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Annual and Sustainability Report 2023
of the Lenzing Group
Overview of the Lenzing Group
Selected indicators of the Lenzing Group | |||||||
Revenue in EUR mn | Investments (CAPEX) in EUR mn | ||||||
2,700 | 2,194.6 | 2,565.7 | 2,521.2 | 900 | 844.3 | 698.9 | |
2,250 | 750 | ||||||
1,800 | 600 | ||||||
1,350 | 450 | 283.6 | |||||
900 | 300 | ||||||
450 | 150 | ||||||
0 | 2021 | 2022 | 2023 | 0 | 2021 | 2022 | 2023 |
EBITDA in EUR mn | EBITDA margin in % | |||
420 | 16.5 | 12.0 | 18 | |
350 | 362.9 | 9.4 | 15 | |
280 | 12 | |||
303.3 | ||||
210 | 241.9 | 9 | ||
140 | 6 | |||
70 | 3 | |||
0 | 2021 | 2022 | 2023 | 0 |
EBIT in EUR mn | EBIT margin in % | |||||||||||
300 | 9.1 | 15 | ||||||||||
200 | 10 | |||||||||||
0.6 | ||||||||||||
100 | 200.6 | -476.4 | 5 | |||||||||
0 | 0 | |||||||||||
16.5 | ||||||||||||
-100 | -5 | |||||||||||
-200 | -10 | |||||||||||
-300 | -18.9 | -15 | ||||||||||
-400 | -20 | |||||||||||
-500 | -25 | |||||||||||
2021 | 2022 | 2023 | ||||||||||
R&D expenditure (after Frascati) in EUR mn | Dividend per share in EUR | ||||||||||||||||
60 | 6 | ||||||||||||||||
4.35 | |||||||||||||||||
50 | 5 | ||||||||||||||||
34.8 | |||||||||||||||||
40 | 31.6 | 31.6 | 4 | ||||||||||||||
30 | 3 | ||||||||||||||||
20 | 2 | ||||||||||||||||
10 | 1 | 0.00 | 0.00 | ||||||||||||||
0 | 0 | ||||||||||||||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | ||||||||||||
The Lenzing Group stands for the ecologically responsible production of specialty fibers based on cellulose and recycled
materials . As an innovation leader, Lenzing is a partner of global textile and nonwoven manufacturers and drives many new technological developments. The Lenzing Group's high-quality fibers are the raw material for a wide range of textile applications - ranging from functional, comfortable and fashionable clothing through to durable and sustainable home textiles. Thanks to their special properties and botanical origin, TÜV-certified biodegradable and compostable Lenzing fibers are also ideal for demanding use in everyday hygiene applications.
The Lenzing Group's business model extends far beyond that of a traditional fiber producer. Together with its customers and partners, Lenzing develops innovative products along the value chain, adding value for consumers. The Lenzing Group strives for efficient utilization and processing of all raw materials and offers solutions for the transition of the textile industry from the
current linear economic system to a circular economy. In order to reduce the rate of global warming and Thereby also support the goals of the Paris Agreement and the EU Commission's Green Deal, Lenzing has a clear, science-based climate action plan that provides for a significant reduction in greenhouse gas emissions (Scopes 1, 2 and 3) by 2030 and a target of net zero by 2050.
