Lenzing Ag · VIE:LNZ
Lenzing — FY2016 Earnings Presentation
61 slides from Lenzing's earnings presentation, Mar 22, 2017
Slide 1: Lenzing Investor Presentation Annual Result 2016
Lenzing Investor Presentation Annual Result 2016 March 22, 2017
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: Highlights 2016
Highlights 2016 Second best year in the history of Lenzing Group revenue up 8% to EUR 2,13 bn y-o-y Strong EBITDA improvement by 47.6% to EUR 428.3 mn y-o-y ROCE at 15.1% Substantial progress implementing the new corporate strategy sCore TEN > EUR 50 mn EBITDA improvements due to commerc
Slide 4: Strategy implementation and target achievement ahead of plan
Strategy implementation and target achievement ahead of plan 2020 2014 2015 2016 Targets EBITDA growth - 21% 48% 10% p.a. (vs 2014 baseline) ROCE (0.1) 8.1 15.1 ≥10% Net financial debt/EBITDA 1.9 1.1 0.0 <2.5 4
Slide 5: sCore TEN: Strengthen the core
sCore TEN: Strengthen the core Delivered over EUR 50 mn Debottlenecking of pulp EBITDA improvement with Business capacities started commercial and operational Total increase of around excellence already per end Customer 35 k tons p.a. 2016 Intimacy In 2017e own pulp capacity at 575 k tons, A
Slide 6: sCore TEN: Customer intimacy
sCore TEN: Customer intimacy New organization to Two new regional application strenghten regional decision Business development centers making implemented Indonesian application center AMEA Customer (“Fiber to Yarn“) Intimacy North Asia Hong Kong application Europe and Americas center
Slide 7: sCore TEN: Lenzing further focused on specialties
sCore TEN: Lenzing further focused on specialties Specialty fiber sales accounted for 42% Share of specialty fibers 2016 after 40.5% in 2015 EUR 375 mn CAPEX committed to grow 11.0% specialty fiber capacities 42.0% 47.0% Speciality fibers1 Standard fibers Other business areas 1) Specialty fibers
Slide 8: sCore TEN: Lenzing further focused on specialties (R&D)
sCore TEN: Lenzing further focused on specialties R&D expenses (2013-2017e)1 R&D expenditures increased more than 50% y-o-y keeping Lenzing at the EUR mn % 60 2.5 forefront of the industry 2.2 50 2.0 Strong innovation pipeline 1.6 1.5 40 1.5 RefibraTM fiber launch 30 1.1 50.0 1.0 Latest lyoc
Slide 9: Refibra fiber: New sustainability innovation concept
RefibraTM fiber: New sustainability innovation concept Major breakthrough for the ‘Circular economy’ on a big scale for wood based cellulose fibers RefibraTM fiber: Combination of prize-winning lyocell technology with pioneering use of recycled cotton off-cuts. Upscaling of cotton and significan
Slide 10: Fiber market 2016
Fiber market 2016 Fiber production in mn tons World fiber production 2016e up 3.6% to 97.8 120 3.6% mn tons For the 2nd consecutive year lower than 100 94.4 97.8 consumption (2016e: 99 mn tons ; +1.5%) 2.2% Wood-based cellulose fibers growth rate 80 continues to outgrow the industry 60.7 62.1
Slide 11: Interfiber price development
Interfiber price development1 Staple fiber prices - Development in China USD/kg (incl. VAT) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 01/2014 05/2014 09/2014 01/2015 05/2015 09/2015 01/2016 05/2016 09/2016 01/2017 Viscose Cotton Polyester Sources: China Cotton Association, China Chemical & Fiber Economic Informat
Slide 12: Cotton market with better supply-demand situation in 2016
Cotton market with better supply-demand situation in 2016 Cotton market In 2016 the average Cotlook A-Index was mn tons at USD 74.3 cents/lbs which was +5.5% y-o-y 30 Chinese cotton prices still higher than world price 25 21.07 24.13 22.85 24.08 23.39 24.29 levels 20 19.25 18.02 17.13 15 Outlo
Slide 13: Very strong viscose pricing reflecting tight supply
Very strong viscose pricing reflecting tight supply and increase in raw material prices VSF1 price trend and inventory of China Continuously good demand for wood-based yuan/MT day cellulose fibers versus scarce supply 18,000 30 17,000 In 2016 inventory level decreased 16,000 20 15,000 from 17 da
Slide 14: Financials 2016 - Group revenue
Financials 2016 - Group revenue (EUR mn) +7.3% +8.0% 555.7 2,134.1 2,090.4 543.5 1,976.8 522.0 1,908.9 518.0 1,864.2 512.8 2012 2013 2014 2015 2016 Q4/2015 Q1/2016 Q2/2016 Q3/2016 Q4/2016 Group revenue Group revenue 14
Slide 15: Financials 2016 – Earnings
Financials 2016 – Earnings (EUR mn) EBITDA margin EBIT margin EPS1,2 (EUR) 16.9% 11.8% 12.9% 14.7% 20.1% 11.1% 4.5% 1.2% 7.6% 13.9% 6.61 1.89 (0.92) 4.78 8.48 +47.6% +96.1% +78.9% 428 229 296 352 181 290 232 128 225 240 151 86 50 22 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 20
Slide 16: Financials 2016 – Key figures
Financials 2016 – Key figures (EUR mn) 1,600 70.0% 900 875 1,390 801 1,400 65.0% 800 730 1,219 683 1,153 1,110 1,200 1,055 60.0% 700 529 577 600 570 1,000 55.0% 505 500 450 800 50.0% 45.5% 44.7% 53.0% 400 355 43.8% 346 296 600 50.6% 45.0% 280 300 400 40.0% 200 328 100 200 35.0% 7 0 0 30.0% 2012 2013
Slide 17: Cash flow development and trading working capital
Cash flow development and trading working capital (EUR mn) + 35.7% (Gross CF) + 119.6% (Operating CF) + 152.6% (Free CF adj.) (15.2%) 600.0 48.0% 500.0 43.0% 447.4 473.4 38.0% 393.7 395.7 400.0 379.6 385.9 363.8 33.0% 366.3 21.3% 28.0% 284.5 300.0 21.6% 19.5% 248.0 17.4% 23.0% 230.8 218.8 209.4 215.
Slide 18: Outlook 2017: Priorities
Outlook 2017: Priorities Strengthen the core Take next step on how to achieve 75% backward integration by 2020 Further boost continuous improvement culture Customer intimacy Launch new brand architecture Strengthen direct sales/marketing channels to customers and brands Specialization
Slide 19: Outlook 2017: Fiber market and Lenzing Group
Outlook 2017: Fiber market and Lenzing Group Fiber market 2017e Indication for wood-based cellulose fibers to outpace the overall fiber market Cotton and polyester still increasing interfiber competition Lenzing is very well positioned Disciplined implementation of the sCore TEN strategy t
Slide 20: 2016 – Backup financial information
2016 – Backup financial information
Slide 21: FY 2016: Consolidated Group P&L
FY 2016: Consolidated Group P&L Change (EUR mn) 2016 2015 y-o-y (%) Revenue 2,134.1 1,976.8 8.0 Change in inventories of finished goods and work in progress 6.4 (7.3) - Own work capitalized 21.8 29.2 (25.4) Other operating income 45.5 45.7 (0.4) Cost of material and purchased services (1.223.8) (1.2
Slide 22: FY 2016: Consolidated Group P&L – Quarters
FY 2016: Consolidated Group P&L – Quarters Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 Q4/Q4 (%) Revenue 512.8 522.0 543.5 555.7 2.2 518.0 7.3 Change in inventories of finished goods and work in progress (10.4) 2.4 (3.8) 18.2 - 8.6 111.8 Own work capitalized 6.1 5.4 6.5
Slide 23: FY 2016: Topline breakdown
FY 2016: Topline breakdown Change Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 Q4/Q4 (%) 2016 2015 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 70.7 71.2 70.6 71.0 0.4 71.6 (0.6) 70.9 69.6 1.3 Nonwoven fibers (%) 29.3 28.8 29.4 29.0 (0.4) 28.4 0.6 29.1
Slide 24: Financials 2016 – Earnings per quarter
Financials 2016 – Earnings per quarter (EUR mn) EBITDA margin EBIT margin EPS (EUR) 1 15.4% 18.0% 19.7% 23.1% 19.4% 7.6% 11.6% 13.5% 16.9% 13.4% 1.55 1.64 1.85 2.49 2.50 +35.4% +90.7% +54.9% 125.5 92.0 102.9 107.7 92.2 74.6 67.5 67.0 70.3 79.5 59.5 50.3 43.3 44.2 39.1 Q4/2015 Q1/2016 Q2/2016 Q3/2016
Slide 25: FY 2016: OPEX as of total sales
FY 2016: OPEX as of total sales Change Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 Q4/Q4 (%) 2016 2015 y-o-y (%) Total sales 512.8 522.0 543.5 555.7 2.2 518.0 7.3 2,134.1 1,976.8 8.0 Total OPEX1 (427.7) (438.8) (431.4) (481.6) 11.6 (463.4) 3.9 (1,779.6) (1,754.4) 1.4 Tot
Slide 26: FY 2016 Total opex structure
FY 2016 Total opex structure 2015 (Total Opex EUR 1,754.4 mn) 2016 (Total Opex EUR 1,779.6 mn) 235.9 236.6 13.4% 13.3% 319.2 300.2 17.9% 17.1% 1,218.3 1,223.8 69.4% 68.8% Cost of material and purchased services Cost of material and purchased services Personnel expenses Personnel expenses Other opera
Slide 27: FY 2016: Net debt bridge
FY 2016: Net debt bridge EUR mn 16.5 445.41 43.0 327.9 Change in total working capital EUR 90.3 mn 3 2 110.8 52.3 53.2 1.4 0.6 6.5 7.2 38.0 Net Financial Debt Tax Net Interest Gross CF Cash Capex (incl. Change in Trading Change in other Dividend Transaction from Currency Others Net Financial Debt FY
Slide 28: Q4/2016: Net debt bridge
Q4/2016: Net debt bridge EUR mn 1 124.8 9.6 12.1 Change in total working capital 64.2 EUR (5.3) mn3 2 6.0 0.0 45.7 0.7 0.0 2.2 2.7 7.2 Net Financial Tax Net Interest Gross CF Cash Capex (incl. Change in Change in other Dividend Transaction from Currency Others Net Financial Debt Q3 2016 Fin. Ass.) T
Slide 29: FY 2016: Solid balance sheet
FY 2016: Solid balance sheet1 as at Dec. 31, 2016 Change According to IFRS (EUR mn) 31 Dec. 31 Dec. 20151 in % 2016 ∑ EUR 2,625.3 mn 3,000.0 ∑ EUR 2,625.3 mn Total assets 2,625.3 2,410.6 8.9 Liquid assets2 570.4 355.3 60.5 2,500.0 thereof liquid funds 559.6 347.3 61.1 Total liabilities 1,256.8 1,211
Slide 30: 2016: Cash flow by quarters
2016: Cash flow by quarters Change Change Change (EUR mn) Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q4/Q3 (%) Q4/2015 y-o-y (%) 2016 2015 y-o-y (%) Gross cash flow (before taxes and interest) 95.0 103.8 121.8 124.8 2.5 82.2 51.8 445.4 321.8 38.4 Taxes and interest (12.6) (13.8) (11.4) (21.7) 90.3 (9.7) 123.3
Slide 31: Cash flow development and trading working capital
Cash flow development and trading working capital (EUR mn) + 42.3% (Gross CF) + 221.7% (Operating CF) (Free CF adj.) -15.2% 164.4 600 48.0% 139.8 500 43.0% 447 431 38.0% 110.4 400 383 380 104.3 106.1 103.1 362 33.0% 98.5 88.4 90.0 28.0% 82.4 82.5 300 21.6% 21.0% 72.5 23.0% 17.3% 17.6% 55.5 17.1% 200
Slide 32: Appendix – Equity story
Appendix — Equity story QEENZING
Slide 33: Lenzing – Our mission
Lenzing – Our mission “Lenzing is a performance materials company that turns CO2 and sunlight into highly functional, emotional and aesthetic products across the globe” 1 1 1 1) Lenzing brands 33
Slide 34: Global fiber market at a glance
Global fiber market at a glance 2016e consumption numbers Wool Cellulose- & 1.1% protein-based fibers Cotton 24.3% 99 mn tons Other natural fibers1 Synthetic fibers 5.3% 62.7% Wood-based fibers2 Viscose/Rayon Wood-based Modal fibers2 6.6% TENCEL® fiber/Lyocell 1) Incl. bast, flax, hemp, jute,
Slide 35: Lenzing - Market leader in all three fiber generations
Lenzing - Market leader in all three fiber generations Competitive Brands Market Position Intensity #1 Low #1 Medium #2 High Source: Lenzing data, CCFG, CCFEI TENCEL® fiber, Lenzing Modal® fiber and Lenzing Viscose® fiber are registered trademarks of the Lenzing Group 35
Slide 36: Lenzing is innovation leader in lyocell with TENCEL fiber
Lenzing is innovation leader in lyocell with TENCEL® fiber TENCEL® fiber: Outstanding functionality and highly eco-friendly 1 Lenzing has strong global footprint and cost leadership Excellent in shaping and creating lyocell market through Branding: TENCEL® fiber Application development and
Slide 37: Focus on innovations: Industry leading R&D spend
