Lenzing Ag · VIE:LNZ
Lenzing — Q1 2017 Earnings Presentation
64 slides from Lenzing's earnings presentation, May 16, 2017
Slide 1: Lenzing Investor Presentation Result 01-03/2017
Lenzing Investor Presentation Result 01-03/2017 May 16, 2017
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 Q1/2017
Highlights Q1/2017 Very strong start into the year Group revenue up 14% to quarterly all-time-high of EUR 586.2 mn primarily as a result of higher selling prices and an improved product mix Strong EBITDA improvement by 46.6% to new quarterly all-time-high of EUR 135.1 mn Lenzing is for the f
Slide 4: Dr. Heiko Arnold – New CTO
Dr. Heiko Arnold – New CTO Born in Munich Strong scientific and technical education, studies at Darmstadt University (physical chemistry and chemical engineering) Longstanding experience, especially in Asia Large-scale investment projects Technology and engineering function in Asia Pacific
Slide 5: sCore TEN specialties investment program
sCore TEN specialties investment program Debottlenecking existing specialties sites by 35 kt until Q2/2018 Around EUR 30 mn investment in Lenzing (Austria) Around EUR 70 mn investment in Heiligenkreuz (Austria) Lyocell brownfield project of 90 kt until around end of Q1/2019 Investment of E
Slide 6: sCore TEN – Further progressing
sCore TEN – Further progressing Evaluation of pulp expansion Opening of commercial offices program by the end of 2017 Business in Turkey and Korea Continous improvement in Strong brand awareness full swing Customer 360 mn brand contacts (retail) Intimacy > 400 brand cooperations > 9 mn
Slide 7: Interfiber price development
Interfiber price development1 Staple fiber prices - Development in China USD/kg (incl. VAT) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 01/2014 04/2014 07/2014 10/2014 01/2015 05/2015 08/2015 11/2015 02/2016 05/2016 08/2016 12/2016 03/2017 Viscose Cotton Polyester Sources: China Cotton Association, China Chemical &
Slide 8: Cotton market with favorable supply-demand situation in Q1
Cotton market with favorable supply-demand situation in Q1 Cotton market Average Cotlook A-Index was mn tons at USD 84.8 cents/lbs in Q1/2017 (+26.8% y-o-y) 30 24.13 24.42 22.78 24.10 Chinese cotton prices still higher than 25 23.12 21.04 20 19.17 17.85 world price levels 15 16.55 Stable consu
Slide 9: Very strong Q1 viscose price level
Very strong Q1 viscose price level VSF1 price trend and inventory of China Q1 started with price increases with a high of RMB 17,405 at beginning of March yuan/MT 18,000 day 30 Since second half of March price declined; 17,000 16,000 consolidation on still high levels of around 15,000 20 14,000
Slide 10: Financials – Revenue (EUR mn)
Financials – Revenue (EUR mn) +14.3% Share of specialty fibers in Q1/2017 586.2 12.3% 555.7 543.5 41.5% 522.0 512.8 46.2% Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q1/2017 Speciality fibers Standard fibers Other business areas Group revenue 10
Slide 11: Financials – Earnings (EUR mn)
Financials – Earnings (EUR mn) EBITDA margin EBIT margin 18.0% 19.7% 23.1% 19.4% 23.0% 11.6% 13.5% 16.9% 13.4% 17.5% +46.6% +72.1% 135.1 102.3 125.5 92.0 102.9 107.7 74.6 92.2 70.3 59.5 Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q1/2017 Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q1/2017 EBITDA EBIT 11
Slide 12: Financials – Earnings (EUR mn)
Financials – Earnings (EUR mn) EPS1 (EUR) 1.642 1.85 2.49 2.50 2.75 +69.6% 75.0 67.5 67.0 5.50 1.5 3 1.3 4.50 4.20 50.3 1.1 44.2 1.20 3.50 0.9 2.50 2.00 1.75 2.00 3.000.7 4.2% 3.7% 0.5 1.50 0.25 1.00 0.3 0.50 2.9% 3.6% 1.50 2.9% 1.9% 2.6% 0.1 Q1/2016 2 Q2/2016 Q3/2016 Q4/2016 Q1/2017 -0.50 2012 2013
Slide 13: Financials 2017 – Key figures (EUR mn)
Financials 2017 – Key figures (EUR mn) Change According to IFRS (EUR mn) 31 March 2017 31 Dec. 2016 in % 900 (875) (801) Total assets 2,690.9 2,625.3 2.5 800 (730) (683) Liquid assets1 611.9 570.4 7.3 700 529 612 thereof liquid funds 606.6 559.6 8.4 (577) 570 600 (505) (545) Total liabilities 1,250.
