Lenzing Ag · VIE:LNZ
Lenzing — FY2019 Earnings Presentation
45 slides from Lenzing's earnings presentation, Mar 12, 2020
Slide 1: Lenzing Investor Presentation Full Year Results 2019
Lenzing Investor Presentation Full Year Results 2019 March 12, 2020 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: At a glance
At a glance 2019 financial results Outlook and guidance ● Revenue of EUR 2.11 bn (EUR 2.18 bn in 2018) ● 2020 results below 2019 level expected ● Specialty share with 51.6 % above target ● EBITDA of EUR 327 mn (EUR 382 mn in 2018) 2024 targets ● Reflecting unprecedented weakness in viscose price ● E
Slide 4: Highlights
Highlights www.lenzing.com
Slide 5: Strategy execution: delivered on 2019 targets
Strategy execution: delivered on 2019 targets ● Major decisions taken ● Greenfield DWP mill project in Brazil end of 2019 ● Decision to build state-of-the-art lyocell plant in Thailand ● Specialization ● Finalize second pilot line for TENCEL™ Luxe filaments ● Expansion of LENZING™ ECOVERO™ pro
Slide 6: Lenzing well recognized as sustainability leader
Lenzing well recognized as sustainability leader ESG ratings Well on track to excel on sustainability targets - 40% by 2024 - 20% waste - 50% sulfur > 80% supplier Transparency Net zero 2050 water emissions emissions assessment Higg FEM 3.0 ● Lenzing awarded strong ESG ratings by MSCI ● Lenzing the
Slide 7: Strong brands drive growth in eco-friendly specialty fibers
Strong brands drive growth in eco-friendly specialty fibers For Nonwovens For Textile For Industrial & Textile B2C Specialties B2C Specialties B2B www.veocel.com www.tencel.com www.lenzingindustrial.com www.ecovero.com www.lenzing.com 12/03/2020 - 7
Slide 8: TENCEL branding: strong improvement across KPIs
TENCEL™ branding: strong improvement across KPIs 6,870 10,553 4,054 7,502 91 mn 173 mn 3 109 421 k 888 k 6.9 bn 28.9 bn 25 % 27 % www.lenzing.com 12/03/2020 - 8
Slide 9: TENCEL collaboration with Red Carpet Green Dress at the Oscars
TENCEL™ collaboration with Red Carpet Green Dress™ at the Oscars® yields amazing results ● ~ 2.4 bn PR reach via almost 100 publications ● Majority of coverage in Tier 1 consumer media (i.e. Variety, Independent, LA Times, Vogue) ● ~ 40 mn digital reach via 330 social posts ● Louis Vuitton directly
Slide 10: Strong momentum for LENZING ECOVERO fibers
Strong momentum for LENZING™ ECOVERO™ fibers Focus on transparency and circularity pays off LENZING™ ECOVERO™ volume development (tons) ● Accelerated roll-out of physical identification system due to huge success of LENZING™ ECOVERO™ fibers ~40,000 ● Digital identification system (Blockchain technol
Slide 11: Market update
Market update www.lenzing.com
Slide 12: Wood-based fibers outgrow global market
Wood-based fibers outgrow global market Expected growth of global fiber demand until 2024 Million CAGR metric tons (2019e – 2024p2) 120 108 mn tons 100 Wood-based fibers1 (7 %) 4-6 % p.a. 80 Synthetic fibers 3-4 % p.a. 60 (63 %) 40 Cotton (1)-1 % p.a. (25 %) 20 Total fiber market 2-3 % p.a. 0 2000 2
Slide 13: Commodity prices under severe pressure in 2019
