Lenzing Ag · VIE:LNZ
Lenzing — Q3 2023 Earnings Presentation
36 slides from Lenzing's earnings presentation, Nov 3, 2023
Slide 1: Lenzing Investor Presentation Results 01-09/2023
Lenzing Investor Presentation Results 01-09/2023 – November 03, 2023 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: Today's agenda
Today’s agenda Topic Presenter 1 Executive Summary • Stephan Sielaff, CEO 2 Market update • Christian Skilich, CPO • Stephan Sielaff, CEO 3 Financials • Nico Reiner, CFO 4 Performance program • Stephan Sielaff, CEO 5 Fully invested operations • Stephan Sielaff, CEO 6 Outlook • Stephan Sielaff, CEO •
Slide 4: Lenzing with positive FCF in Q3 – holistic performance program initiated
Lenzing with positive FCF in Q3 – holistic performance program initiated to be prepared for continued weak market environment Key developments & strategic highlights ● Continued weak markets relevant to Lenzing keep demand under pressure, whilst raw material and energy costs remain volatile on eleva
Slide 5: Market update
Market update www.lenzing.com
Slide 6: Energy and NaOH prices normalized further, but remain elevated
Energy and NaOH prices normalized further, but remain elevated Development of selected energy and NaOH market prices, 2020-Q3/2023 Indexed, Q1 2020 = 100 Energy prices NaOH prices 2,250 500 2,000 1,750 400 1,500 300 1,250 1,000 200 750 NaOH Europe Natural Gas Europe NaOH Southeast Asia 500 100 NaOH
Slide 7: Economic uncertainty and cost pressure softening apparel demand
Economic uncertainty and cost pressure on consumers resulted in softening apparel demand in key markets such as Europe and China Q3 2023 apparel retail sales1 by region Global Percent, Q3 '23 vs. Q2 '23, inflation adjusted, seasonally adjusted -3 % Q3 2023 QoQ United States Europe 1% -5 % Q3 2023 Qo
Slide 8: Apparel inventory levels remain elevated but relatively stable
Apparel inventory levels remain elevated but relatively stable against the typical seasonal trend US clothing inventories (retail and wholesale) EXAMPLE: US USD bn -1% -8% 110 105 100 2022 95 2023 90 +23% 85 80 75 2012-2019 range & 70 average 65 60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec NOT
Slide 9: Fiber market prices remain on low levels
Fiber market prices remain on low levels Fiber market prices in China USD/kg, excl. VAT Viscose Cotton Dissolving hardwood pulp 4.00 Viscose 3.50 • Chinese VSF market prices have improved somewhat since August, due to peak season 3.00 and cost increases Cotton 2.50 • Despite adverse impacts from cli
Slide 10: Lenzing's specialty fibers increased premium until 2019 and maintained it
Lenzing's specialty fibers increased premium until 2019 and maintained it at solid level since, supported by strong branding Cellulosic fiber prices in China Overview of co-branding programs, # 6-months average, percent from January 2017, converted at constant FX rates 697 100 Lenzing specialties1 5
Slide 11: Financials
Financials www.lenzing.com
Slide 12: Revenues decreased slightly, EBITDA at EUR 83 mn
Revenues decreased slightly, EBITDA at EUR 83 mn Group revenue in EUR mn EBITDA in EUR mn -5% -17% 1,970 263 1,866 Revenue split 01-09/2023 2192 -9% +11% 26% 1071 677 596 623 627 616 83 1 741 74% 301 Fiber Pulp Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q3/2023 01-09 01-09 01-09 01-09 2022 2023 2022 2023 -211
Slide 13: EBIT decreased to EUR 1 mn in Q3 2023
EBIT decreased to EUR 1 mn in Q3 2023 EBIT in EUR mn Group net profit after minorities and hybrid bond, in EUR mn EPS in EUR -0.20 -4.91 -3.03 -0.89 -0.97 2.16 -4.90 -15 -39 113 57 29 17 -5 1 -24 -44 -41 -80 -149 01-09 2022 01-09 2023 -130 -96 -11 Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q3/2023 Q3/2022 Q4/2
Slide 14: FCF steadily improved quarter to quarter to EUR 27 mn in Q3 2023
FCF steadily improved quarter to quarter to EUR 27 mn in Q3 2023 Free cash flow1, in EUR mn Trading working capital3, in EUR mn +150 27 632 621 617 568 571 90 20 18 -48 -52 -63 -78 25% 25% 21% 24% 25% -143 -33 -85 -123 -167 -132 Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q3/2023 -245 Q3/2022 Q4/2022 Q1/2023 Q2
Slide 15: Net financial debt at EUR 1.57 bn after capital increase
Net financial debt at EUR 1.57 bn after capital increase, liquidity cushion at EUR 1 bn Net financial debt1,2, in EUR mn Balance sheet metrics -19% According to IFRS (EUR mn) 30 Sep. 2023 31 Dec. 2022 Change in % 1,915 1,953 Total assets 5,891.9 5,525.0 6.6 1,799 Liquid assets3 754.6 453.3 66.5 1,63
Slide 16: Performance program
Performance program www.lenzing.com
Slide 17: Rationale for new performance program
Rationale for new performance program: improve profitability and cash flow generation in a continued stagnant market environment ● Continued weak market environment during H2 2023 Market ● Still low demand and pricing dynamics in global fiber markets context ● Market recovery takes more time than in
Slide 18: Performance program launched with three pillars
Performance program launched in Q3 2023 with three pillars: top line growth, cost excellence and cash flow generation Lenzing’s holistic performance program Strengthening top line growth with defined sales 1 initiatives in push and pull Fibers Cost excellence Top line growth FCF generation Pulp 2 En