Slide 14: Cash flow development and trading working capital (EUR mn)
Cash flow development and trading working capital (EUR mn) + 47.8% (Gross CF) + 1.7% (Operating CF) (10.3%) (Free CF adj.) (10.8%) 164.4 600 48.0% 139.8 43.0% 500 121.8 431 38.0% 110.4 383 380 384 104.3 106.1 103.1 106.1 400 362 33.0% 98.5 88.4 90.0 82.4 82.5 28.0% 79.3 300 21.0% 17.3% 17.6% 23.0% 5
Slide 15: Outlook 2017 – Priorities
Outlook 2017 – Priorities Strengthen the core Take next step on how to achieve 75% backward integration by 2020 Further boost continuous improvement culture Customer intimacy Launch new brand architecture Strengthen direct sales/marketing channels to customers and brands Specialization
Slide 16: Outlook 2017 – Fiber market and Lenzing Group
Outlook 2017 – Fiber market and Lenzing Group The International Monetary Fund is forecasting a slight acceleration in global economic growth to 3.5 percent in 2017. However, the political environment will be a source of greater uncertainty. Developments on the fiber markets should be slightly more
Slide 17: Q1/2017 – Financial information
Q1/2017 – Financial information
Slide 18: Q1/2017: Consolidated Group P&L
Q1/2017: Consolidated Group P&L Change Change (EUR mn) Q1/2017 Q4/2016 Q1/2016 Q1/Q4 (%) y-o-y (%) Revenue 586.2 555.7 512.8 5.5 14.3 Change in inventories of finished goods and work in progress (21.4) 18.2 (10.4) (217.4) 105.5 Own work capitalized 9.3 3.8 6.1 144.9 53.0 Other operating income 12.7
Slide 19: Q1/2017: Topline breakdown
Q1/2017: Topline breakdown Change Q1/Q4 Change y-o-y (EUR mn) Q1/2017 Q4/2016 (%) Q1/2016 (%) Breakdown of Fibers segment revenue Textile fibers (%) 71.5 71.0 0.5 70.7 0.8 Nonwoven fibers (%) 28.5 29.0 (0.5) 29.3 (0.8) Fibers only 508.5 489.0 4.0 462.3 10.0 Others1 75.6 64.0 17.9 48.5 55.9 Total seg
Slide 20: Q1/2017: Total Opex structure
Q1/2017: Total Opex structure Q1/2017 (Total Opex EUR 451.7 mn) Q1/2016 (Total Opex EUR 427.7 mn) 66.9 59.9 14.8% 14.0% 85.5 18.9% 75.3 17.6% 299.2 292.5 66.3% 68.4% Cost of material and purchased services Cost of material and purchased services Personnel expenses Personnel expenses Other operating
Slide 21: Q1/2017: Net debt bridge
Q1/2017: Net debt bridge Net Transaction Financial Cash from the Debt FY Capex (incl. Change in Change in sale of Currency Net Liquidity 2016 Tax Net Interest Gross CF Fin. Ass.) Trading WC other WC Dividend subsidiaries Translation Others Q1 2017 27.2 2 16.8 4.3 0.0 0.6 1.1 0.8 Change in total work
Slide 22: Q1/2017: Cash flow
Q1/2017: Cash flow Change Change (EUR mn) Q1/2017 Q4/2016 Q1/Q4 (%) Q1/2016 y-o-y (%) Gross CF (before taxes and interest) 132.5 124.8 6.2 95.0 39.5 Taxes and interest (10.7) (21.7) (50.5) (12.6) (15.1) Gross CF (after taxes and interest) 121.8 103.1 18.1 82.4 47.8 Change in total working capital1 (
Slide 23: 2016 – Backup financial information
2016 – Backup financial information
Slide 24: FY 2016: Consolidated Group P&L
FY 2016: Consolidated Group P&L Change (EUR mn) 2016 2015 y-o-y (%) Revenue 2,134.1 1,976.8 8.0 Change in inventories of finished goods and work in progress 6.4 (7.3) - Own work capitalized 21.8 29.2 (25.4) Other operating income 45.5 45.7 (0.4) Cost of material and purchased services (1.223.8) (1.2
Slide 25: FY 2016: Consolidated Group P&L – Quarters
