Lenzing Ag · VIE:LNZ
Lenzing — 9M 2016 Earnings Presentation
62 slides from Lenzing's earnings presentation, Nov 16, 2016
Slide 1: Leading Fiber Innovation
Leading Fiber Innovation Lenzing Investor Presentation Nine months result 2016 November 16, 2016
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 01-09/2016
Highlights 01-09/2016 Continuously good organic growth - very solid demand across all products Group revenue up 8.2% y-o-y Fiber business grew by 10.9% due to pricing and product mix Strong progress: EBITDA up 52.2% from EUR 210.6 mn to EUR 320.6 mn y-o-y Working capital improvement fuels
Slide 4: Strengthen the core: pulp capacity additions
Strengthen the core: pulp capacity additions EUR 100 mn for debottlenecking and modernizing existing pulp capacities Around EUR 60 mn investment in Lenzing (Austria) Around EUR 40 mn investment in Paskov (Czech Republic) First step to increase backward integration from 56% to 75% in line wit
Slide 5: Lenzing strengthens its innovation triangle
Lenzing strengthens its innovation triangle Lenzing adds two regional application development centers Indonesian application center to focus on ‚Fiber to Yarn‘ Hongkong application center to focus on ‚Yarn to Garment‘ Overall objectives Move innovation closer to the customers Boost produ
Slide 6: Interfiber price development
Interfiber price development Staple fiber prices - Development in China USD/kg (incl. VAT) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 01/2010 09/2010 05/2011 01/2012 09/2012 05/2013 01/2014 09/2014 05/2015 01/2016 09/2016 Viscose Cotton Polyester Sources: CCFGroup, CIRFS, Cotton Outlook, Fiber Economic
Slide 7: Cotton market with better supply-demand situation
Cotton market with better supply-demand situation Cotton market Uneven cotton price development in Q3/2016 mt 30 Higher demand of cotton at end of season with 26.20 24.20 23.78 23.81 25 big price increase in July up to 0.77 USD/lb 22.31 21.10 19.37 22.54 20 18.10 With new harvest season decrea
Slide 8: Strong price increase in the wood-based fiber market in Q3/2016
Strong price increase in the wood-based fiber market in Q3/2016 VSF1 price trend and inventory of China Continuously good demand for wood-based cellulose fibers yuan/MT day 17,000 30 Inventory level decreased further 16,000 15,000 (Ø 8 days in Q3/2016 vs Ø 11.5 days in H1/2016) 14,000 20 13,000
Slide 9: Revenue and specialty fibers share (EUR mn)
Revenue and specialty fibers share (EUR mn) +8.2% Share of specialty fibers +8.0% in 01-09/2016 543.5 1,578.4 1,458.9 10.5% 522.0 42.1% 518.0 512.8 503.4 47.3% Speciality fibers1 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q3/2016 01-09/2015 01-09/2016 Standard fibers Group revenue Other business areas Group re
Slide 10: EBITDA (EUR mn)
EBITDA (EUR mn) EBITDA margin EBITDA margin 16.7% 15.4% 18.0% 19.7% 23.1% 14.4% 20.3% +52.2% +49.2% 320.6 125.5 210.6 102.9 92.2 84.1 79.5 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q3/2016 01-09/2015 01-09/2016 EBITDA EBITDA 10
Slide 11: EBIT (EUR mn)
EBIT (EUR mn) EBIT margin EBIT margin 10.2% 7.6% 11.6% 13.5% 16.9% 7.7% 14.0% +98.0% +78.5% 92.0 221.7 70.3 59.5 51.5 112.0 39.1 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q3/2016 01-09/2015 01-09/2016 EBIT EBIT 11
