The Lenzing Group has reported record results after the most successful first half year in the company's history.

Following a very good first quarter 2011, sales and earnings were significantly surpassed in the second quarter of 2011 and the company has now set its guidance for the full year 2011 at the upper end of the initial guidance announced in the first quarter, forecasting EBITDA of EUR 470 million to EUR 500 million and consolidated sales between EUR 2.1 billion and EUR 2.2 billion.

In the first half of 2011, consolidated sales rose by 31.0%, from EUR 821.4 million to EUR 1,076.2 million mainly due to considerably higher fibre prices compared to the prior-year, as well as higher fibre shipment volumes and the consolidation effects from the acquisition of the Biocel Paskov pulp plant.

Earnings before interest, tax, depreciation and amortization (EBITDA) in the first six months of 2011 rose by 65.1% to the new record level of EUR 247.8 million, which resulted in an all-time high EBITDA margin of 23.0% (H1 2010: 18.3%). Operating profit (EBIT) almost doubled, rising by 84.5% to EUR 199.2 million compared to EBIT of EUR 108.0 million achieved in the first half of 2010. This corresponds to an EBIT margin of 18.5% (H1 2010: 13.1%).

Outstanding second quarter 2011

The second quarter of 2011 featured consolidated sales of EUR 544.1 million and EBITDA of EUR 132.9 million (margin of 24.4%), which Lenzing describes as an outstanding performance which comprises the best quarterly results in the company's history. EBIT of EUR 108.5 million (margin of 19.9%) also represents a new all-time high for the company.

 "Our global growth strategy together with our intensified specialization in high value fibres such as Lenzing Modal and TENCEL, for which we have a unique position on the market, has really paid off", says Lenzing Chief Executive Officer Peter Untersperger, commenting on the Group's business development.

"In any case, the long-term positive development in the form of excess demand for cellulose fibres ("cellulose gap") will continue and will not be seriously impeded by the latest decline in cotton prices to a realistic price level again," CEO Untersperger adds.

Positive development of all segments

In Lenzing's core business Segment Fibers, the company was able to carry out several selling price increases in the first half-year, most recently for its specialty fibres, against the backdrop of the full utilization of its production capacities.

These price hikes more than compensated for the expected price consolidation for standard viscose fibres for the Asian textile industry which took place in the second quarter. Thus Lenzing's average fibre prices for textile applications in the second quarter of 2011 were higher than in the first quarter. Volume demand for textile fibres remained strong throughout the entire half-year.

Lenzing also recorded a stable price and volume development at a high level in the Business Unit Nonwoven Fibers, whose average fibre prices in the second quarter were also above those in the first quarter of 2011.

The Segments Plastics Products and Engineering developed very positively, and achieved significantly better results than in the prior-year period.

Outlook

The Lenzing Group confirms its last published outlook for the entire year 2011, in which the company anticipates consolidated sales between EUR 2.1 billion and EUR 2.2 billion. Expected EBITDA will be in the range of EUR 470 million and EUR 500 million, corresponding to the upper half of the initial outlook. A decisive underlying factor is the very good business development of the Lenzing Group in the second quarter of 2011, which exceeded expectations.

On average business development for Q3 and Q4 2011 is expected to be similar to the first quarter's performance. The additional production volumes resulting from the capacity expansion of Lenzing Nanjing (China) should have a positive effect, the company says.

According to Lenzing, an ongoing high price level along with good demand is also anticipated for the specialty fibres Lenzing Modal and TENCEL in the second half-year. In contrast, the company says, the continuation of the short-term price consolidation trend for standard viscose fibres in Asia which is still taking place along with the resulting "pipeline effect" should have a dampening effect.

Even against the backdrop of a very good cotton harvest 2011/2012, the structural influencing factors underlying the "cellulose gap" - population growth, increasing prosperity and sustainability, will continue to apply fully, Lenzing concludes.

Click the image on the right to download Lenzing's 'Letter to Shareholders 02/2011'.