Commodity prices under severe pressure in 2019 ● US-China trade conflict triggers nervousness Staple fiber prices (China) in textile value chain USD/kg ● Decrease in utilization rates (fibers, (excl. VAT) 2.55 spinners, downstream) with further slow 2.35 down in Q4-2019 ahead of Chinese NY 2.15 ● Ch
Slide 14: Specialty fibers remain comparatively resilient
Specialty fibers remain comparatively resilient 120 115 110 Lenzing Specialties1,2 105 (Include Lenzing specialty viscose which is priced 100 on “VSF plus“ basis) 95 90 Cotton Index1 85 80 75 70 VSF (TX) CCF high1 65 0 01/17 03/17 05/17 07/17 09/17 11/17 01/18 03/18 05/18 07/18 09/18 11/18 01/19 03/
Slide 15: Chinese VSF market grim, but unlikely to get worse
Chinese VSF market grim, but unlikely to get worse ● In 2019, capacity additions (utilization rate declined VSF1 price trend and theoretical profit / loss in China to 77 % vs. 84 % in 2018) and trade tensions RMB/ton (incl. VAT) RMB/ton (curtailed demand) triggered increase in viscose 14,000 0 13,50
Slide 16: VSF capacity expansions have peaked
VSF capacity expansions have peaked Estimated viscose net capacity additions¹ ● In 2019, net additions of ~550 kt (mn tons) ~7.3 ● Some expansions were shifted to 2020 ~6.6 ~7.1 ● In 2020, net additions of ~500 kt feasible ● In 2021, net additions of potentially ~200 kt 2019 2020 2021 Estimated net
Slide 17: The lyocell market develops as expected
The lyocell market develops as expected ● Industry has been supply constrained for Lenzing well set up for future lyocell market years due to several competitive advantages ● Lenzing has been the sole market ● Only player with industrial scale (“Jumbo lines”) developer ● Alternative supply sources t
Slide 18: Expansion projects
Expansion projects www.lenzing.com
Slide 19: DWP expansion project in full swing
DWP expansion project in full swing ● Investment decision taken in December 2019 ● JV LD Celulose (LDC): Lenzing holds 51 %, Duratex 49 % Key facts: Financing details: ● 500 kt single line dissolving wood pulp mill ● Financing: Lenzing 51 %, Duratex 49 % Largest of its kind ● Financing structure: 37
Slide 20: Lyocell expansion project in Thailand fully on track
Lyocell expansion project in Thailand fully on track Key facts: ● 100 kt lyocell fiber plant Largest of its kind ● EUR 400 mn industrial capex ● Project on time and within budget ● Ramp-up expected end of 2021 ● Bioenergy secured ● Attractive tax incentive scheme www.lenzing.com 12/03/2020 - 20
Slide 21: Financials
Financials www.lenzing.com
Slide 22: P&L – Revenue
P&L – Revenue EUR mn Share of specialty fibers (9.7) % (3.3) % in 2019 2,259 14.7% 2,134 2,176 2,105 560 1,977 540 529 529 487 51.6% 33.7% Specialty fibers 1 Standard fibers Q4/2018 Q1/2019 Q2/2019 Q3/2019 Q4/2019 2015 2016 2017 2018 2019 Other business areas Group revenue Group revenue 1) LENZING™
Slide 23: P&L – Operating results
P&L – Operating results EBITDA margin EBIT margin 14.7 % 20.1 % 22.2 % 17.6 % 15.5 % 7.6 % 13.9 % 16.4 % 10.9 % 7.7 % EUR mn EUR mn (14.4) % (31.7) % 502 371 428 296 382 238 327 290 151 162 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 EBITDA EBIT www.lenzing.com 12/03/2020 - 23
Slide 24: P&L – Net earnings and dividend per share