FY 2016: Consolidated Group P&L – Quarters Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 Q4/Q4 (%) Revenue 512.8 522.0 543.5 555.7 2.2 518.0 7.3 Change in inventories of finished goods and work in progress (10.4) 2.4 (3.8) 18.2 - 8.6 111.8 Own work capitalized 6.1 5.4 6.5
Slide 26: FY 2016: Topline breakdown
FY 2016: Topline breakdown Change Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 Q4/Q4 (%) 2016 2015 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 70.7 71.2 70.6 71.0 0.4 71.6 (0.6) 70.9 69.6 1.3 Nonwoven fibers (%) 29.3 28.8 29.4 29.0 (0.4) 28.4 0.6 29.1
Slide 27: Financials 2016 – Earnings per quarter (EUR mn)
Financials 2016 – Earnings per quarter (EUR mn) EBITDA margin EBIT margin EPS (EUR) 1 15.4% 18.0% 19.7% 23.1% 19.4% 7.6% 11.6% 13.5% 16.9% 13.4% 1.55 1.64 1.85 2.49 2.50 +35.4% +90.7% +54.9% 125.5 92.0 102.9 107.7 92.2 74.6 67.5 67.0 70.3 79.5 59.5 50.3 43.3 44.2 39.1 Q4/2015 Q1/2016 Q2/2016 Q3/2016
Slide 28: Financials 2016 – Earnings (EUR mn)
Financials 2016 – Earnings (EUR mn) EBITDA margin EBIT margin EPS1,2 (EUR) 16.9% 11.8% 12.9% 14.7% 20.1% 11.1% 4.5% 1.2% 7.6% 13.9% 6.61 1.89 (0.92) 4.78 8.48 +47.6% +96.1% +78.9% 428 229 296 352 181 290 232 128 225 240 151 86 50 22 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 20
Slide 29: FY 2016: OPEX as of total sales
FY 2016: OPEX as of total sales Change Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 Q4/Q4 (%) 2016 2015 y-o-y (%) Total sales 512.8 522.0 543.5 555.7 2.2 518.0 7.3 2,134.1 1,976.8 8.0 Total OPEX1 (427.7) (438.8) (431.4) (481.6) 11.6 (463.4) 3.9 (1,779.6) (1,754.4) 1.4 Tot
Slide 30: FY 2016: Solid balance sheet
FY 2016: Solid balance sheet1 as at Dec. 31, 2016 According to IFRS (EUR mn) 31 Dec. 31 Dec. 20151 Change 2016 in % ∑ EUR 2,625.3 mn 3,000.0 ∑ EUR 2,625.3 mn Total assets 2,625.3 2,410.6 8.9 Liquid assets2 570.4 355.3 60.5 2,500.0 thereof liquid funds 559.6 347.3 61.1 Total liabilities 1,256.8 1,211
Slide 31: FY 2016 Total opex structure
FY 2016 Total opex structure 2015 (Total Opex EUR 1,754.4 mn) 2016 (Total Opex EUR 1,779.6 mn) 235.9 236.6 13.4% 13.3% 319.2 300.2 17.9% 17.1% 1,218.3 1,223.8 69.4% 68.8% Cost of material and purchased services Cost of material and purchased services Personnel expenses Personnel expenses Other opera
Slide 32: FY 2016: Net debt bridge
FY 2016: Net debt bridge EUR mn 16.5 445.41 43.0 327.9 Change in total working capital EUR 90.3 mn 3 2 110.8 52.3 53.2 1.4 0.6 6.5 7.2 38.0 Net Financial Debt Tax Net Interest Gross CF Cash Capex (incl. Change in Trading Change in other Dividend Transaction from Currency Others Net Financial Debt FY
Slide 33: FY 2016: Cash flow by quarters
FY 2016: Cash flow by quarters Change Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 y-o-y (%) 2016 2015 y-o-y (%) Gross cash flow (before taxes and interest) 95.0 103.8 121.8 124.8 2.5 82.2 51.8 445.4 321.8 38.4 Taxes and interest (12.6) (13.8) (11.4) (21.7) 90.3 (9.7) 123
Slide 34: Cash flow development and trading working capital (EUR mn)
Cash flow development and trading working capital (EUR mn) + 35.7% (Gross CF) + 119.6% (Operating CF) + 152.6% (Free CF adj.) (15.2%) 600.0 48.0% 500.0 43.0% 447.4 473.4 38.0% 393.7 395.7 400.0 379.6 385.9 363.8 33.0% 366.3 21.3% 28.0% 284.5 300.0 21.6% 19.5% 248.0 17.4% 23.0% 230.8 218.8 209.4 215.
