Lenzing Ag · VIE:LNZ
Lenzing — H1 2015 Earnings Presentation
54 slides from Lenzing's earnings presentation, Aug 25, 2015
Slide 1: Lenzing Group – Half Year 2015 Results
Lenzing Group Leading Fiber Innovation LENZING INVESTOR PRESENTATION – HALF YEAR 2015 RESULTS August 25, 2015
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: H1/2015: Executive summary
H1/2015: Executive summary Upward trend progressing Group revenue 6.2% higher y-o-y (EUR 955.4 mn vs. EUR 900.0 mn) Tailwind through positive FX effects (USD, RMB), slightly increased volumes and a better product mix Strongly improved profitability EBITDA +37.7% to EUR 126.5 mn y-o-y (H1/201
Slide 4: Q2/2015: Executive summary
Q2/2015: Executive summary Strong quarter Average spot market prices for viscose (TX) in China increased Average Quarterly Gross VSF (TX) CCF/CNY/t toward the later part of Q2 2015 12,315 +3.7% y-on-y 2014/2015 11,872 11,909 11,847 +8.3% q1-on-q2 2015 Average quarterly imported DWP1 price/t
Slide 5: Fiber price development
Fiber price development 3-year average until June 30, 2015 VSF Spot Cotton A Index Cotton A Index VSF Spot 19,000 120.00 18,000 110.00 17,000 100.00 16,000 CNY/T US-Cent/lb 15,000 90.00 14,000 80.00 13,000 30.06.2015 12,000 30.06.2015 70.00 12,540 74.30 11,000 31.12.2014 31.12.2014 60.00 10,000 11,5
Slide 6: Despite decreased production cotton prices likely to remain under pressure
Despite decreased production cotton prices likely to remain under pressure1 Chinas inventory policy is likely to create oversupplied market Cotton prices remain on a low level after the drop in July 2014 Average Cotton A Index currently around 70 USct/lbs China changed its reserve policy in 20
Slide 7: Competitive viscose environment
Competitive viscose environment We remain cautious about a sustainable positive viscose pricing Remaining good demand volume paired with low inventory level at producers Structural overcapacities remain Some capacities in China temporarily closed due to environmental pressure from authorities
Slide 8: Lenzing's marketing activities
Lenzing‘s marketing activities Textile – Apparel and Home & Interior Denim: Further increased position and brand recognition of TENCEL® 50 % of leading players sell TENCEL® denim fabrics Fiber launch: TENCEL® A100 MICRO for high-value knitted products presented to the textile trade Successfu
Slide 9: Lenzing's marketing activities
Lenzing‘s marketing activities Technical textiles New concept launch: botanic shoes with TENCEL® fibers High margin business – TENCEL® in technical devices with constant market increase in the last 6 months Protective concept launch for fire fighters with Lenzing FR® Further increased glob
Slide 10: Financials – Revenue
Financials – Revenue Tailwind due to FX effects, slightly increased volumes, better product mix Group Revenue Segment Fibers Revenue 480.9 472.2 448.3 423.2 Q2/2014 Q2/2015 Q2/2014 Q2/2015 955.4 917.7 900.0 853.1 Q2/2014 H1/2014 Q2/2015 H1/2015 Q2/2014 H1/2014 Q2/2015 H1/2015 August 25, 2015 - 10
Slide 11: Financials – Earnings
Financials – Earnings Strong improvement – H1/2015 EPS at EUR 1.99 (H1/2014: EUR 0.57) Q2/2014 vs. Q2/2015 H1/2014 vs. H1/2015 EUR mn EUR mn 126.5 66.9 91.9 45.6 35.0 60.5 33.5 51.6 32.4 15.7 15.2 7.5 10.2% 13.9% 10.2% 13.2% 3.6% 6.3% 1.7% 5.4% 3.5% 7.0% 1.7% 7.3% Margin EBITDA EBIT Net profit EBITD
Slide 12: Total Opex structure
Total Opex structure Q2/2014 H1/2014 (Total Opex EUR 429.9 mn) (Total Opex EUR 860.4 mn) 11.8% 12.5% 53.1 107.4 17.5% 17.8% 78.3 152.9 66.6% 69.7% 298.5 600.2 Q2/2015 H1/2015 (Total Opex EUR 434.4 mn) (Total Opex EUR 871.4 mn) 13.8% 13.7% 66.3 119.8 15.6% 17.4% 75.0 151.3 61.0% 68.9% 293.1 600.3 Mat
Slide 13: Financials – KPI
Financials – KPI Strong financial position Further net financial debt reduction According to IFRS (EUR mn) 30.06.2015 31.12.2014 Change in % 900 875 Total assets 2,419.2 2,375.1 1.9 801 800 730 730 731 Property, plant and equipment 1,320.3 1.322.5 (0.2) 700 653 613 Total liquidity cushion 537.2 47