Slide 19: Holistic performance program drives positive FCF generation
Holistic performance program drives positive FCF generation 1 • Enhancement of push (direct customers) and pull (global brands) sales organization Top line growth • Dedicated sales initiatives to grab growth opportunities in Lenzing relevant markets • Higher share of wallet and strengthened collabor
Slide 20: Fully invested operations
Fully invested operations www.lenzing.com
Slide 21: Capacity expansions and site conversions are completed
Capacity expansions and site conversions are completed - all fiber sites are now 100 % converted for specialty fiber production Fully invested capacity expansions Site conversions completed 100 kt Lyocell plant 500 kt single line Upgrade and conversion of fiber sites in SPV Purwakarta, Indonesia in
Slide 22: Outlook
w.lenzing.com Outlook e | Lenzing Innovative by nature
Slide 23: Current situation in the TX industry remained nearly unchanged in negative territory
Current situation in the TX industry remained nearly unchanged in negative territory TX industry sentiment by survey date, balance index Percent of respondents, balance between good vs. poor Current situation Expectations in 6 months 40 36 Six months expectations 32 remain stable 28 29 30 26 23 22 2
Slide 24: Lower demand and elevated inventories weigh on apparel brands
Lower demand and elevated inventories continue to weigh on apparel brands' performance; nonwovens more stable ” Company Date Oct 26, Quotes recent trading updates "In the US, retailers continue to take a cautious approach to managing inventory levels and placing orders. Consumer demand 2023 for soft
Slide 25: After the perfect storm in H2 2022, recovery is taking time
After the “perfect storm” built up in H2 2022, recovery is taking time H2 2022 – a “perfect storm” 01-09 2023 Expected Q4 2023 Unprecedented increase in Declining – but still elevated – Costs are expected to continue to Costs raw material and energy cost energy and raw material prices remain volatil
Slide 26: Massively depressed market environment maintained; guidance 2023 confirmed
Massively depressed market environment maintained; guidance 2023 confirmed Lenzing expects weak market conditions to continue weighing on EBITDA ● Demand is expected to remain on low levels due to the continued weak markets relevant to Lenzing in Q4 2023 ● Prices are expected to remain under pressur
Slide 27: Lenzing is uniquely positioned to take full advantage of market rebound
Lenzing is uniquely positioned to take full advantage of market rebound Best positioned in terms of megatrends • Benefitting from increased sustainability awareness Strong brand portfolio • Growing demand for WBCF 1 due to the widening of the cellulosic gap driven by cotton supply constraints • High
Slide 28: Thank you for your attention!
for your attention! www.lenzing.com
Slide 29: Backup
w.lenzing.com Backup e | Lenzing Innovative by nature
Slide 30: Fiber revenue breakdown
Fiber revenue breakdown Fiber revenue by application, % Specialties share of fiber sales in Q3-2023 Standard Fibers 37% 41% 35% 38% 36% 21% 63% 59% 65% 62% 64% Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q3/2023 79% Textile fibers Nonwoven fibers Specialty Fibers1 1) LENZING™ Lyocell, LENZING™ Modal, LENZING™ S
Slide 31: Quarterly P&L development
Quarterly P&L development Delta Q3 % EUR mn Q3 2023 Q2 2023 Q1 2023 Q3 2022 Delta Q3 YoY YoY Revenues 615,5 627,1 623,1 676,5 -61,0 -9,0% Cost of Sales -561,0 -502,4 -562,0 -583,3 22,3 -3,8% % of Revenue -91,1% -80,1% -90,2% -86,2% Gross Profit 54,6 124,7 61,1 93,2 -38,7 -41,5% % of Revenue 8,9% 19,
Slide 32: Topline Breakdown 01-09 2023
Topline Breakdown 01-09 2023 YTD EUR mn Q3-c 2023 Q3-c 2022 Change Wood-based cellulosic fibers 1 304,4 1 617,4 -313,0 -19,3% Co-Products Fibers 46,0 46,4 -0,4 -0,8% Mechanical and plan engineering, engineering services and 26,9 others -2,7 29,6 < -100,0% Fiber 1 377,4 1 661,1 -283,7 -17,1% Pulp 376
Slide 33: Quarterly cash flow development
Quarterly cash flow development Change Change (EUR mn) Q3/2023 Q2/2023 Q3/Q2 (%) Q3/2022 Q3/Q3 (%) Gross cash flow (after taxes and interest) 54.5 36.5 49.5 78.5 (30.6) Change in total working capital1 35.8 (18.0) - (58.9) - Operating cash flow 90.3 18.5 388.3 19.6 361.4 Investment cash flow2 (63.0)
Slide 34: Q3-2023: Net debt bridge
Q3-2023: Net debt bridge Net Cash Net Financial Capex3 Change Financial Debt Q2 Net (incl. Fin. in Trading Change in Currency IFRS 16 Capital Debt Q3 20231 Tax Interest Gross CF 2 Ass.) WC other WC Dividend Translation Leasing Increase Others 20231 Change in total working capital EUR 34.3 mn4 -1.7 1
Slide 35: 01-09/2023: Net debt bridge
01-09/2023: Net debt bridge Net Cash Net Financial Capex3 Change Financial Debt FY Net (incl. Fin. in Trading Change in Currency IFRS 16 Capital Debt Q3 20221 Tax Interest Gross CF 2 Ass.) WC other WC Dividend Translation Leasing Increase Others 20231 Change in total working capital EUR 26.9 mn4 -3.
Slide 36: 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