Lenzing Ag · VIE:LNZ
Lenzing — FY2022 Earnings Presentation
47 slides from Lenzing's earnings presentation, Mar 9, 2023
Slide 1: Lenzing Investor Presentation Full-year results 2022
Lenzing Investor Presentation Full-year results 2022 – March 09, 2023
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 Key developments & strategic highlights ● Markets remained challenging with strong headwinds on cost, price and demand especially in H2 2022 ● EUR > 70 mn cost reduction program well on track ● Successful production ramp-up of new Lyocell production site in Thailand and new DWP site in B
Slide 4: Excellent prospects for Lenzing remain unchanged
Excellent prospects for Lenzing remain unchanged Prospects remain positive The comeback year 2024+ The “perfect storm” in 2023 H2 2022 2022 www.lenzing.com 09/03/23 - 4
Slide 5: The perfect storm in H2 2022
2022 The „perfect storm“ in H2 2022 www.lenzing.com
Slide 6: 2022 saw an unprecedented increase in energy and NaOH cost across the industry
2022 saw an unprecedented increase in energy and NaOH cost across the industry Development of selected energy and NaOH market prices, 2020-2022 Indexed, Q1 2020 = 100 Energy prices NaOH prices 2,250 500 NaOH Europe 2,000 1,750 400 1,500 300 1,250 1,000 NaOH Southeast Asia Natural Gas Europe 200 NaOH
Slide 7: Energy and chemicals accounted for > 35% of production cost in 2022
Due to the cost increases, energy and chemicals accounted for > 35 % of production cost in 2022 Production cost breakdown 20211 Production cost breakdown 20221 Energy Energy 12% 17% Chemicals 15% 20% Chemicals 63% Others 73% Others 1) Production cost not equal to cost of sales www.lenzing.com 09/03/
Slide 8: Initial optimism early 2022 led to unfavorable decisions in the industry
Initial optimism early 2022 led to unfavorable decisions in the industry in retrospect Fashion executives' view1 on 2022 when asked in Nov 2021 % of respondents, n=221 Key takeaways At the end of 2021, the textile industry saw a Worse very strong 2022 ahead 9% 91 % expected the year to be better
Slide 9: Clothing inventories increased to record high levels in H2 2022
Clothing inventories increased to record high levels in H2 2022 US clothing inventories (retail and wholesale) EXAMPLE: US USD bn 105 100 95 2022 90 85 80 75 2012-2019 range and average 70 65 60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec NOTE: Including inventories in both retail and wholesale.
Slide 10: Brands reacted with order postponements and cancellations
Brands reacted with order postponements and cancellations reflected in drop of apparel imports US monthly apparel imports, 2022 EU-27 monthly apparel imports, 2022 USD bn EUR bn 11 11 10 10 9 9 8 8 7 7 6 6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov De
Slide 11: Business sentiment in textile industry rapidly declined in H2 2022
Business sentiment in textile industry rapidly declined in H2 2022, leading to negative impact on demand, operating rates and prices Current business situation TX industry Operating rates VSF China Prices VSF China (CCFG medium) % of respondents, balance between good % RMB/ton, incl. VAT vs. poor 20
Slide 12: Lenzing fiber demand declined by 10% in 2022
As a consequence, Lenzing fiber demand declined by 10 % in 2022 Lenzing fiber sales volumes in thousand tons Annual development Half-yearly development -10.5% 899 909 787 814 • Overall decrease in demand for fibers in the textile industry led -19.1% to a decline of fiber sales for 450 Lenzing by ~ 1
Slide 13: Higher cost passed on in H1, H2 2022 suffered from lower demand