Slide 14: Financials – Net financial debt bridge
Financials – Net financial debt bridge Further reduction EUR mn 449.5 6.2 152.61 0.1 26.7 14.5 0.1 401.5 64.9 16.5 10.1 27.92 Change in total working capital: EUR (48.4) mn 3 Net Financial Tax Net Interest Gross CF Cash Capex Change in Change in Dividend Transaction Currency Others Net Financial Deb
Slide 15: Outlook: Full Year 2015
Outlook: Full Year 2015 Short term development H2/2015 Geo-political situation, Chinese economic development and unforeseeable FX fluctuations remain as uncertain factors Slightly better market environment for MMC1 compared to the end of Q1/2015 First price increases implemented following co
Slide 16: Q2/2015 – Financial information
Q2/2015 – Financial information
Slide 17: Q2/2015: Consolidated Group P&L
Q2/2015: Consolidated Group P&L (EUR mn) Q2/2015 Q1/2015 Q2/2014 H1/2015 H1/2014 Revenue 480.9 474.6 448.3 955.1 900.0 Change in inventories of finished goods and work in progress (1.9) (4.2) 5.9 (6.1) 5.9 Work performed by the Group and capitalized 7.1 5.9 10.6 13.0 23.2 Other operating income 15.2
Slide 18: Q2/2015: Topline breakdown
Q2/2015: Topline breakdown Fibers going up y-o-y, still strong Nonwoven business Change Q2/Q1 Change Change (EUR mn) Q2/2015 Q1/2015 Q2/2014 (%) y-o-y (%) H1/2015 H1/2014 y-o-y (%) Breakdown of fibers segment revenue Textile fibers 298.1 269.4 244.2 10.6 22.0 567.4 491.8 15.4 Nonwoven fibers 131.8 1
Slide 19: Q2/2015: Net financial debt
Q2/2015: Net financial debt Further reduction EUR mn 1 3.1 94.8 450.1 8.4 26.6 23.1 3 2.8 401.5 3 10.0 0.6 2 7.5 16.0 Change in total working capital: EUR (17.4) mn Net Financial Tax Net Interest Gross CF Cash Capex Change in Change in other Dividend Transaction Currency Others Net Financial Debts 0
Slide 20: Q2/2015: Cash flow by quarter
Q2/2015: Cash flow by quarter Strong free cash flow Change Change Q2/Q1 Change y-o-y (EUR mn) Q2/2015 Q1/2015 Q2/2014 (%) y-o-y (%) H1/2015 H1/2014 (%) Gross CF (before taxes and interest) 94.81 57.8 43.9 64.0 115.9 152.61 86.1 77.3 Taxes and interest (11.5) 5.4 (4.6) n.a. 149.0 (6.1) (13.8) (55.7)
Slide 21: FY 2014 – Financial information
FY 2014 – Financial information
Slide 22: FY 2014: Consolidated Group P&L
FY 2014: Consolidated Group P&L (EUR mn) 2014 excl. imp. 2014 incl. imp. 20131 2013 Total sales 1,864.2 1,864.2 1,859.0 1,908.9 Inventory change/work in progress (2.6) (2.6) 12.3 11.5 Work performed by the group and capitalized 34.6 34.6 52.0 52.2 Other operating income 48.5 48.5 36.6 68.1 Cost of m
Slide 23: FY 2014: Topline breakdown
FY 2014: Topline breakdown Affected by Nonwoven business (+), low pricing (-), discontinued operations (-) Change Change (EUR mn) 2014 2013 y-o-y (%) 20134 y-o-y (%) Breakdown of fibers segment sales Textile fibers 1,028.3 1,048.7 (1.9) 1,048.7 (1.9) Nonwoven fibers 475.9 463.6 2.6 463.6 2.6 Others1
Slide 24: FY 2014: Total Opex
FY 2014: Total Opex 2014 (Total Opex EUR 1,704.5 mn) 2013 (Total Opex EUR 1,815.3 mn) 20131 (Total Opex EUR 1,766.1 mn) 12.5% 12.4% 12.3% 17.1% 18.6% 18.5% 69.0% 69.2% 70.4% Cost of material and purchased services Cost of material and purchased services Cost of material and purchased services Person
Slide 25: FY 2014: Opex as of total sales
FY 2014: Opex as of total sales Change Change (EUR mn) 2014 2013 y-o-y (%) 20132 y-o-y (%) Total sales 1,864.2 1,908.9 (2.3) 1,859.0 0.3 Total Opex1 (1,704.5) (1,815.3) (6.1) (1,766.1) (3.5) Total cost of material and purchased services (1,199.2) (1,253.4) (4.3) (1,223.4) (2.0) as % of total sales 6
Slide 26: FY 2014: Cash flow
FY 2014: Cash flow Considerably improved cash flows Change (EUR mn) 2014 2013 y-o-y (%) Gross CF (before taxes and interest) 253.3 172.6 46.7 Taxes and interest (22.5) (78.1) (71.2) Gross CF (after taxes and interest) 230.8 94.6 144.1 Change in total working capital1 (12.0) (13.6) (11.9) CF from dis
Slide 27: Appendix – Equity story
