Thursday, 15 November 2012
The global economy impacts Lenzing and the entire fiber market
In the third quarter of 2012, the unsatisfactory global economic environment continued to dampen the development of the entire fiber industry, similar to the situation in the first two quarters of the year. The market continues to be provided with a sufficient supply of fibers. The cotton price, the most important benchmark for the entire fiber industry, tended to move sideways, ranging between 80.8 and 86.8 US cents/lb. In the light of weak demand, no quick or substantial increase in the cotton price is anticipated as a consequence of the disproportionately high cotton inventories around the world and the expectations for the current 2012/13 cotton harvest, which foresee a decline in the cotton harvest of only 6%. Conversely, in spite of the high volume of available quantities, the downward trend in the cotton price has bottomed out and now hovers at the considerably higher level of 80-85 US cents/lb compared to the all-time lows recorded in the past decade.
The Chinese textile industry, by far the largest in the world, suffered from the
ongoing weak demand for exports from the Western industrialized nations (especially in Europe) during the period under review. This development cannot be compensated by the domestic market. As a result, the entire Chinese textile industry is still characterized by capacity under-utilization. In turn, this led to the under-utilization of the Chinese fiber industry, and a corresponding erosion
of fiber selling prices. The viscose fiber spot market price in China amounted to approximately RMB 14.22 per kilogram at the end of October 2012, comprising a decline of more than 10% since the beginning of the year.
Despite economic headwinds, the Lenzing Group succeeded in achieving the second best business results in its history during the first three quarters of 2012. However, as expected, the company could not match the record performance of the previous year. EBITDA (earnings before interest, tax, depreciation and amortization) in the third quarter of 2012 totaled EUR 87.9 mn (Q2 2012: EUR 100.6 mn), which was within the third quarter guidance of EUR 85-90 mn published in the middle of 2012. Consolidated sales in the third quarter of 2012 amounted to EUR 505.7 mn (Q2 2012: EUR 533.6 mn).
From Lenzing Q3 Report 2012
Source: press releases