Slide 12: Net profit (EUR mn) and earnings per share (EUR)
Net profit (EUR mn) and earnings per share (EUR)1 EPS2 (EUR) EPS2 1.26 1.55 1.64 1.85 2.49 3.24 5.98 +91.1% +102.2 % 162.1 67.5 50.3 43.3 44.2 84.8 33.4 Q3/2015 Q4/2015 Q1/2016 Q2/2016 Q3/2016 01-09/2015 01-09/2016 Group net profit Group net profit 1) Restatement according to IAS 8 (see http://www.l
Slide 13: Key figures (EUR mn)
Key figures (EUR mn) According to IFRS (EUR mn) Sept. 30, Dec. 31, Change 2016 2015 in % 900 Total assets 2,537.0 2,410.63 5.2 800 714 Liquid assets1 542.9 355.3 52.8 700 683 670 637 607 thereof liquid funds 531.7 347.3 53.1 600 543 487 Total liabilities 1,253.2 1,211.83 3.4 500 428 thereof financia
Slide 14: Cash flow development and trading working capital (EUR mn)
Cash flow development and trading working capital (EUR mn) +68.5% (Gross CF) + 33.4% (Gross CF) +24.5% (Operating CF) +102.7% (Operating CF) +22.9% (Free CF adj.) +120.6% (Free CF adj.) -14.5% 600 48.0% 374.9 164.4 500 43.0% 447 431 139.8 310.8 424 38.0% 282.8 383 400 362 33.0% 110.4 104.3 106.1 212
Slide 15: Outlook 2016
Outlook 2016 The macroeconomic environment remains volatile especially given the recent political events. Against this background the fundamentals of the wood-based cellulosic fiber industry should stay favorable in the mid-term. Lenzing expects however viscose prices to be notably lower than the hi
Slide 16: Financial information 01-09/2016
01-09/2016 – Financial information
Slide 17: 01-09/2016: Consolidated Group P&L
01-09/2016: Consolidated Group P&L (EUR mn) Q3/2016 Q2/2016 Q3/2015 01-09/2016 01-09/2015 Revenue 543.5 522.0 503.4 1,578.4 1,458.9 Change in inventories of finished goods and work in progress (3.8) 2.4 (9.8) (11.8) (15.9) Own work capitalized 6.5 5.4 7.7 18.0 20.6 Other operating income 10.7 11.8 2
Slide 18: 01-09/2016: Topline breakdown
01-09/2016: Topline breakdown Change Change Change (EUR mn) Q3/2016 Q2/2016 Q3/Q2 (%) Q3/2015 Q3/Q3 (%) 01-09/2016 01-09/2015 y-o-y (%) Breakdown of Fibers segment revenue Textile fibers (%) 70.6 71.2 (0.9) 70.1 0.7 70.8 68.9 2.8 Nonwoven fibers (%) 29.4 28.8 2.2 29.9 (1.6) 29.2 31.1 (6.2) Fibers on
Slide 19: 01-09/2016 Total Opex structure
01-09/2016 Total Opex structure Q3/2015 (Total Opex EUR 419.5 mn) 01-09/2015 (Total Opex EUR 1,290.9 mn) 12.9% 13.5% 54.1 173.9 17.3% 17.3% 72.6 224.0 69.8% 69.2% 292.7 893.0 Cost of material and purchased services Cost of material and purchased services Personnel expenses Personnel expenses Other o
Slide 20: Q3/2016: Net debt bridge
Q3/2016: Net debt bridge EUR mn 1.7 121.8 1 150.1 9.7 Change in total working capital EUR (1.0) mn3 24.5 23.5 0.0 0.4 0.7 64.2 23.82 0.0 Net financial Tax Net interest Gross CF Cash capex Change in Change in Dividend Transaction Currency Other Net financial debt Q2/2016 (incl. fin. ass.) trading WC
Slide 21: 01-09/2016: Net debt bridge
01-09/2016: Net debt bridge EUR mn 6.9 320.61 30.9 327.9 Change in total working capital EUR 95.6 mn 3 2 65.1 51.6 53.2 1.4 1.6 3.8 64.2 44.0 Net financial Tax Net interest Gross CF Cash capex Change in Change in other Dividend Transaction Currency Other Net financial debt FY 2015 (incl. fin. ass.)
