Aug 25, 2014
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Lenzing ups savings targets as profits tumble

Aug 25, 2014

Viscose fibres maker Lenzing announced higher savings targets on Thursday after first-half operating profit more than halved on deteriorating viscose prices.

The Austrian company, which is the world's biggest maker of cellulose fibres including its trademark Tencel, said it now expected cost savings of up to 90 million euros ($119 million) this year, half as much again as originally planned.

First-half earnings before interest and tax (EBIT) were 32 million euros on sales that fell 4 percent to 900 million euros.

Lenzing said it expected viscose staple fibre (VSF) prices, which are driven by the Chinese market and closely linked to cotton prices, to improve in 2015 at the earliest.

"There are no perceptible signs of any easing of the situation on the global fibre market in the second half of 2014," it said in a statement. "Repeated measures initiated to stabilise prices are bound to fail."

Lenzing said it more than halved capital expenditure to 64 million euros in the first half, and would concentrate on promoting its higher-margin specialty fibres Tencel and Modal.

Lenzing is the only large non-Chinese player still in the viscose business apart from India's Aditya Birla. Their competitors include China's Fulida Group, Sanyou Chemical and CHTC Helon.

A sluggish textile industry has pulled down viscose fibre prices over the past few years, and although demand has recently picked up, capacity expansions by Chinese manufacturers have kept prices low. ($1 = 0.7549 euro)

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