Lenzing AG · VIE:LNZ
Lenzing — FY2014 Earnings Presentation
28 slides from Lenzing's earnings presentation, Mar 24, 2015
Slide 1: Press Conference Annual Results 2014
Press Conference Annual Results 2014 Vienna, March 24, 2015
Slide 2: 2014 at a glance
2014 at a glance Ongoing difficult market environment, massive internal countermeasures, successful ramp-up of the TENCEL® fiber plant Continuing headwinds on the market Unchanged strong volume demand for Lenzing fibers Fiber prices remain under pressure – viscose selling prices largely stabiliz
Slide 3: Lenzing Group: Highlights 2014
Lenzing Group: Highlights 2014 Strong operating results, but burdened by value adjustments New record shipment volume of 961,000 tons of fibers (+8%) Revenue: EUR 1.86 bn (2013: EUR 1.91 bn, “like-for-like“: EUR 1.86 bn) Cost savings far surpass EUR 100 mn Negative non-recurring effect of EU
Slide 4: Business environment in the fiber industry
Business environment in the fiber industry Ongoing difficult price environment Price pressure on all fibers continues Changed cotton subsidy policy in China Cotton inventories remain at a record level Polyester fiber prices decline in conjunction with the drop in oil prices Continuing surp
Slide 5: Lenzing takes countermeasures
Lenzing takes countermeasures Intensification of previous focus on specialization Intensified focus on specialty Expand cost leadership fibers Fully leverage comparative Strict cost optimization at all sites advantages of TENCEL® and excelLENZ: structural savings of Lenzing Modal® EUR 160 mn p
Slide 6: Lenzing takes countermeasures: excelLENZ program
Lenzing takes countermeasures excelLENZ program The excelLENZ cost savings program was intensified in 2014 2013: savings of about EUR 40 mn 2014: cost reductions far in excess of EUR 100 mn (instead of originally budgeted EUR 60 mn) As of 2016: structural savings of EUR 160 mn p.a. More than
Slide 7: excelLENZ program – a sustainable improvement in cost position
Lenzing takes countermeasures ecxelLENZ program – a sustainable improvement in Lenzing‘s cost position 160 160 2014 40% 46% One-off 137 Structural 140 ++ 14% Incremental savings Total Runrate 120 30 121 100 35% 31% 2015 80 33% 60 107 2016 32% 43% 40 25% 20 0 Operational excellence 2014 2015 e Total
Slide 8: More efficient Group organizational structure
Lenzing takes countermeasures More efficient Group organizational structure Successful implementation of a functional organizational structure The previous divisional structure in the Business Units Textile Fibers and Nonwoven Fibers was terminated and replaced by a functional Group organization
Slide 9: Segment Fibers
Segment Fibers QLENZING LEADING FIBER INNOVATION i
Slide 10: Global fiber production in 2014
Global fiber production in 2014 First-time consolidation trend for man-made cellulose fibers Global fiber production in 2014: +1.9% (2013: +3.6%) to 89.4 mn tons Man-made cellulose fibers in 2014: +2.0% (2013: +9.3%) to 6.0 mn tons Wool +0.0% to Natural fibers 1.1 mn t & natural polymers Cotton +0.1
Slide 11: Development of the cotton price
Development of the cotton price Cotton remains the most important benchmark for fiber prices Price development lost considerable momentum following record prices of 2010/11, the extreme price fluctuations during the year and the subsequent price decline Strong price drop since mid-2014 due to Ch
Slide 12: Chinese policy dominates developments on the cotton market
Chinese policy dominates developments on the cotton market Ongoing high importance of the Chinese fiber market for the global price situation A large share of the world‘s cotton inventories is still in China 12
Slide 13: Low oil price pushes down polyester prices
Low oil price pushes down polyester prices Drastic drop in the price of crude oil accelerated the price decline for polyester in H2 2014 Price development of polyester (China) In USD/kg 1,7 1,5 -17% 1,3 1,1 0,9 13
Slide 14: Viscose fiber prices in 2014