P&L – Net earnings and dividend per share EPS1, 2 (EUR) 4.78 8.48 10.47 5.61 4.63 EUR per share EUR mn (22.4) % 5.50 5.0 5.0 282 4.50 4.2 2.0 2.0 229 1.2 3.50 3.0 3.0 3.0 2.50 148 2.0 128 115 1.50 3 1.0 0.50 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 -0.50 Group net profit 1, 2 Dividend Speci
Slide 25: Cash flow and trading working capital development
Cash flow and trading working capital development (3.3) % Gross CF EUR mn (12.6) % Operating CF EUR mn (9.2) % Trading Working Capital 473 600 0.40 419 386 366 500 82 0.35 304 294 284 280 83 444 271 245 400 447 414 404 0.30 216 380 300 25.6% 0.25 145 200 20.8% 20.6% 20.7% 0.20 33 24 19.4% 1 100 0.15
Slide 26: Balance sheet metrics
Balance sheet metrics Change According to IFRS (EUR mn) 31 Dec. 2019 31 Dec. 2018 in % Total assets 3,121.1 2,630.9 18.6 EUR mn Liquid assets1 581.0 254.4 128.4 thereof liquid funds 571.5 243.9 134.3 Total liabilities 1,583.2 1,097.0 44.3 (982) thereof financial liabilities 981.6 473.8 107.2 Adjuste
Slide 27: Outlook
w.lenzing.com Outlook e | Lenzing Innovative by nature
Slide 28: Outlook and guidance
Outlook and guidance Expectations for 2020 ● Currently limited visibility due to coronavirus (Covid-19) ● Challenging market environment to persist ● Commodity prices likely to remain subdued ● Viscose and DWP price at historic lows, but unlikely to get worse ● Caustic soda price in Europe supportiv
Slide 29: Core pillars of sCore TEN strategy fully valid
Core pillars of sCore TEN strategy fully valid Stay the course – key focus areas ● Backward integration in DWP ● Greenfield project in Brazil ● Financing contracts to be soon finalized ● Specialisation ● State-of-the-art lyocell plant in Thailand ● Conversion of existing commodity to specialty sites
Slide 30: Lenzing pursues profitable purpose-led growth
Lenzing pursues profitable purpose-led growth Innovation & Business Driver Core value www.lenzing.com 12/03/2020 - 30
Slide 31: Expansion projects trigger structural improvement
Expansion projects trigger structural improvement sCore TEN value drivers 2024 targets Financial targets EBITDA (EUR mn) 800 Specialization ROCE1 > 10 % Leverage2 < 2.5x Vertical integration Strategic targets Specialty share3 > 75 % Sustainability DWP integration > 75 % CO2 emission reduction4 > 40
Slide 32: Current earnings well below mid-cycle levels
Current earnings well below mid-cycle levels ● Current EBITDA below mid-cycle levels ● Expansion projects to unlock structural earnings uplift +20 % CAGR 800 EUR mn EUR mn Implied mid-cycle EBITDA trend line 502 428 327 382 327 290 240 194 1 2013 2014 2015 2016 2017 2018 2019 2019 2024e 1) EBITDA fr
Slide 33: Thank you for your attention!
for your attention! www.lenzing.com
Slide 34: Appendix
Appendix FY2019 detailed financials www.lenzing.com
Slide 35: FY2019: Group P&L
FY2019: Group P&L (EUR mn) 2019 2018 Change y-o-y (%) Revenue 2,105.2 2,176.0 (3.3) Change in inventories of finished goods and work in progress 18.4 36.4 (49.3) Own work capitalized 56.3 55.7 1.1 Other operating income 78.6 57.2 37.5 Cost of material and purchased services (1,257.3) (1,297.3) (3.1)
Slide 36: FY2019: Quarterly P&L development
FY2019: Quarterly P&L development Change Change (EUR mn) Q1/2019 Q2/2019 Q3/2019 Q4/2019 Q4/Q3 (%) Q4/2018 Q4/Q4 (%) Revenue 560.0 528.5 529.4 487.3 (7.9) 539.8 (9.7) Change in inventories of finished goods and work in progress (5.6) 22.2 5.0 (3.2) - 31.6 - Own work capitalized 10.1 13.2 13.3 19.6 4
