Lenzing AG

EANS-News: Lenzing AG
Lenzing Group achieves best full-year results in its history

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Financial Figures/Balance Sheet/Annual Result/Company Information

Highlights -

* Revenue increased by 5.9 percent to EUR 2.26 bn
* EBITDA up 17.3 percent to EUR 502.5 mn
* Dividend proposal of EUR 3.00/share plus a special dividend of EUR 2.00/share
* New brand strategy to generate a strong message to consumers
* Limited visibility for coming quarters

Lenzing - In 2017, the Lenzing Group reports its best financial performance ever
with record revenue and earnings due to a better product mix and higher selling
prices in combination with a generally favorable market environment.

Group revenue grew by 5.9 percent in the 2017 financial year to EUR 2.26 bn
(2016: EUR 2.13 bn). Group earnings before interest, tax, depreciation and
amortization (EBITDA) improved by 17.3 percent to EUR 502.5 mn (2016: EUR 428.3
mn). The corresponding EBITDA margin rose to 22.2 percent (2016: 20.1 percent).
Earnings before interest and tax (EBIT) increased by 25.2 percent to EUR 371 mn,
resulting in a higher EBIT margin of 16.4 percent (2016: 13.9 percent). The net
profit for the year totaled EUR 281.7 mn, a rise of 23 percent from the prior-
year figure of EUR 229.1 mn. Earnings per share in the 2017 financial year
amounted to EUR 10.47 (2016: EUR 8.48).

The Management Board and the Supervisory Board will propose at the upcoming
Annual General Meeting a stable dividend of EUR 3.00 per share plus an increased
special dividend of EUR 2.00 per share (2016: EUR 1.20 per share). In total, the
dividend will amount to EUR 5.00 per share, corresponding to a dividend payment
to shareholders of EUR 132.75 mn.

"The Lenzing Group looks back at a very successful year 2017. We continued to
implement our corporate strategy sCore TEN with great discipline and focus on
our investment projects and successfully captured value in a positive market
environment. Our commitment to innovation and customer centricity was
underpinned by the opening of an application innovation center in Hong Kong and
the creation of the new sales and marketing office in Turkey. In line with sCore
TEN we decided to revamp our brand architecture and image to sharpen Lenzing's
corporate and product profiles for customers and consumers. We want to put a
stronger emphasis on our ambition to make the textile and nonwoven market more
sustainable", says Stefan Doboczky, Chief Executive Officer of the Lenzing
Group. "We are very positive about our chosen strategy as it will help us to be
more resilient as we expect more headwinds in the upcoming quarters", he adds.

Zwtl.: Very strong balance sheet and improved return on capital

The return on capital employed (ROCE) increased to 18.6 percent compared to 15.1
percent in 2016 and adjusted equity increased by 9.9 percent to EUR 1.53 bn from
the prior-year level of EUR 1.39 bn. Accordingly, the adjusted equity ratio
improved to 61.2 percent (December 31, 2016: 53 percent). Despite higher capital
expenditures net financial debt continued to remain at a very low level,
totaling EUR 66.8 mn at the end of 2017 (December 31, 2016: EUR 7.2 mn).

Zwtl.: CAPEX investments more than doubled

The capital expenditures (CAPEX) of the Lenzing Group more than doubled in 2017
to EUR 238.8 mn from EUR 107.2 mn in light of the capacity expansions. The
increase in working capital, primarily due to the discontinuation of the
factoring program, resulted in an operating cash flow in 2017 of EUR 271.1 mn
down from EUR 473.4 mn in 2016.

Total expenditures for research and development, calculated according to the
Frascati method, amounted to EUR 55.4 mn in the 2017 financial year (2016: EUR
46.4 mn), putting Lenzing in the top ranks of the industry both in absolute
terms as well as in relation to revenue.

Zwtl.: Sustainability driven innovation power

In 2017, the Lenzing Group presented a number of game changing sustainability
innovations, that underline the ongoing transformation of Lenzing into a genuine
specialist player focused on high-quality botanic materials made from the
sustainable raw material wood. The introduction of TENCEL(TM) branded lyocell
fibers with REFIBRA(TM) technology at the Première Vision trade fair in Paris in
February and the launch of LENZING(TM) ECOVERO(TM) branded viscose fibers in May
were followed by the presentation of TENCEL(TM) Luxe branded lyocell filaments.
TENCEL(TM) Luxe will open new markets for the company and for its customers and
partners and will allow the company to further participate in the premium
segment of the fabrics market. With the help of TENCEL(TM) Luxe filaments
Lenzing supports customers of the premium luxury fashion industry to improve
their ecological footprint.

Zwtl.: Investment program in progress

The Lenzing Group aims to increase the share of specialty fibers as a percentage
of revenue to 50 percent by 2020. Next to the capacity expansion in
Heiligenkreuz (Austria), to be completed in the second quarter of 2018, and the
new plant in Mobile, Alabama (USA), with a start-up in 2019, Lenzing announced
its intention to construct the next world-scale plant to produce LENZING(TM)
branded lyocell fibers in Thailand.

Zwtl.: Focus on customer intimacy

In September 2017, the Lenzing Group opened a new textile application innovation
center (AIC) in Hong Kong, thus setting a further milestone in strengthening its
innovation offering to all partners along the value chain. New applications for
LENZING(TM) fibers will be developed and tested at the AIC. Furthermore, new
sales and marketing offices were opened in Turkey and South Korea in the first
half of 2017. The direct contact to customers and well-equipped showrooms
featuring products made of LENZING(TM) fibers serve as the basis for providing
even better customer support.

Zwtl.: New brand architecture

Lenzing will sharpen its corporate and product portfolio profile for customers
and partners as well as consumers as a sustainable innovation leader.
Consequently Lenzing decided in 2017 on a new brand strategy. The backbone of
the new brand strategy is a brand architecture focused on fewer brands and a
strong message to consumers.

Zwtl.: Outlook

The International Monetary Fund expects a further acceleration in global
economic growth to 3.7 percent in 2018. However, growing protectionist
tendencies in the political arena represent a source of uncertainty. Export-
oriented companies in the Eurozone will also be faced with an additional
challenge from the currency environment.

Developments on the fiber markets should also be positive in 2018, but with
continuing volatility. Cotton prices are expected to remain at the current level
and inventory levels should be constant despite the increase in production.
Polyester fiber prices increased in recent quarters following years of historic
lows.

The wood-based cellulose fiber segment, which is relevant for Lenzing, should
see further strong demand. After years of moderate capacity expansion in the
viscose sector, significant additional volumes can be expected to enter the
market in 2018. The Lenzing Group is very well positioned in this market
environment with its sCore TEN corporate strategy and will continue the
consistent focus on growth with specialty fibers.

The Lenzing Group sees a number of, in part contradictory, factors which limit
the visibility over fiber prices in 2018. The prices for several key raw
materials, e.g. caustic soda, remain at a very high level and their further
development is difficult to estimate. These general conditions are expected to
form the basis for a challenging market environment in the standard viscose
fiber business during the coming quarters; coupled with anticipated negative
exchange rate fluctuations, the Lenzing Group expects its results for 2018 to be
lower than the outstanding results in the last two years.


Key group indicators
(IFRS)                                    01-12/2017                  01-12/2016
(in EUR mn)
Revenue                                      2,259.4                     2,134.1
Earnings before interest,
tax, depreciation and                          502.5                       428.3
amortization (EBITDA)
EBITDA margin in %                              22.2                        20.1
Earnings before interest                       371.0                       296.3
and tax (EBIT)
EBIT margin in %                                16.4                        13.9
Net profit for the year                        281.7                       229.1
CAPEX1                                         238.8                       107.2



                                       Dec. 31, 2017               Dec. 31, 2016
Adjusted equity ratio2 in                       61.2                        53.0
%
Number of employees at                         6,488                       6,218
year-end


1) Capital expenditures: i.e. acquisition of intangible assets, property, plant
and equipment as per statement of cash flows
2) Ratio of adjusted equity to total assets in percent

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Further inquiry note:
Lenzing AG
Mag. Waltraud Kaserer
Vice President Corporate Communications & Investor Relations
Tel.: +43 7672 701-2713
mailto:w.kaserer@lenzing.com

end of announcement                         euro adhoc
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issuer:       Lenzing AG
                
              A-A-4860 Lenzing
phone:        +43 7672-701-0
FAX:          +43 7672-96301
mail:      office@lenzing.com
WWW:       http://www.lenzing.com
ISIN:         AT0000644505
indexes:      WBI, ATX
stockmarkets: Wien
language:     English
 

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