Viscose fiber prices in 2014 Stabilization at a low level as of H2 2014 Continuing production overcapacities in China Factories still operated at full capacity in 2014 to generate cash even in the light of an unsatisfactory earnings situation Chinese fiber exports also trigger international pr
Slide 15: Lenzing 2014: Record fiber sales
Lenzing 2014: Record fiber sales Record fiber sales of about 960,000 tons in 2014 (+8%) Asia is the most important market for Lenzing, accounting for close to 2/3 of total sales volumes Sales growth mainly for TENCEL® (+30%) after completion of new production plant in Lenzing 15
Slide 16: Sales development of textile and nonwoven fibers
Sales development of textile and nonwoven fibers New record shipment volumes for Modal fibers and TENCEL® New markets and applications for TENCEL® Clear growth focus on nonwovens, also with TENCEL® 1200 SalesininTsd tsdTonnen to Absatz 1000 800 297 269 238 600 Nonwovens Textile 400 621 664 572
Slide 17: Successful ramp-up of TENCEL production plant in Lenzing
Successful ramp-up of TENCEL® production plant in Lenzing Largest TENCEL® fiber plant: annual capacity of 67,000 tons Lenzing TENCEL® capacity increased to about 220,000 tons p.a. 140 new, high quality jobs created Investments of about EUR 150 mn Expansion of undisputed global market leade
Slide 18: Increased pulp production
Increased pulp production Level of self-sufficiency up to 52% Total production output of about 554,000 tons of dissolving pulp (2013: about 523,000 tons) The Paskov plant (Czech Republic) fully converted to dissolving pulp in 2013 achieved a further 10% rise to 258,000 tons in 2014 18
Slide 19: Reorganization of technical areas
Reorganization of technical areas Technical Services of Lenzing AG will consist of four departments: Central Fiber Maintenance (with planning and workshops) Global Automation Global Engineering Lenzing Technik GmbH Repositioning of Lenzing Technik GmbH: Managed in a market-oriented man
Slide 20: Group results 2014
Group results 2014 QLENZING LEADING FIBER INNOVATION
Slide 21: Operating results above expectations
Operating results above expectations Write-down of goodwill burdens EBIT and net profit for the year Average fiber selling prices fell to EUR 1.57/kg in 2014 (-8% vs. 2013) Record sales volume of about 960,000 tons (+8% vs. 2013) Savings and improved product mix increased operating results (EB
Slide 22: Solid balance sheet structure
Solid balance sheet structure Lower level of net financial debt, cash management has positive impact Equity ratio down to 44.9% of balance sheet total Net financial debt reduced to below 10% Non-current liabilities down 6.1% IFRS Dec. 31, Dec. 31, Change in % 2014 2013 Balance sheet total (EUR
Slide 23: Strong rise in operating cash flow
Strong rise in operating cash flow Substantial drop in CAPEX Investments reduced to a minimum Focus on completion of the large TENCEL® fiber jumboline in Lenzing IFRS Dec. 31, 2014 Dec. 31, Change in % 2013 Operating cash flow (EUR mn) 218.8 82.3 +165.9 CAPEX (EUR mn) 104.3 248.71 -58.1 Cash flo
Slide 24: Outlook for the fiber market in 2015
Outlook for the fiber market in 2015 No price recovery in sight Falling oil prices put downward pressure on polyester prices and thus on fiber prices in general Cotton market: Producers react to low prices by reducing areas under cultivation China still has cotton inventories equal to an ent
Slide 25: Outlook Lenzing 2015
Outlook Lenzing 2015 Further improvement in the product mix, expansion of cost leadership Further sales increases for TENCEL® and Lenzing Modal® Stable price premiums New TENCEL® capacities take full effect in 2015 Resolute continuation of the excelLENZ program Targeted annualized savings
Slide 26: 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 World fiber Age structure in the developing countries materials market “Cellulose Sustainability
Slide 27: Thank you for your attention!
Thank you for your attention!
Slide 28: 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.