Slide 22: 01-09/2016: Cash flow
01-09/2016: Cash flow Change Change Change (EUR mn) Q3/2016 Q2/2016 Q3/Q2 (%) Q3/2015 Q3/Q3 (%) 01-09/2016 01-09/2015 y-o-y (%) Gross cash flow (before taxes and interest) 121.8 103.8 17.4 87.0 39.9 320.6 239.6 33.8 Taxes and interest (11.4) (13.8) (17.5) (21.5) (47.1) (37.8) (27.7) 36.7 Gross cash
Slide 23: Financial information 2015
2015 – Financial information
Slide 24: FY 2015: Consolidated Group P&L
FY 2015: Consolidated Group P&L Change (EUR mn) 2015 2014 y-o-y (%) Revenue 1.976,8 1,864.2 6.0 Change in inventories of finished goods and work in progress (7.3) (2.6) 184.9 Own work capitalized 29.2 34.6 (15.6) Other operating income 45.7 48.5 (5.8) Cost of material and purchased services (1.218,3
Slide 25: Financials 2015 – Earnings (EUR mn)
Financials 2015 – Earnings (EUR mn) EBITDA margin EBIT margin EPS1 (EUR) 22.4% 16.9% 11.8% 12.9% 14.7% 17.0% 11.1% 4.5% 1.2% 7.6% 9.88 6.61 1.89 -0.92 4.78 480 +20.7% 364 267 352 290 232 181 225 240 151 128 86 50 22 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 1 -25 EBI
Slide 26: FY 2015: Solid balance sheet
FY 2015: Solid balance sheet1 as at Dec. 31, 2015 Change According to IFRS (EUR mn) 31 Dec. 2015 31 Dec. 2014 in % 0 ∑ 2,410.6 EUR mn 3000 ∑ 2,410.6 EUR mn Total assets 2,410.6 2,359.2 2.2 Liquid assets2 355.3 280.3 26.8 thereof liquid funds 347.3 271.8 27.8 0 2500 Total liabilities 1,211.8 1,324.7
Slide 27: FY 2015: Cash flow
FY 2015: Cash flow Change Change Change (EUR mn) Q1/2015 Q2/2015 Q3/2015 Q4/2015 Q4/Q3 (%) Q4/2014 y-o-y (%) 2015 2014 y-o-y (%) Gross cash flow (before taxes and interest) 57.8 94.81 87.0 82.2 (5.6) 95.8 (14.2) 321.8 253.3 27.1 Taxes and interest 5.4 (11.5) (21.5) (9.7) (54.9) (4.6) 110.2 (37.4) (2
Slide 28: Financials 2015 – Cash flow (EUR mn)
Financials 2015 – Cash flow (EUR mn) EUR mn Positive free cash flow development y-o-y influenced by +26.2% 21.3% 21.6% Higher revenue 19.5% 17.0% 17.4% Lower investments (CAPEX EUR 70.9 mn) Special dividend 145.0 116.3 114.8 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Trading working cap
Slide 29: Appendix – Equity story
Appendix — Equity story QEENZING
Slide 30: Lenzing – Market leader in wood-based cellulose fibers
Lenzing – Market leader in wood-based cellulose fibers Our mission: “Lenzing is a performance materials company that turns CO2 and sunlight into highly functional, emotional and aesthetic products across the globe” 30
Slide 31: Lenzing - Market leader in all three fiber generations
Lenzing - Market leader in all three fiber generations Competitive Market Position Intensity #1 Low #1 Medium #2 High Source: Lenzing data, CCFG, CCFEI TENCEL®, Lenzing Modal® and Lenzing Viscose® are registered trademarks of the Lenzing Group 31
Slide 32: Lenzing culture – from forest to fiber
Lenzing culture – from forest to fiber
Slide 33: Global fiber market at a glance
Global fiber market at a glance 2015 consumption numbers Wool Cellulose- & 1% protein-based fibers Cotton 25% 96.7 mn tons Other natural fibers1 5% Wood-based fibers2 Synthetic fibers Viscose/Rayon 63% Wood-based Modal fibers2 6% TENCEL®/Lyocell 1) Incl. bast, flax, hemp, jute, silk and allied
Slide 34: Lenzing is the only player with European roots in the viscose staple fibers market
Lenzing is the only player with European roots in the viscose staple fibers market1 (2015) … Source: CIRFS, FEB, Trade statistics, Company estimates 1) Viscose staple fibers (including Modal and TENCEL®), excluding viscose filaments, acetate tow, cigarette filters 2) Based on latest available compan
Slide 35: … and is the global leader in cellulose fibers
… and is the global leader in cellulose fibers Balanced exposure to matured and Global network of production sites and emerging markets sales offices Fiber revenue by region 2015 footprint Americas RoW 9% 2% Europe incl. Turkey 26% Asia 63% Source: Lenzing data as at September 30, 2016 35
Slide 36: Capacity 2016: A global footprint
Capacity 20161: A global footprint Europe2 China Total capacity at year end CAGR 6.1% CAGR 2.7% CAGR 3.2% 444 444 453 992 996 1005 373 921 357 887 172 172 181 222 223 232 105 155 155 105 103 107 110 110 110 103 107 110 110 110 160 178 178 178 178 149 161 162 162 162 629 659 660 663 663 2012 2013 201
Slide 37: Textile and Nonwovens are the two main applications
Textile and Nonwovens are the two main applications Textile Nonwovens Size 86 mt (~90% of fiber market) 8 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% share F
Slide 38: Lenzing is THE trusted long-term partner for global consumer brands
