The cooperation with Södra, a Swedish pulp producer, marks another milestone in Lenzing’s efforts to achieve its ambitious climate and sustainability goals. The two leading global suppliers, which have been proactively driving circular economy in the fashion industry for many years, are joining forces to give the issue another boost and to make a decisive contribution to addressing the global textile waste challenges. A capacity expansion for pulp from post-consumer waste is also planned. The goal is to recycle 25,000 tons of textile waste per year by 2025.

The presentation of the first TENCEL™ branded lyocell fiber made of orange pulp and wood sources as part of the new TENCEL™ Limited Edition initiative with the Italian company Orange Fiber as well as the introduction of the first carbon-neutral cellulosic fibers on the global nonwovens market under the VEOCEL™ brand are other recent results of product innovation, which serve as examples for the ambitious efforts of Lenzing and its partners on the issues of climate change and circular economy.

Momentum through legislation

Pollution of the environment – especially marine pollution – is one of the biggest problems of our time. The fashion industry has an extremely negative impact on the environment with its fast fashion business model and the growing consumption of fossil resources. The use of fossil-based synthetic fibers in textiles has roughly doubled over the last 20 years. More than half of all textiles worldwide contain polyester today, and the share keeps increasing. This is also demonstrated by a report of the non-profit organization Changing Markets Foundation.

Consequently, Lenzing welcomes specific measures taken by the EU in fighting plastic waste, for example those related to the Single-Use Plastics Directive (EU) 2019/9041. The EU Commission specifies in the recently issued guidelines for implementation of the directive which products fall within the scope of the directive, thus providing clarity in the joint fight of the EU member states against environmental pollution from plastic waste. Lenzing’s wood-based, biodegradable cellulosic fibers such as those of the VEOCEL™ brand comprise a sustainable and innovative solution to this man-made problem. The Single-Use Plastics Directive stipulates uniform labelling requirements for some of the single-use plastic products on the packaging or the product itself starting in July 2021. They encompass feminine hygiene products and wet wipes for personal and household care containing plastic.

EcoVadis Platinum status

Lenzing received several awards for its achievements during the reporting period, most notably in the field of sustainability: The Corporate Social Responsibility rating by EcoVadis deserves particular mention. Lenzing achieved Platinum status for the first time and now ranks among the world’s top one percent of the companies evaluated with regard to the environment, fair working conditions and human rights as well as ethics and sustainable procurement. The non-profit environmental organization CDP once again recognized Lenzing’s efforts to tackle climate change. Lenzing earned a place on CDP’s Supplier Engagement Leaderboard for its role as a supplier engagement leader.  

New divisional structure

To prepare the Lenzing Group for the challenges and opportunities arising from the investment projects and the changed market environment, the Managing Board presented a new organizational structure, which supports the goals of the sCore TEN strategy focusing on profitable, organic specialty fiber growth and will further increase efficiency and transparency. The organization of business was consequently adjusted and structured in two new divisions, “Fiber” and “Pulp”, as well as “Others”2.

Guidance for 2021

The International Monetary Fund expects global growth of 6 percent for 2021. However, the economic recovery after the deep recession caused by COVID-19 is subject to risks and largely depends on the vaccination progress and successful containment of the pandemic. The currency environment is expected to remain volatile in the regions relevant to Lenzing.

The global fiber and pulp markets came under considerable pressure as a result of the COVID-19 crisis. The significant recovery of demand from the third quarter of 2020 onwards, starting in China, continued into the first quarter of 2021. In February/March of this year, the market turned again and has since moved sideways. In the cotton market, a shortage in production volume is anticipated in the current 2020/2021 harvest and, consequently, a slight decline in inventory levels. The prices for dissolving wood pulp remain at a high level.

Lenzing expects a continued increase in demand for sustainably produced fibers for the textile and apparel industry as well as for the hygiene and medical industry. This trend is likely to continue unabated after the COVID-19 pandemic, not least due to a number of legislative initiatives.

With the prospect of a progressing active immunization of a broad population against COVID-19, optimism and confidence in an early return to normality are also growing within the textile value chain. However, the currently positive environment is still characterized by a high level of uncertainty, also due to the increased occurrence of virus mutations and the extreme occurrence of infections in countries such as Brazil and India. Therefore, the visibility remains limited.

Taking into account the above factors and due to the very positive development of the first half of the year, the Lenzing Group expects the EBITDA in 2021 to reach at least a level of EUR 360 mn.

In view of these developments, Lenzing considers itself well-positioned with its sCore TEN corporate strategy, and will continue to drive the completion of the major strategic projects, which will make a significant contribution to earnings from 2022. In addition to its targets for EBITDA (EUR 800 mn) and ROCE (>10 %3), Lenzing also confirms its four other medium-term targets for 2024: net debt/EBITDA (<2.5 x), share of specialty fibers (>75 % of fiber revenue), internal production of dissolving wood pulp (>75 %), decarbonization (>40 % fewer CO2 emissions per ton of product).

1 Directive (EU) 2019/904 of the European Parliament and of the Council of June 5, 2019 on the reduction of the impact of certain plastic products on the environment

2 Note 3 to the condensed interim consolidated financial statements as at June 30, 2021

3 To be adjusted for assets under construction

1) As of the beginning of the 2021 financial year, the Lenzing Group prepares the consolidated income statement according to the cost-of-sales method rather than the total cost method, thus increasing international comparability with peer group companies. Some amounts previously recognized in EBIT/EBITDA are reclassified to the financial result (see note 1 of the consolidated interim financial statements of the Half-Year Report 01-06/2021)

2) Capital expenditures: expenditures for intangible assets, property, plant and equipment and biological assets as per consolidated statement of cash flows

3) Ratio of adjusted equity to total assets in percent