Higher cost could be mainly passed on in H1, however, H2 2022 suffered from lower demand and prices came under pressure Group revenue in EUR mn EBITDA1 in EUR mn Quarterly development Quarterly development 679 677 101 606 615 596 88 65 (15%) 74 (14%) (11%) (11%) -21 Q4/2021 Q1/2022 Q2/2022 Q3/2022 Q
Slide 14: EBIT significantly lower in 2022
EBIT significantly lower in 2022 EBIT1 in EUR mn Group net profit after minorities and hybrid bond¹, in EUR mn Quarterly development EPS1 in EUR 44 52 Quarterly development 22 (7%) (8%) 17 (4%) (3%) 0.39 0.87 1.49 -0.20 -4.91 40 10 23 -5 -96 (-16%) -130 Q4/2021 Q1/2022 Q2/2022 Q3/2022 Q4/2022 Q4/202
Slide 15: Free cash flow impacted by planned capex and inventories build-up
Free cash flow impacted by planned capex for new up and running sites in Thailand and Brazil as well as inventories build-up Free cash flow, in EUR mn Trading working capital, in EUR mn 24 47.3% 1 394 571 280 245 49 -43 444 404 384 387 -256 -244 -664 22% 24% -839 -698 21% 21% 16% -615 -741 -445 2018
Slide 16: Substantial liquidity buffer covered impact from recent headwinds
Substantial liquidity buffer enabled Lenzing to cover impact from recent headwinds with a strong position by year-end 2022 Net financial debt, in EUR mn Balance sheet metrics Change 1,869 According to IFRS (EUR mn) 31 Dec. 2022 31 Dec. 2021 in % Total assets 5,525.0 5,322.8 3.8 1,362 Liquid assets3
Slide 17: 2022 solid start in H1, H2 a perfect storm
2022 with a solid start in H1, however, H2 2022 was a “perfect storm” - sudden and steep demand drop with rising costs H1 2022 – a solid start in the year H2 2022 – a “perfect storm” • Unprecedented increase in raw material Costs and energy cost across the industry • Strong demand in all fiber produ
Slide 18: Measures taken proactively to reduce costs and secure liquidity
Measures have been taken proactively already in 2022 to further reduce costs and secure liquidity Global program to define and implement cost reduction measures ● Reorganization and cost savings program with annualized and recurring impact of > EUR 70 mn well on track, full impact by the end of 2023
Slide 19: The comeback year 2023
2023 The comeback year www.lenzing.com
Slide 20: Many indicators point towards an improved outlook in early 2023
Many indicators point towards an improved outlook in early 2023, albeit starting from a low level and risks remain In January, the IMF raised its 2023 global GDP forecast for the first Macro growth time to now +2.9 % YoY Textile industry In January survey, global textile industry business expectatio
Slide 21: After the perfect storm, recovery is expected in 2023
After the “perfect storm” built up in H2 2022, recovery is expected in 2023 H2 2022 – a “perfect storm” in H2 2022 2023 expectation – the comeback year • Declining energy and raw material • Unprecedented increase in raw material Costs prices visible in current market and energy cost across the indus
Slide 22: Liquidity position remains strong
Liquidity position remains strong Liquidity cushion, EUR mn Debt maturities1, EUR mn Quarterly development 686 • Solid liquidity position consisting of 390 liquid assets and undrawn credit facilities 192 141 61 • Liquidity-generating measures are in 0 0 0 0 place or have been initiated (e.g. cost Q1
Slide 23: Lenzing expects EBITDA in 2023 of EUR 320 mn - 420 mn
Lenzing expects EBITDA in 2023 to be in the range of EUR 320 mn - 420 mn Lenzing with focus on clear operational focal points ● Demand in Q1 2023 increasing but still on a low level ● Capacity utilization with positive developments in Q1 2023 but not yet on pre-crisis levels ● Visibility remains low
Slide 24: Prospects remain positive 2024+
2024+ Prospects remain positive www.lenzing.com
Slide 25: History proves textiles market comes back stronger after crises
History proves that textiles market comes back stronger after a crises Setbacks of global fiber demand over the last 60 years Global fiber demand, 1960-20221 Covid-19 Million tons pandemic 120 Global Financial 100 Crisis 80 Asian Financial Early 90s Crisis 60 Early 80s Recession Oil Crisis Recession
Slide 26: Outlook remains positive due to cellulose gap and sustainable fiber gap
The outlook for Lenzing remains positive due to cellulose gap and sustainable fiber gap Expected long-term growth rates p.a., % >20% ~3% ~4-6% ~1% ~2-3% Population Fiber market GDP Wood-based Lyocell cellulosic fibers ● Global fiber demand expected to continue its long-term growth trajectory at ~2-3
Slide 27: Lenzing with strong focus on innovations
Lenzing with strong focus on innovations Selected recent fiber and pulp highlights Lenzing’s VEOCEL™ brand Lenzing celebrates 30 years of launches hydrophobic Lyocell TENCEL™ fibers fibers with Dry technology TENCEL™ Modal fiber with Lenzing expands carbon neutral Indigo Color technology won fiber p
Slide 28: VEOCEL brand awareness already close to 40%
VEOCEL™ is still a very young brand – however, brand awareness already close to 40 % VEOCEL™ branding KPIs Co-branding programs Aided brand awareness of VEOCEL™ in nonwovens applications (in %)1 Selected co-branding partners 37 38 25 33 9 27 2020 2021 2022 2020 2021 2022 1) Source: Nielsen brand tra
Slide 29: TENCEL with further increase of co-branding programs
TENCEL™ with further increase of co-branding programs TENCEL™ branding KPIs Co-branding programs Aided brand awareness of TENCEL™ in Selected co-branding partners apparel and home textiles (in %)1 +23% 697 567 36 35 168 30 109 27 2019 2020 2021 2022 2019 2020 2021 2022 1) Source: Nielsen brand track
Slide 30: New and upgraded assets strengthen Lenzing's foundation
New and upgraded assets strengthen Lenzing’s foundation to benefit from full market recovery Fully invested capacity expansions Site conversions ongoing 100 kt Lyocell plant in 500 kt single line DWP Upgrade and conversion of fiber sites in Thailand mill in Brazil1 Nanjing, China and Purwakarta, Ind
Slide 31: Lenzing confirms position as sustainability champion
Lenzing confirms position as sustainability champion ESG Ratings Lenzing was in the second year in a Lenzing defended it’s “AA” rating - Lenzing has been reawarded row recognized with a triple “A” score with a continuous improvement of its Platinum status in EcoVadis’ CSR for global climate, forests
Slide 32: Excellent prospects for Lenzing remain unchanged
Excellent prospects for Lenzing remain unchanged Prospects remain positive 2024+ The comeback year 2023 The “perfect storm” in H2 2022 ● Leading position to tackle megatrends 2022 of sustainability and circularity ● Demand is expected to ● Specialty fibers with highest growth recover in the course o
Slide 33: Thank you for your attention!
for your attention! www.lenzing.com
Slide 34: Backup
w.lenzing.com Backup e | Lenzing Innovative by nature
Slide 35: Group revenue breakdown
Group revenue breakdown Fiber revenue by application, % Specialties share of fiber sales in 2022 Standard Fibers 29% 32% 32% 37% 41% 71% 68% 68% 63% 59% 26% Q4/2021 Q1/2022 Q2/2022 Q3/2022 Q4/2022 Nonwoven fibers Textile fibers 74% 29% 30% 31% 35% 38% Specialty Fibers1 71% 70% 62% 69% 65% 1) LENZING
Slide 36: Group P&L
Group P&L YTD MEUR Q4-c 2022 Q4-c 2021 Change Revenues 2 565,7 2 194,6 371,1 16,9% Cost of Sales -2 162,6 -1 692,8 -469,8 27,8% % of Revenue -84,3% -77,1% -7,2% Gross Profit 403,1 501,9 -98,7 -19,7% % of Revenue 15,7% 22,9% -7,2% Selling Expenses -286,7 -234,0 -52,8 22,6% % of Revenue -11,2% -10,7%
Slide 37: Quarterly P&L development
