Lenzing Ag · VIE:LNZ
Lenzing — FY2015 Earnings Presentation
56 slides from Lenzing's earnings presentation, Mar 23, 2016
Slide 1: Leading Fiber Innovation
Leading Fiber Innovation Lenzing Investor Presentation – Full year results 2015 March 23, 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 FY 2015
Highlights FY 2015 Strong operational performance Group revenue up 6.0% to EUR 1,977 mn EBITDA grows by +20.7% to EUR 290.1 mn ROCE at 8.0% Successful strategic portfolio realignment Sale of Dolan GmbH and European Carbon Fiber GmbH Sale of three units of Lenzing Technik New strategy
Slide 4: Highlights Q4/2015
Highlights Q4/2015 Revenue +2.3% to EUR 518.0 mn (Q4/2014 EUR 506.5 mn) Lenzing’s specialties showed price resilience and the demand remained strong Strong viscose market prices but fast drop towards end of the quarter as per forecast Positive earnings development EBITDA of EUR 79.5 mn (Q4
Slide 5: New fiber nomenclature
New fiber nomenclatur Polyester Carbon Polyamide Ceramics Polypropylene Glass Polyurethane Metal (Elastan) Acrylic Polytetrafiuor- ethylene cetona ren aren 5 QLENZING
Slide 6: Fiber market 2015
Fiber market 2015 Fiber production Cotton inventories and China's share 1 Staple fiber prices - Development in China VSF2 price trend and inventory of China 1) Wood-based and cotton linter-based cellulose fibers, previously named man-made cellulosics 2) Viscose staple fibers Sources: CCFG, CIRFS, Co
Slide 7: Lenzing 2015: Increasing brand recognition – innovation and trust
Lenzing 2015: Increasing brand recognition – innovation and trust Lenzing’s products and brands are in high demand in the search for innovation, sustainability and comfort >400 million brand impression at retail, all-time record and up from ~340 mio in 2014 Lingerie and Homewear Hygiene Co
Slide 8: Financials 2015 – Revenue (EUR mn)
Financials 2015 – Revenue (EUR mn) 2,140.0 +6.0% 2014 2015 2,090.4 1,976.8 1,908.9 1,864.2 12.5% 19.0% 35.0% 40.5% 2011 2012 2013 2014 2015 Total Group revenue 47.0% 46.0% +2.3% 518.0 Specialty fibers Specialty fibers 506.5 Standard fibers Standard fibers 503.4 Other business areas Other business ar
Slide 9: 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 EBITDA
Slide 10: Financials 2015 – Key figures (EUR mn)
Financials 2015 – Key figures (EUR mn) 900 875 1,226 801 1,153 800 730 1,110 1,066 683 1,048 700 653 500 600 529 505 50.6% 500 450 45.5% 400 346 355 44.8% 43.8% 296 280 300 328 200 153 44.9% 100 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 interest bearing financial debt liquid assets net fin
Slide 11: 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 12: Outlook 2016: Implement and decide
Outlook 2016: Implement and decide Decision on how to Implement new organization Business with focus on regional decision strengthen pulp and co- products position 1 making Deliver EUR 50 mn EBITDA Customer Establish regional application and by 2017 with commercial Intimacy customer innovati
Slide 13: Outlook 2016: Further substantial improvement
Outlook 2016: Further substantial improvement Global fiber market to remain volatile High cotton stock and cheap polyester fibers increase inter-fiber price competition Lenzing’s relevant market segment “wood-based cellulose fibers”1 implies a more positive development than the global fiber ma
Slide 14: 2015 – Financial information
2015 – Financial information
Slide 15: 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 Work performed by the Group and capitalized 29.2 34.6 (15.6) Other operating income 45.7 48.5 (5.8) Cost of material and purc
Slide 16: 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) - Work performed by the Group and ca
Slide 17: 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 18: 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 19: 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 20: FY 2015: Solid balance sheet
FY 2015: Solid balance sheet as of Dec. 31, 2015 Change According to IFRS (EUR mn) 31 Dec. 2015 31 Dec. 2014 in % 0 ∑ 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 cash and cash 0 2500 equivalents 347.3 271.8 27.8 Total liabilities 1,21
Slide 21: 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 22: 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 23: Appendix – Equity story
Appendix — Equity story QEENZING
Slide 24: 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 25: 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 2015 25
Slide 26: …enjoys market leadership in all three fiber generations…
…enjoys market leadership in all three fiber generations… Competitive The fiber production is fully secured by robust Market Position dissolving wood pulp supply (> 50% own pulp Intensity production with true biorefineries and long- term contracts) #1 Low #1 Medium #2 High Source: Lenzing data, CCFG
Slide 27: … is 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 Stable Fibers (including Modal and TENCEL®), excluding viscose filaments, acetate tow, cigarette filters 2) Based on latest available company infor
Slide 28: …is innovation leader in lyocell with TENCEL®…
…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 partners
Slide 29: …and is THE trusted long-term partner for global consumer brands
…and 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 40%
Slide 30: 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 31: 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 32: The new strategy – driving value growth
The new strategy – driving value growth Business Customer Intimacy Areas New Forward Strengthen Solutions the Core Specialization 32
Slide 33: 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 34: 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 35: 2020 financial targets
2020 financial targets EBITDA Net financial debt/ ROCE growth of 10% p.a. EBITDA ≥10% (vs. 2014 base) <2.5 35
Slide 36: 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 37: 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. 37
Slide 38: 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 39: 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 40: Lenzing is the innovation leader
Lenzing is the innovation leader Industry leading R&D spend (EUR 29.81 mn in 2015) R&D expenses (2000-2015) 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 41: 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 42: 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 43: 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 44: 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 45: Megatrend: Sustainability
Megatrend: Sustainability TENCEL® - a sustainable production process Direct solving process Closed-loop process Complete recovery of solvent 45
Slide 46: 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 47: 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 48: …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 48
Slide 49: 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 December 30, 2015 69.55 EUR B&C Privatstiftung Market capitalization 1,84
Slide 50: Back-up
QEENZING
Slide 51: 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 52: 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® 52
Slide 53: Where our fibers end up
Where our fibers end up Home and Interiors 100% TENCEL® Lenzing Modal® bedlinen towels duvets bathrobes mattresses …. 53
Slide 54: Where our fibers end up
Where our fibers end up Nonwovens TENCEL® TENCEL® TENCEL® wash cloth face masks hygiene articles 54
Slide 55: 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 56: 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