Slide 37: FY2019: Quarterly topline breakdown
FY2019: Quarterly topline breakdown Change Change Q4/Q3 Q4/Q4 Change (EUR mn) Q1/2019 Q2/2019 Q3/2019 Q4/2019 (%) Q4/2018 (%) 2019 2018 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 70.9 69.8 71.0 71.8 1.1 70.9 1.3 70.3 70.8 (0.7) Nonwoven fibers (%) 29.1 30.2 29.0 28.2 (2.8) 29.1
Slide 38: FY2019: Quarterly OPEX development
FY2019: Quarterly OPEX development Change Change Q4/Q3 Q4/Q4 Change (EUR mn) Q1/2019 Q2/2019 Q3/2019 Q4/2019 (%) Q4/2018 (%) 2019 2018 y-o-y (%) Total sales 560.0 528.5 529.4 487.3 (7.9) 539.8 (9.7) 2,105.2 2,176.0 (3.3) Total cost of material and purchased (334.7) (325.2) (314.8) (282.6) (10.2) (33
Slide 39: FY2019: Quarterly earnings development
FY2019: Quarterly earnings development EBITDA margin EBIT margin EPS1 (EUR) 16.9 % 16.4 % 16.9 % 16.2 % 12.3 % 8.8 % 9.7 % 9.7 % 9.0 % 1.8 % 0.56 1.65 1.32 1.45 0.21 EUR mn EUR mn EUR mn (34.3)% (81.3)% (85.9)% 91.4 92.0 89.2 85.7 54.4 51.2 47.3 47.9 60.0 42.8 34.0 36.1 14.4 8.8 2.0 Q4/2018 Q1/2019
Slide 40: FY2019: Quarterly cash flow development
FY2019: Quarterly cash flow development Change Change Change Q4/Q3 Q4/Q4 y-o-y (EUR mn) Q1/2019 Q2/2019 Q3/2019 Q4/2019 (%) Q4/2018 (%) 2019 2018 (%) Gross cash flow (before taxes and interest) 99.6 99.4 91.8 66.4 (27.7) 107.4 (38.2) 357.2 392.9 (9.1) Taxes and interest (15.9) (19.4) (12.9) (14.9) 1
Slide 41: Quarterly cash flow and working capital development
Quarterly cash flow and working capital development (36.1) % Gross CF 124.6 % Operating CF EUR mn (14.9) % Trading Working Capital EUR mn (79.0) % Free CF adj. 500 474.4 444.4 441.1 439.0 80.6 83.7 80.0 78.9 450 0.31 73.6 73.6 403.5 400 50.1 47.2 51.5 350 0.26 22.4% 32.8 28.0 300 20.6% 20.8% 20.7% 1
Slide 42: Q4 2019: Net debt bridge
Q4 2019: Net debt bridge Net Cash Net financial capex2 Change Inflow from financial debt Q3 (incl. fin. in trading Change in the sale of Currency IFRS 16 debt Q4 2019 Tax Net interest Gross CF1 assets) WC other WC Dividend subsidiaries translation Leasing Others 2019 Change in total working capital
Slide 43: FY2019: Net debt bridge
FY2019: Net debt bridge Net Cash Net financial capex2 Change Inflow from financial debt FY (incl. fin. in trading Change in the sale of Currency IFRS 16 debt FY 2018 Tax Net interest Gross CF1 assets) WC other WC Dividend subsidiaries translation Leasing Others 2019 Change in total working capital E
Slide 44: Balance sheet structure and return on capital employed
Balance sheet structure and return on capital employed 3,500.0 EUR mn 3,500.0 EUR mn EUR 3,121 mn 2,100 1,923 3,000.0 3,000.0 1,900 1,750 0.51 2,500.0 2,500.0 1,700 1,579 1,541 1,572 1,635 1,538 1,500 0.41 2,000.0 PP&E1 2,000.0 Equity 1,300 1,500.0 0.31 1,500.0 396 1,100 18.6% 1,000.0 251 Inventorie
Slide 45: Contact and financial calendar
Contact and financial calendar Investor contact Financial calendar Stephan Trubrich, CFA Full year results 2019 March 12, 2020 Vice President Capital Markets 76th Annual General Meeting April 16, 2020 Results 01-03/2020 May 6, 2020 Phone: +43 7672 701 3416 Half-year results 2020 August 5, 2020 Fax: