Lenzing AG · VIE:LNZ
Lenzing — FY2013 Earnings Presentation
29 slides from Lenzing's earnings presentation, Mar 21, 2014
Slide 1: Press Conference Annual Results 2013
Press Conference Annual Results 2013 Vienna, March 21, 2014
Slide 2: 2013 at a glance
2013 at a glance Difficult market environment with very weak fiber selling prices Strong headwinds on the market Extremely unsatisfactory price situation However, unchanged strong volume demand for Lenzing fibers Revised guidance fulfilled Countermeasures were initiated excelLENZ 1.0 cost re
Slide 3: Lenzing Group: Highlights 2013
Lenzing Group: Highlights 2013 New record fiber shipment volumes: 890,000 tons of fibers in 2013 (+10%) Consolidated sales: EUR 1.91 bn (2012: EUR 2.09 bn) EBITDA: EUR 225.4 mn (2012: EUR 352.4 mn) EBIT: EUR 86.4 mn (2012: EUR 231.5 mn) Dividend remains unchanged at EUR 1.75 per share In
Slide 4: Business environment in the fiber industry
Business environment in the fiber industry Distorted price structures due to politically-motivated market intervention Intransparent cotton subsidy policy in China Historically unique high cotton inventories in China Surplus production capacities in the Chinese viscose fiber industry Visco
Slide 5: Lenzing takes countermeasures: Adjustments to business strategy in 2013
Lenzing takes countermeasures: Adjustments to business strategy in 2013 Market offensive Risk minimization Scalability of TENCEL® Focus on best possible cash flow generation Promote Lenzing Modal® specialty TENCEL® plant in Lenzing: only blends current capacity expansion project Viscose: C
Slide 6: Lenzing takes countermeasures: More efficient Group organizational structure
Lenzing takes countermeasures: More efficient Group organizational structure Comprehensive, internal reorganization program More effective decision-making processes based on new, functional structures New sales and marketing organization with an intensified focus on customers and business develo
Slide 7: Lenzing takes countermeasures: excelLENZ programs
Lenzing takes countermeasures: excelLENZ programs excelLENZ 1.0 – first initiative – starting Q1 2013 Double-digit million euro savings achieved in 2013: about EUR 40 mn excelLENZ 2.0 – second program – launched in Q4 2013 Initial positive effects as of Q1 2014 – about EUR 60 mn in savings in 20
Slide 8: Segment Fibers
Segment Fibers QLENZING LEADING FIBER INNOVATION
Slide 9: World fiber production in 2013
World fiber production in 2013 Weak growth due to unsatisfactory global economic situation Global fiber production in 2013: +1.6% to 85.4 mn tons Man-made cellulose fibers in 2013: +9.6% to 5.8 mn tons Wool +0.7% to 1.1 mn tons Cotton -4.1% to 25.7 mn tons Chemical fibers +4.3% to 58.5 mn tons MMC f
Slide 10: Development of the cotton price
Development of the cotton price Cotton price remains the most important benchmark for fiber prices Price development lost considerable momentum following the speculative excesses of 2010/11, the extreme price fluctuations during the year and the subsequent price decline Intransparent cotton inve
Slide 11: China's policies dominate developments on the cotton market/1
China‘s policies dominate developments on the cotton market/1 The importance of the Chinese fiber market for the global fiber price situation increased further in 2013 A large share of the world‘s cotton inventories is in China 11
Slide 12: China's policies dominate developments on the cotton market/2
China‘s policies dominate developments on the cotton market/2 At the end of the cotton harvest season 2012/2013, the stock-to-use ratio totaled about 116% This ratio is likely to climb to about 147% in 2013/14 12
Slide 13: Fiber selling prices under pressure
Fiber selling prices under pressure 13
Slide 14: Viscose fiber prices in 2013
Viscose fiber prices in 2013 Excess production capacities in China Factories operated at the highest possible capacity in 2013 to generate cash, even if the earnings situation was unsatisfactory Forward sales of fibers at cash cost Market share gains of Chinese viscose producers due to aggre
Slide 15: Lenzing 2013: Record fiber sales