Focus on innovations: Industry leading R&D spend R&D is an essential part of the sCore TEN strategy R&D expenditures increased more than 50% R&D expenses (2013-2017e)1 Strong innovation pipeline New testing facilities and pilot plants EUR mn % 60 2.5 RefibraTM fiber: milestone in lyocell f
Slide 38: Textile and Nonwovens are the two main applications
Textile and Nonwovens are the two main applications Textile Nonwovens Size 88.6 mt (~90% of fiber market) 9.2 mt (~10% of fiber market) Regional Over 90% in China, India and Asia-Pacific Mainly a regional market (due to high logistic costs) focus High Low: Top 5 to 10 players hold between 60-80% sha
Slide 39: Only player with European roots in viscose staple fibers
Lenzing is the only player with European roots in the viscose staple fibers market1 (2016e) … Lenzing with 18% share of production Lenzing with 17% share of capacities2 Lenzing Lenzing Others 18% 17% 28% Others 29% 5.3 mn tons Birla 5.9 mn tons Birla 17% 17% Yamei Yamei 5% 5% Aoyang Aoyang 5% Zhongt
Slide 40: Global leader in wood-based cellulose fibers
… and is the global leader in wood-based cellulose fibers Balanced exposure to matured and Global network of production sites and emerging markets sales offices Fiber revenue by region 2016 footprint Americas RoW AMEA North Asia 9% 2% 37% 37% Europe incl. Turkey 25% Asia 64% Europe Americas 26% Sour
Slide 41: Capacity 2017: A global footprint
Capacity 20171: A global footprint Europe2 China Total capacity at year end CAGR 5.3% CAGR 0 % CAGR 2.4% 444 444 457 458 373 992 995 1,009 1,013 181 181 921 172 172 105 155 222 222 232 235 107 110 110 111 112 107 110 110 111 112 178 178 178 178 178 161 162 162 165 165 659 660 663 666 666 2013 2014 2
Slide 42: Sales and marketing - Customer concentration
Sales and marketing - Customer concentration Textiles Percent of sales by customers Nonwoven Percent of sales by customers (20161) (20161) 62.7% 48.3% 45% 33.6% 31 % 21 % Top 5 Top 10 Top 20 Top 5 Top 10 Top 20 Source: Lenzing data 2016 42
Slide 43: Megatrends support fiber demand growth
Looking forward: Megatrends support fiber demand growth Population growth and higher purchasing power in the emerging markets drive overall fiber growth Industrial world Developing world CAGR CAGR 2010-2020 6.75 2010-2020 5.27 5.99 Population 0.85 0.91 0.96 in bn +0.5% +1.2% 42.1 33.4 36.3 5.2 GDP g
Slide 44: Distinct trends are emerging
Distinct trends are emerging Textiles Need for sustainable supply chains across the globe Fast fashion Focus on functionality Nonwovens Need for higher cleanliness Need to improve eco-footprint of downstream products High innovation headroom 44
Slide 45: Sustainability is gaining importance
Sustainability is gaining importance Less than 1% of global water resources is available as fresh Arable land is decreasing due to Oil is a finite resource causing water for people erosion and urbanization negative externalities ▪ But water consumption is rising due ▪ With a growing global populatio
Slide 46: Lenzing's sustainability strategy
Lenzing’s sustainability strategy “Lenzing balances the needs of society, the environment and shareholders and is a sustainability leader in its industry. Creating substantially more positive impacts or benefits is the guiding torch for our innovation and business practices.” Four focus areas Wo
Slide 47: Certificates and recognitions
Certificates and recognitions VÖNIX (Austrian Sustainability Index) OK compost HOME (Vincotte) The European Eco-Label (European Flower) OK biodegradable SOIL (Vincotte) Responsible Care OK biodegradable MARINE OEKO-TEX Standard 100 Food contact compliance (mainly based on European
Slide 48: Dissolving wood pulp is the basis for our sustainable products
Dissolving wood pulp is the basis for our sustainable products Our business is part of a natural closed cycle We only use wood from sustainable forestry Photosynthesis PEFC controlled1 9% PEFC Disposal Trees 21% FSC mix 37% Use Pulp 33% Textiles and Cellulose nonwovens products fiber production FSC