Appendix — Equity story QLENZING LEADING FIBER INNOVATION
Slide 28: Global fiber market at a glance
Global fiber market at a glance 2014e production numbers Wool Natural fibers 1.3% & natural polymers Cotton 29.4% 89.4 mn tons Man-made cellulose fibers Synthetic fibers Viscose/Rayon 62.6% MMC fibers Modal 6.7% TENCEL®/Lyocell Source: CIRFS, The Fiber Year, The Fiber Organon, Lenzing estimate
Slide 29: Innovation drives specialties
USP: Only producer of three fiber generations Strong market position of TENCEL® and Lenzing Modal ® Share of Market Position Fiber and Market Share Unique Selling Proposition Key End Markets Revenue in Q2/20151 Q2/20152 #1 ...the new age fiber – outstanding sustainability Jeans, bed linen, Enviro
Slide 30: Lenzing: Global market leader in VSF
Lenzing: Global market leader in VSF1 (2014e) Lenzing with 21% share of production2 Lenzing with 18% share of capacities3 Lenzing Lenzing Others 21% 18% 31% Others 33% Grasim4 9% 4.60 mn tons Grasim4 5.49 mn tons 9% Thai Rayon4 Tangshan 2% Thai Rayon4 Helon Tangshan 3% 9% 3% Indo 9% Helon Bharat4 3%
Slide 31: Lenzing: Only global player
Lenzing: Only global player Sales volume by region1 – higher footprint in Asia (H1/2014: 61%) RoW Americas 2% 8% Europe incl. Turkey 27% Asia 63% Source: Company information 1) Fiber sales by volume in metric tons, H1/2015 August 25, 2015 - 31
Slide 32: Capacity 2015: A global footprint
Capacity 20151: A global footprint Europe2 China CAGR 5.8% CAGR 6.2% 444 444 355 357 373 172 172 178 103 1053 105 178 1788 103 103 107 110 110 140 160 149 149 161 162 162 2011 2012 2013 2014 2015e 2011 2012 2013 2014 2015e USA CAGR 5.7% 50 50 50 50 40 100 Total capacity at Indonesia 2011 2012 2013 2
Slide 33: Capacities by site and year
Capacities by site and year Investment in TENCEL® jumbo line – full production in 2015 Planned Capacity – Capacity – Capacity – capacity – YE 2012 YE 20131 YE 2014 YE 2015 Plant location (metric tons) (metric tons) (metric tons) (metric tons) Lenzing / Austria 252,000 268,000 339,000 339,000 Lenzing
Slide 34: Capacity by site 2015
Capacity by site 2015 Capacity per Capacity per Capacity per Capacity per (metric tons) March 31, 2015 June 30, 2015 September 30, 2015 December 31, 2015 Lenzing 339,000 339,000 339,000 339,000 Indonesia 320,000 320,000 320,000 323,000 Nanjing 178,000 178,000 178,000 178,000 Heiligenkreuz 65,000 65,
Slide 35: Lenzing has cost advantages
Lenzing has cost advantages Through pulp integration and long-term pulp supply contract Pulp is the main input factor 90+% of long-term pulp supply secured through own production (vertical integration) and long-term supply contracts Long-term contract linked to paper pulp index (not to spot pr
Slide 36: Textile: Building barriers to entry
Textile: Building barriers to entry Global branded supplier to blue chip customer base Knitting & Dyeing & Spinning Yarn Garment Making Retail Weaving Finishing Fabric Manufacturer Blue Chip Customers – Textiles Push Pull Trusted, long-term partner for global consumer brands Global integrated ma
Slide 37: Nonwoven value chain
Nonwoven value chain Private label Roll-good Lenzing Converter or Retailer Consumer producer brand Direct customers Lenzing contribution Price Price per kg Price per m² Price per packs (wipe count) reference: Blue Chip Customers – Nonwoven Lenzing is very close to the customer due to short value c
Slide 38: Sales and marketing
Sales and marketing Customer concentration Textiles % of sales by customers Nonwoven % of sales by customers (first half of 20151) (first half of 20151) 62,6% 48,4 % 42,7% 29,7 % 33,3% 20,6 % Top 5 Top 10 Top 20 Top 5 Top 10 Top 20 Source: LAG 1) Due to a new clustering in 2015, the figures cann
Slide 39: Lenzing is the innovation leader
Lenzing is the innovation leader Industry leading R&D spend (EUR 20.61 mn in 2014) R&D expenses (2000-2014) Intellectual property As of December 2014, Lenzing owned 35 3.5 approx. 1,500 patent applications and 30 3 patents in 63 countries belonging to 250 patent families 25 2.5 All significant p