Lenzing 2013: Record fiber sales Record fiber sales volumes of about 890,000 tons in 2013 (+10%) Asia is the most important market for Lenzing with 2/3 of total sales Sales growth due to first-time whole-year availability of Line 5 at SPV and higher production volumes at the TENCEL® plant in M
Slide 16: Sales development with textile and nonwoven fibers
Sales development with textile and nonwoven fibers New record shipment volumes for Modal fibers New markets and areas of application opened up for TENCEL® Clear growth focus for nonwovens 1000 Sales volume (kt) 900 800 269 700 238 600 206 500 Nonwovens 400 Textile 300 572 621 506 200 100 0 201
Slide 17: Construction of TENCEL production plant in Lenzing fully on schedule
Construction of TENCEL® production plant in Lenzing fully on schedule Almost all technical equipment was already installed at the end of 2013 Tests for individual plant components were already started Fiber production test runs to start in the middle of 2014 140 new high-quality jobs created
Slide 18: Increased pulp production
Increased pulp production Successful conversion of Paskov facility In spite of higher fiber production volumes, Lenzing still produces about 50% of its own pulp needs. Total output increased to 533,000 tons of dissolving pulp (2012: 407,000 tons) Expansion and refitting program at Paskov (Czec
Slide 19: Innovations in 2013
Innovations in 2013 EUROCELTM: Lenzing Fibers “Made in Europe“ New fiber blend consisting of 50% Lenzing Viscose® and 50% TENCEL®, both produced in Europe High-end nonwovens quality for customers aiming to differentiate themselves from competitors based on regional origin and sustainability
Slide 20: Group results 2013
Group results 2013 QLENZING LEADING FIBER INNOVATION
Slide 21: Low fiber prices burden sales
Low fiber prices burden sales Average fiber selling prices down to EUR 1.70/kilogram in 2013 (-13% from 2012) EUR 61.8 mn in sales decrease due to loss of external pulp sales from Paskov resulting from higher internal Group consumption Savings thanks to the excelLENZ cost reduction program IFR
Slide 22: Balance sheet with ongoing high equity ratio
Balance sheet with ongoing high equity ratio Decline in the balance sheet total Provisions for excelLENZ 2.0 adjusted in the 2013 financial statements Solid balance sheet structure IFRS Dec. 31, Dec. 31, Change in % 2013 2012 Balance sheet total (EUR mn) 2,439.9 2,632.7 -7.3 Property, plant an
Slide 23: Outlook for the fiber market in 2014
Outlook for the fiber market in 2014 Continuation of very difficult price situation Ongoing volatile situation on the cotton market Experts expect further surplus production of cotton As a consequence, further increase in cotton inventories Subsidy policy for Chinese cotton continues to dist
Slide 24: Outlook 2014: Year of Transition
Outlook 2014: Year of Transition Lenzing strives to raise volume to close to 1 mn tons Speedy implementation of the excelLENZ 2.0 program One-off expenses already included in the 2013 financial statements 2014: Cost savings of about EUR 60 mn 2015: EUR 120 mn in cost reductions (annualized b
Slide 25: Megatrends remain valid for Lenzing
Megatrends remain valid for Lenzing Sales record demonstrates intact demand for Lenzing fibers Population Rising growth/ standard of Emerging living markets Volatility/Availability of all agro-based raw Global fiber developing Age structure in the countries materials market “Cellulose Sustainability
Slide 26: Thank you for your attention!
Thank you for your attention!
Slide 27: 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 28: Market strategy: Intensify sales of specialty fibers
Market strategy: Intensify sales of specialty fibers Lenzing stands out from the mass market due to ongoing innovations and new types of fibers Spun-dyed Lenzing Modal® COLOR fibers TENCEL® microfibers Flame-resistant TENCEL® fibers Specialty fibers such as Lenzing Modal® and TENCEL® conti
Slide 29: Innovations of 2013/Textile fibers
Innovations of 2013/Textile fibers Flame-resistant fibers for public transportation: Lenzing FR® Divan fibers Particularly strict safety guidelines must be fulfilled Lenzing FR® impresses due to the fact that the fiber does not melt, drip or afterglow in case of fire TENCEL® in upholstery fa