Slide 35: Appendix – Equity story
Appendix — Equity story QEENZING
Slide 36: Lenzing – Our mission
Lenzing – Our mission “Lenzing is a performance materials company that turns CO2 and sunlight into highly functional, emotional and aesthetic products across the globe” 1 1 1 1 1 1) Lenzing brands 36
Slide 37: Global fiber market at a glance
Global fiber market at a glance 2016e consumption numbers Wool Cellulose- & 1.1% protein-based fibers Cotton 24.3% 99 mn tons Other natural fibers1 Synthetic fibers 5.3% 62.7% Wood-based fibers2 Viscose/Rayon Wood-based Modal fibers2 6.6% TENCEL® fiber/Lyocell 1) Incl. bast, flax, hemp, jute,
Slide 38: Lenzing - Market leader in all three fiber generations
Lenzing - Market leader in all three fiber generations Competitive Brands Market Position Intensity #1 Low #1 Medium #2 High Source: Lenzing data, CCFG, CCFEI TENCEL® fiber, Lenzing Modal® fiber and Lenzing Viscose® fiber are registered trademarks of the Lenzing Group 38
Slide 39: Lenzing is innovation leader in lyocell with TENCEL fiber
Lenzing is innovation leader in lyocell with TENCEL® fiber TENCEL® fiber: Outstanding functionality and highly eco-friendly 1 Lenzing has strong global footprint and cost leadership Excellent in shaping and creating lyocell market through Branding: TENCEL® fiber Application development and
Slide 40: Focus on innovations: Industry leading R&D spend
Focus on innovations: Industry leading R&D spend R&D is an essential part of the sCore TEN strategy R&D expenditures increased more than 50% R&D expenses (2013-2017e)1 Strong innovation pipeline New testing facilities and pilot plants EUR mn % 60 2.5 RefibraTM fiber: milestone in lyocell f
Slide 41: Textile and Nonwovens are the two main applications
Textile and Nonwovens are the two main applications Textile Nonwovens Size 88.6 mt (~90% of fiber market) 9.2 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% sha
Slide 42: Lenzing is the only player with European roots in viscose staple fibers
Lenzing is the only player with European roots in the viscose staple fibers market1 (2016e) … Lenzing with 18% share of production Lenzing with 17% share of capacities2 Lenzing Lenzing Others 18% 17% 28% Others 29% 5.3 mn tons Birla 5.9 mn tons Birla 17% 17% Yamei Yamei 5% 5% Aoyang Aoyang 5% Zhongt
Slide 43: … and is the global leader in wood-based cellulose fibers
… and is the global leader in wood-based cellulose fibers Balanced exposure to matured and Global network of production sites and emerging markets sales offices Fiber revenue by region 2016 footprint North Asia AMEA (Asia, Middle 37% East and Africa) 37% Europe & Americas 26% Source: Lenzing data as
Slide 44: Capacity 2017: A global footprint
Capacity 20171: A global footprint Europe2 China Total capacity at year end CAGR 5.3% CAGR 0 % CAGR 2.4% 444 444 457 458 373 992 995 1,009 1,013 181 181 921 172 172 105 155 222 222 232 235 107 110 110 111 112 107 110 110 111 112 178 178 178 178 178 161 162 162 165 165 659 660 663 666 666 2013 2014 2
Slide 45: Sales and marketing - Customer concentration
Sales and marketing - Customer concentration Textiles Percent of sales by customers Nonwoven Percent of sales by customers (20161) (20161) 62.7% 48.3% 45% 33.6% 31 % 21 % Top 5 Top 10 Top 20 Top 5 Top 10 Top 20 Source: Lenzing data 2016 45
Slide 46: Looking forward: Megatrends support fiber demand growth
Looking forward: 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 6.75 2010-2020 5.27 5.99 Population 0.85 0.91 0.96 in bn +0.5% +1.2% 42.1 33.4 36.3 5.2 GDP g
Slide 47: 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 47
Slide 48: 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 due ▪ With a growing global populatio
