09. May 2019 | News, Views & Markets
Lenzing: solid start to the 2019 financial year
Expansion of pulp and lyocell capacities
CAPEX (acquisition of property, plant and equipment) dropped by 22.4 percent to EUR 45.7 mn in the first quarter of 2019. This decline is attributable to the completion of the expansion project in Heiligenkreuz (Austria) in 2018 and the ongoing planning for the major projects in Brazil and Thailand, which will only have an effect on the investment volume in the coming quarters. The basic engineering for the construction of the new lyocell plant in Prachinburi, near Bangkok, is making equally good progress as the planned establishment of the pulp plant in Minas Gerais.
Heiligenkreuz at full capacity again
At the site in Heiligenkreuz a fire occurred on February 1, 2019 causing a shutdown of the lyocell production for several weeks. Material damage and the damage resulting from the interruption of operations are covered by insurance. Production at the site is now running at full capacity again.
The International Monetary Fund expects a slowdown of global economic growth to 3.3 percent in 2019, mainly driven by increasing protectionist tendencies and growing geopolitical tensions. The currency environment in the regions relevant to Lenzing will remain volatile.
Demand on the global fiber markets is still positive. According to preliminary calculations, cotton inventory levels should decline slightly again in 2019. Over the past months, the polyester market recovered from slower growth at the beginning of the reporting year. The price levels for cotton and polyester are expected to remain stable.
Capacity expansions for standard viscose should remain at a similar level as in the 2018 financial year. Despite strong demand, this will result in growing oversupply, which will cause even higher pressure on prices. The Lenzing Group expects the positive development of its specialty fiber business to continue.
Caustic soda prices in Asia have already declined significantly over the past months; however, there are no signs of such a development in Europe yet. Overall, Lenzing does not expect any significant changes for key raw materials that would be relevant to earnings.
Based on the current exchange rates, the Lenzing Group continues to expect its results for 2019 to reach a similar level as in 2018 despite a much tighter market environment for standard viscose.