Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lenzing AG (LNZNF, Financial) reported a 5% increase in revenue, reaching EUR 647 million in Q3 and nearly EUR 2 billion for the first nine months of 2024.
- EBITDA significantly increased by 20% in Q3 and 80% in the first nine months, indicating strong operational performance.
- The company's holistic performance program is yielding positive results, contributing to revenue growth and cost excellence.
- Free cash flow was positive for the fifth consecutive quarter, showing a strong financial position.
- Lenzing AG (LNZNF) successfully increased the share of specialty fibers by 14 percentage points, now accounting for 94% of their product mix, enhancing margins.
Negative Points
- Global apparel retail sales were slightly below the same period last year, with Chinese consumers particularly reluctant to buy high-priced clothing.
- Generic fiber prices remain under pressure, and input costs are still elevated compared to 2020, impacting profitability.
- Net loss attributable to Lenzing shareholders amounted to EUR 135.1 million, partly due to tax expenses from the withdrawal from the Austrian tax group.
- The company faces challenges in achieving a premium for certain fiber types due to current market conditions.
- Market visibility remains low, and there is uncertainty regarding the timing of a full market recovery, particularly in the generic fiber market.
Q & A Highlights
Q: Why is it difficult to get a premium for Lenzing's specialty fibers compared to standard fibers?
A: Rohit Geral, CEO, explained that the price premiums depend on fiber types and market conditions. The focus remains on increasing the premium for specialty fibers despite market challenges, aiming to push price development forward.
Q: Can the revaluation of biological assets negatively impact EBITDA if timber prices fall?
A: Nico Reiner, CFO, confirmed that asset valuation is based on market prices, which could decrease if market prices fall. However, they are confident in the asset's current valuation.
Q: Is equity financing an option given the high net debt to EBITDA ratio?
A: Nico Reiner, CFO, stated that while they manage their capital structure proactively, he could not comment on potential equity financing at this time.
Q: Does Lenzing use factoring to manage working capital, and could this understate net debt?
A: Nico Reiner, CFO, confirmed the use of factoring as a common tool, but emphasized that their performance program significantly supports working capital development.
Q: What are the expected savings from the cost savings program for 2025?
A: Nico Reiner, CFO, indicated confidence in exceeding the target of EUR 100 million in savings by 2025, with significant improvements already seen in 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