Quarterly P&L development Delta Q4 % Delta Q3 - Q4 Delta % Q3 - MEUR Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Delta Q4 YoY YoY 2022 Q4 2022 Revenues 595,5 676,5 678,6 615,0 606,1 -10,6 -1,7% -81,0 -13,6% -12,0% Cost of Sales -568,8 -583,3 -524,4 -486,1 -500,7 -68,2 13,6% 14,4 -2,5% % of Revenue -95,5
Slide 38: Division EBITDA Q4-c 2022 vs Q4-c 2021
Division EBITDA Q4-c 2022 vs Q4-c 2021 EBITDA per Division in EUR mn Q4-c / 2022 Q4-c / 2021 210 363 310 -61 242 214 -101 33 Fiber Pulp Other1) 2) Group Fiber Pulp Other1 Group 1) Incl. consolidation 2) Other includes the total restructuring provision www.lenzing.com 09/03/23 - 38
Slide 39: Topline Breakdown Q4-c 2022 vs Q4-c 2021
Topline Breakdown Q4-c 2022 vs Q4-c 2021 EUR mn 2022 2021 Wood-based cellulosic fibers 2,013.8 1,833.6 Co-products of fiber production 55.9 52.8 Mechanical and plant engineering, engineering services and others 24.1 17.9 Division Fiber 2,093.8 1,904.3 Pulp 272.1 162.2 Biorefinery-products and energy
Slide 40: Quarterly cash flow development
Quarterly cash flow development Change Change Q4/Q4 Change (EUR mn) Q4/2022 Q3/2022 Q4/Q3 (%) Q4/2021 (%) 01-12/2022 01-12/2021 y-o-y (%) Gross cash flow (after taxes and interest) (3.4) 78.5 - 70.9 - 244.8 372.0 (34.2) Change in total working capital1 (74.6) (58.9) 26.6 15.4 - (288.0) 22.0 - Operat
Slide 41: Cash flow and trading working capital development
Cash flow and trading working capital development Free cash flow, in EUR mn Trading working capital, in EUR mn 0% 86 80 567 568 571 20 -64 -78 387 397 -143 -183 -214 24.0% 20.9% 21.0% -205 -123 -167 16.0% 16.1% -103 -128 -245 Q4/2021 Q1/2022 Q2/2022 Q3/2022 Q4/2022 -270 Q4/2021 Q1/2022 Q2/2022 Q3/20
Slide 42: FY2022: Net debt bridge
FY2022: Net debt bridge Net Cash Net Financial Capex2 Change Financial Debt FY Net (incl. Fin. in Trading Change in Currency IFRS 16 Capital Debt FY 2021 Tax Interest Gross CF 1 Ass.) WC other WC Dividend Translation Leasing Increase Others 2022 977.0 -357.1 Change in total 1,869.0 working capital 4
Slide 43: Q4 2022: Net debt bridge
Q4 2022: Net debt bridge Net Cash Net Financial Capex2 Change Financial Debt Q3 Net (incl. Fin. in Trading Change in Currency IFRS 16 Capital Debt Q4 2022 Tax Interest Gross CF 1 Ass.) WC other WC Dividend Translation Leasing Increase Others 2022 1,714.2 Change in total 1,869.0 working capital EUR (
Slide 44: Balance sheet structure and return on capital employed
Balance sheet structure and return on capital employed Balance sheet positions, in EUR mn Capital employed, in EUR mn EUR 5,525 mn 3,542 2,025.9 Equity 2,767 2,216 3,613.6 1,923 1,750 PP&E1 10.3% 5.4% 5.4% 2,322.2 2.0% Financial liabilities -0.5% 2018 2019 2020 2021 2022 712.5 Inventories 293.6 Trad
Slide 45: Gradual recovery of China's economy expected to have positive impact
Gradual recovery of China’s economy is expected to have positive impact on Chinese fiber and pulp markets Fiber prices in China USD/kg, excl. VAT Viscose Viscose Cotton Polyester Dissolving hardwood pulp • VSF market started bullish after Chinese New Year, however the 4.00 recovery proved to be more
Slide 46: Cotton price down after last year's spike
Cotton price down after last year's spike, Lenzing specialties similar to other cellulosics Cellulosic fiber prices in China 6-months average, percent from January 2017, converted at constant FX rates 160 150 140 130 120 Lenzing specialties1 110 CC Index 100 90 VSF (TX) CCF high 80 70 60 1/17 7/17 1
Slide 47: Contact and financial calendar
Contact and financial calendar Investor contact Financial calendar Sébastien Knus Annual results 2022 March 9, 2023 VP Capital Markets 79th Annual General Meeting April 19, 2023 Results 01-03/2023 May 3, 2023 Phone: +43 7672 701 3599 E-mail: s.knus@lenzing.com Half-year results 2023 August 2, 2023 R