Slide 49: Dissolving wood pulp production
Highly efficient use of the raw materials The Lenzing site is fully integrated. Dissolving wood pulp production at the Lenzing and Paskov sites achieve a wood utilization rate of about 100% (incl. energy use). Biorefinery products Dissolving ~40% wood pulp Dissolving Biochemicals Acetic acid wood pu
Slide 50: Fiber production fully secured by a robust pulp supply
Fiber production fully secured by a robust pulp supply Level of backward integration: Own pulp supply in percentage of annual fiber capacity >50% secured by own pulp production Remaining pulp is secured Total annual through long-term contracts fiber capacity (100%) 58% 56% 56% 56% 46% 2012 2013
Slide 51: China remains the growth engine in global textiles
China remains the growth engine in global textiles Global textile demand by value (2003-2020) CAGR EUR bn (2013-2020e) 1,515 25% China 9.2% 1,144 18% 15% Rest of Asia 3.1% 842 7% 16% 19% North America 1.4% 17% 23% 31% 27% Europe 2.4% 31% 36% 8% 12% 13% ROW 5.3% 2003 2013 2020e Source: ICAC World Tex
Slide 52: Wood-based fibers outgrow market
Wood-based fibers1 outgrow market Expected growth of global fiber demand until 2020 Million metric tons2 120 CAGR (2015 – 2020p) 100 Wood-based 5-6% p.a. 80 fibers1 60 Synthetic fibers 3-4% p.a. 40 Cotton 1-2% p.a. 20 Total fiber market 3-4% p.a. 0 2000 2005 2010 2015e 2020p 1) Wood-based and cotton
Slide 53: The new strategy – driving value growth
The new strategy – driving value growth Business Customer Intimacy Areas New Forward Strengthen Solutions the Core Specialization 53
Slide 54: Strengthen the Core
Strengthen the Core Further strengthen pulp position Business via backward integration and/or strategic co-operations Maintain quality leadership 1 Customer Intimacy Deliver EUR 50 mn EBITDA by 2017 with commercial and Areas operational excellence program New Forward Strengthen Strengthen ou
Slide 55: Customer Intimacy, Specialization, Forward Solutions and New Business Areas
Customer Intimacy, Specialization, Forward Solutions and New Business Areas Increase management Business presence and decision power in the regions Customer Establish two additional Intimacy regional application and Select and establish new 2 customer innovation centers emerging business areas
Slide 56: Backup
QEENZING
Slide 57: Where you can find our fibers
Where you can find our fibers Apparel/Home & Interiors - close to skin 57
Slide 58: Where you can find our fibers: Nonwovens
Where you can find our fibers Nonwovens Facial masks Wipes Hygiene articles 58
Slide 59: Where you can find our fibers: New business development & technical textiles
Where you can find our fibers New Business Development & Technical textiles In automotive Packing solutions with Botanic Shoe with TENCEL® fiber (car seats, tires, injection Lenzing Modal® COLOR fiber TENCEL® fiber shoe complete (shoe molding, …) (vegetable and fruit nets – soles, lining, uppe
Slide 60: Lenzing share information
Lenzing share information Oberbank AG Shareholder structure 3.97% ISIN LNZ / AT0000644505 as at March 10, 2017 Bloomberg LNZ:AV Reuters LNZNF.PK ATX Prime, ATX Global Players, VÖNIX Indices Sustainability Index Number of shares 26,550,000 Free float 33.46% Share price Dec. 30, 2016 EUR 115.00 B&C Pr
Slide 61: Contacts and financial calendar
Contacts and financial calendar Investor Relations contact Financial calendar Stephanie Kniep Full year result 2016 March 22, 2017 Head of Investor Relations 73rd Annual General Meeting April 25, 2017 Corporate Communications & Investor Relations Result 01-03/2017 May 16, 2017 Phone: +43 7672 70