8 43.5 404 31.9 25.1 19.5 400 384 47.0% 3.7 350 31.7% 37.0% (10.7) 28.5% 300 (49.6) 20.7% 24.3% 21.9% 27.0% 250 (106.7) 200 17.0% Q4/2019 Q1/2020 Q2/2
Slide 47: FY2020: Net debt bridge
FY2020: Net debt bridge Net Cash Net Financial Capex2 Change Financial Debt FY Net (incl. Fin. in Trading Change in Currency IFRS 16 Capital Hybrid Debt FY 2019 Tax 1 Interest Gross CF Assets) WC other WC Dividend Translation Leasing Increase capital Others 2020 400.6 33.5 17.7 178.1 Change in total
Slide 48: Q4 2020: Net debt bridge
Q4 2020: Net debt bridge Net Cash Net Financial Capex2 Change Financial Debt Q3 Net (incl. Fin. in Trading Change in Currency IFRS 16 Capital Hybrid Debt Q4 2020 Tax Interest Gross CF1 Assets) WC other WC Dividend Translation Leasing Increase capital Others 2020 4.1 471.4 Change in total working cap
Slide 49: Balance sheet structure and return on capital employed
Balance sheet structure and return on capital employed EUR mn EUR mn EUR 4,163 mn 2,800 0.59 2,218.1 1,881.4 Equity 2,300 2,216 0.49 PP&E1 1,923 1,750 0.39 1,800 1,572 1,541 329.4 0.29 Inventories 249.7 Trade receivables 1,552.5 1,300 Financial liabilities 18.6% 15.1% 0.19 10.3% 1,070.0 Cash and equ
Slide 50: Contact and financial calendar
Contact and financial calendar Investor contact Financial calendar Sébastien Knus Annual results 2020 March 11, 2021 VP Capital Markets, a.i. 77th Annual General Meeting April 14, 2021 Results 01-03/2021 May 5, 2021 Phone: +43 7672 701 3599 E-mail: s.knus@lenzing.com Half-year results 2021 August 4,