Slide 40: Innovation process adapted to new functional organization
Innovation process adapted to new functional organization Idea Feasibility Review New innovation Development Launch process „PRO” CCO Central R&D Business Product Process New R&D Development Development Development organization Lenzing Lenzing Apparel Home/ Non- New TENCEL® Pulp Co-Products Viscose®
Slide 41: Growth drivers for the MMC market
Growth drivers for the MMC market Three megatrends Input factor Megatrends Input factor Supply trend Cellulosic fibers Population Arable land 1. Growth Cotton CAGR*) ‘11 – ’20: Water 1.1%1 Fiber Prosperity Consumption Man-made Cellulose 2. CAGR*) ‘112 – ’20: Cellulosic Wood Gap 2.4% Shift
Slide 42: Cellulose Gap
Cellulose Gap Limited potential to increase cotton supply increases demand for MMC fibers Cotton planted area expected to remain Structural limitations in cotton production: within historical narrow band (1960-2015e) effects from yield expansion leveling out Million hectares Million metric tones 45
Slide 43: Megatrend: Sustainability
Megatrend: Sustainability Green footprint of MMC: Very environmentally friendly Renewable raw material - cellulose is nature‘s most important construction material and available in abundance More than 50% of Lenzing’s fuel consumption sourced from renewable resources Certified wood and pulp so
Slide 44: Megatrend: Sustainability
Megatrend: Sustainability TENCEL® - a sustainable production process Direct solving process Closed-loop process Complete recovery of solvent August 25, 2015 - 44
Slide 45: Lenzing share information
Lenzing share information ISIN LNZ / AT0000644505 Oberbank AG Bloomberg LNZ:AV 5.0% Reuters LNZNF.PK ATX Prime, ATX Global Players, Indices VÖNIX Sustainability Index Number of shares 26,550,000 mn Share price June 30, 2015 63.9 EUR Free float Market capitalization 27.4% 1,696.5 mn June 30, 2015 B&C
Slide 46: Back-up
QLENZING LEADING FIBER INNOVATION i
Slide 47: Fiber market environment
Fiber market environment Highest stock-to-use-ratio ever at approx. 89.9% (2014/20151) World cotton production of 26.20 mn tons, consumption of 24.36 mn tons and ending stocks of 21.89 mn tons Huge Chinese national cotton reserve of estimated 12.64 mmt1 tons (>57.7% of world inventories) 1960 19
Slide 48: Our production sites
Our production sites Lenzing AG – Lenzing, Austria PT. South Pacific Viscose – Biocel Paskov a.s. – Austria (Fiber and pulp) (TENCEL® ) Indonesia (Viscose) Czech Republic (Pulp) Grimsby – Heiligenkreuz – Mobile – Lenzing (Nanjing) Fibers Great Britain (TENCEL®) Austria (TENCEL®) USA (TENCEL®) Co. Lt
Slide 49: Where our fibers end up
Where our fibers end up August 25, 2015 - 49
Slide 50: Where our fibers end up
Where our fibers end up Apparel - Ladies’ wear – close to skin 100% Jacket: 35% TENCEL® / Asymmetric Hem Dress 100% TENCEL® 65% TENCEL® / TENCEL® 18% Ramie / 47% 100% TENCEL® 35% Cotton Organic cotton, Jumpsuit: 100% TENCEL® August 25, 2015 - 50
Slide 51: Where our fibers end up
Where our fibers end up Home and Interiors 100% TENCEL® Lenzing Modal® bedlinen towels duvets bathrobes mattresses …. August 25, 2015 - 51
Slide 52: Where our fibers end up
Where our fibers end up Nonwovens TENCEL® TENCEL® TENCEL® wash cloth face masks hygiene articles August 25, 2015 - 52
Slide 53: Where our fibers end up
Where our fibers end up New Business Development & Technical TENCEL® Lenzing Modal® COLOR TENCEL® car seats vegetable and fruit nets laces tires eg. at REWE Austria soles injection moldings outer/inner layer … August 25, 2015 - 53
Slide 54: Contacts and financial calendar
Contacts and financial calendar Investor Relations contact Financial calendar Stephanie Kniep Financial calendar 2015 Head of Investor Relations Full year results March 24, 2015 Phone: +43 7672 701 4032 70th Annual General Meeting April 22, 2015 Results 1st quarter May 18, 2015 Fax: +43 7672 9