Lenzing is THE trusted long-term partner for global consumer brands Global consumer brands trust Lenzing as long-term partner due to our quality leadership and deep technical expertise, resulting in several “co-branding” initiatives Textiles Others Key accounts 65% 35% Nonwovens Others Key accounts
Slide 39: Megatrends foster growth perspectives
Megatrends foster growth perspectives
Slide 40: 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% 12% 13% ROW 5.3% 8% 2003 2013 2020e Source: ICAC World Tex
Slide 41: Megatrends support fiber demand growth
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 growth 3.4 +1.5% +
Slide 42: The key growth drivers for fibers
The key growth drivers for fibers Population ▪ Growing population demanding more fabrics growth-driven Overall fiber market growth Wealth-related ▪ Higher per-capita consumption of fibers with increasing income growth Wealth impact ▪ People exit extreme poverty and can afford garments: Strong increa
Slide 43: 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 44: Renewable raw material wood
Renewable raw material wood The Cellulose Cycle Cellulose is nature‘s most important construction material and available in abundance Wood and dissolving wood pulp derived from it are the basis for wood-based cellulose fibers Wood contains about 40% - 50% cellulose Biodegradability is confir
Slide 45: Megatrend: Sustainability
Megatrend: Sustainability TENCEL® - a sustainable production process Direct solving process Closed-loop process Complete recovery of solvent 45
Slide 46: Dissolving wood pulp production
Highly efficient use of the raw materials The Lenzing site is fully integrated. Dissolving wood pulp production at the Lenzing site achieves a wood utilization rate of about 50%. Biorefinery products Dissolving ~42% wood pulp Dissolving Acetic acid wood pulp ~10% Furfural Xylose production Energy ~4
Slide 47: 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% 45% 46% 2011 2012
Slide 48: Lenzing underpins its innovation leadership
Lenzing underpins its innovation leadership Industry leading R&D spend (EUR 29.81 mn in 2015) R&D is an essential part of the sCore TEN strategy and contributes to all five fields R&D expenses (2012-2016e)1 Substantial progress with respect to strategic innovations and thus looking at a very hea
Slide 49: Commercial launch of a new sustainability innovation concept
Commercial launch of a new sustainability innovation concept Major breakthrough for the ‘Circular economy’ on a big scale Special TENCEL® fiber made with recycled cotton. Upscaling of cotton and significant reduction of cotton fabric waste in the garment production Business model innovation: W
Slide 50: Lenzing is innovation leader in lyocell with TENCEL
Lenzing is innovation leader in lyocell with TENCEL® TENCEL® fiber: Outstanding functionality and highly eco-friendly Lenzing has strong global footprint and cost leadership Excellent in shaping and creating lyocell market through Branding: TENCEL® Application development and downstream pa
Slide 51: 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 51
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: 2020 financial targets
2020 financial targets EBITDA Net financial debt/ ROCE growth of 10% p.a. EBITDA ≥10% (vs. 2014 base) <2.5 56
Slide 57: Our production sites
Our production sites Lenzing – Lenzing – Purwakarta – Paskov – Austria (fiber and pulp) Austria (TENCEL® ) Indonesia (viscose) Czech Republic (pulp) Grimsby – Heiligenkreuz – Mobile – Nanjing – Great Britain (TENCEL®) Austria (TENCEL®) USA (TENCEL®) China (viscose) 57
Slide 58: Where you can find our fibers
Where you can find our fibers Apparel/Home & Interiors - close to skin 58
Slide 59: Where you can find our fibers
Where you can find our fibers Nonwovens Facial masks Wipes Hygiene articles 59
Slide 60: Where you can find our fibers
Where you can find our fibers New Business Development & Technical textiles In automotive Packing solutions with Botanic Shoe with TENCEL® (car seats, tires, injection Lenzing Modal® COLOR TENCEL® shoe complete (shoe soles, molding, …) (vegetable and fruit nets – lining, upper fabric and shoe
Slide 61: Lenzing share information
Lenzing share information Oberbank AG 4.2% ISIN LNZ / AT0000644505 Bloomberg LNZ:AV Reuters LNZNF.PK ATX Prime, ATX Global Players, VÖNIX Indices Sustainability Index Number of shares 26,550,000 Free float Share price Sept. 30, 2016 EUR 104.00 33.2% Market capitalization B&C Privatstiftung EUR 2,761
Slide 62: 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