Slide 49: Lenzing’s sustainability strategy
Lenzing’s sustainability strategy “Lenzing balances the needs of society, the environment and shareholders and is a sustainability leader in its industry. Creating substantially more positive impacts or benefits is the guiding torch for our innovation and business practices.” Four focus areas Wo
Slide 50: Certificates and recognitions
Certificates and recognitions VÖNIX (Austrian Sustainability Index) OK compost HOME (Vincotte) The European Eco-Label (European Flower) OK biodegradable SOIL (Vincotte) Responsible Care OK biodegradable MARINE OEKO-TEX® Standard 100 Food contact compliance (mainly based on European
Slide 51: Dissolving wood pulp is the basis for our sustainable products
Dissolving wood pulp is the basis for our sustainable products Our business is part of a natural closed cycle We only use wood from sustainable forestry Photosynthesis PEFC controlled1 9% PEFC Disposal Trees 21% FSC mix 37% Use Pulp 33% Textiles and Cellulose nonwovens products fiber production FSC
Slide 52: Dissolving wood pulp production
Highly efficient use of the raw materials The Lenzing site is fully integrated. Dissolving wood pulp production at the Lenzing and Paskov sites achieve a wood utilization rate of about 100% (incl. energy use). Biorefinery products Dissolving ~40% wood pulp Dissolving Biochemicals Acetic acid wood pu
Slide 53: 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% 56% 46% 2012 2013
Slide 54: 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% 8% 12% 13% ROW 5.3% 2003 2013 2020e Source: ICAC World Tex
Slide 55: Wood-based fibers outgrow market
Wood-based fibers1 outgrow market Expected growth of global fiber demand until 2020 Million metric tons2 120 CAGR (2015 – 2020p) 100 Wood-based 5-6% p.a. 80 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 cotton
Slide 56: The new strategy – driving value growth
The new strategy – driving value growth Business Customer Intimacy Areas New Forward Strengthen Solutions the Core Specialization 56
Slide 57: Strengthen the Core
Strengthen the Core Further strengthen pulp position Business via backward integration and/or strategic co-operations Maintain quality leadership 1 Customer Intimacy Deliver EUR 50 mn EBITDA by 2017 with commercial and Areas operational excellence program New Forward Strengthen Strengthen ou
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: Backup
QEENZING
Slide 60: Where you can find our fibers
Where you can find our fibers Apparel/Home & Interiors - close to skin 60
Slide 61: Where you can find our fibers
Where you can find our fibers Nonwovens Facial masks Wipes Hygiene articles 61
Slide 62: Where you can find our fibers
Where you can find our fibers New Business Development & Technical textiles In automotive Packing solutions with Botanic Shoe with TENCEL® fiber (car seats, tires, injection Lenzing Modal® COLOR fiber TENCEL® fiber shoe complete (shoe molding, …) (vegetable and fruit nets – soles, lining, uppe
Slide 63: Lenzing share information
Lenzing share information Oberbank AG 3.97% ISIN LNZ / AT0000644505 Bloomberg LNZ:AV Reuters LNZNF.PK ATX Prime, ATX Global Players, VÖNIX Indices Sustainability Index Number of shares 26,550,000 Free float 33.46% Share price March 31, 2017 EUR 157.65 B&C Privatstiftung Market capitalization EUR 4,1
Slide 64: Contacts and financial calendar
Contacts and financial calendar Investor Relations contact Financial calendar Stephanie Kniep Full year result 2016 March 22, 2017 Head of Investor Relations 73rd Annual General Meeting April 25, 2017 Corporate Communications & Investor Relations Result 01-03/2017 May 16, 2017 Phone: +43 7672 70