1 Annual and Sustainability Report 2023 Lenzing Group
Selected indicators of the Lenzing Group
Key earnings and profitability figures
EUR mn | 2023 | 2022 | Change |
Revenue | 2,521.2 | 2,565.7 | (1.7)% |
EBITDA (earnings before interest, tax, depreciation and amortization) | 303.3 | 241.9 | 25.4% |
EBITDA margin | 12.0% | 9.4% | |
EBIT (earnings before interest and tax) | (476.4) | 16.5 | n/a |
EBIT margin | (18.9)% | 0.6% | |
EBT (earnings before tax) | (585.6) | (10.1) | 5,722.0% |
Net profit/loss after tax | (593.0) | (37.2) | 1,492.2% |
Earnings per share in EUR | (20.02) | (2.75) | 627.4% |
ROCE (return on capital employed) | (14.2)% | 2.0% | |
ROE (return on equity) | (30.1)% | (0.5)% | |
ROI (return on investment) | (8.9)% | 0.3% | |
Key cash flow figures
EUR mn | 2023 | 2022 | Change |
Gross cash flow | 88.5 | 244.8 | (63.9)% |
Cash flow from operating activities | 160.3 | (43.2) | n/a |
Free cash flow | (122.8) | (740.7) | (83.4)% |
CAPEX | 283.6 | 698.9 | (59.4)% |
Liquid assets as at 31/12 | 731.0 | 453.3 | 61.3% |
Unused credit facilities as at 31/12 | 203.0 | 232.3 | (12.6)% |
Key balance sheet figures
EUR mn as at 31/12 | 2023 | 2022 | Change |
Total assets | 5,214.6 | 5,525.0 | (5.6)% |
Adjusted equity | 1,809.1 | 2,088.6 | (13.4)% |
Adjusted equity ratio | 34.7% | 37.8% | |
Net financial debt | 1,562.6 | 1,799.41 | (13.2)% |
Net financial debt / EBITDA | 5.2 | 7.41 | (30.7)% |
Net financial debt incl. lease liabilities | 1,704.7 | 1,869.0 | (8.8)% |
Net debt | 1,779.5 | 1,946.6 | (8.6)% |
Net gearing | 86.4% | 86.2%1 | |
Trading working capital | 551.1 | 570.7 | (3.4)% |
Trading working capital to annualized group revenue | 21.0% | 24.0% | |
Key stock market figures
EUR | 2023 | 2022 | Change |
Market capitalization in mn as at 31/12 | 1,372.9 | 1,454.9 | (5.6)% |
Share price as at 31/12 | 35.55 | 54.80 | (35.1)% |
Dividend per share | 0.00 | 0.00 | n/a |
Employees
2023 | 2022 | Change | |
Full-time equivalents (FTE) as at 31/122 | 7,917 | 7,931 | (0.2)% |
- Since the second quarter of the 2023 financial year, net financial debt is presented excluding lease liabilities (see the supplement to the management report "Notes on the Financial Performance Indicators of the Lenzing Group").
- The number of employees has been reported on a full-time equivalent basis since the third quarter of the 2023 financial year. Until the third quarter of the 2023 financial year, the figure was based on the number of individuals.
The above financial indicators are derived primarily from the IFRS consolidated financial statements of the Lenzing Group. Additional details are provided in the section "Notes on the financial performance indicators of the Lenzing Group", in the glossary to the Annual Report and in the consolidated financial statements of the Lenzing Group. Rounding differences can occur in the presentation of rounded amounts and percentage rates.
2 Annual and Sustainability Report 2023 Lenzing Group
Ready to join?
Rethink, Redesign, and Rebuild: Only through this trifold approach can we achieve innovative solutions on the scale the world needs. Our corporate strategy of "Better Growth" means we aim to generate as much benefit for the economy, environment, and society as possible. That's why we invite you to think, shape, and participate in driving the transition towards a circular economy together.
3 Annual and Sustainability Report 2023 Lenzing Group
New actions start | |
with new thinking | R E T H I N K |
Before anything can be made new, it must first | |
be thought anew: Our culture of innovation | |
serves as the foundation for ideas and projects | |
that propel the circular economy forward. |
Rethink with us
The path brings us | |
R E D E S I G N | closer to the goal |
Every innovative solution paves new paths. | |
In line with the principles of the circular | |
economy, we optimize processes at every | |
stage of the value chain. |
Redesign with us
Sustainability on a new scale
Striving for as much positive change as possible: | R E B U I L D |
In addition to expertise, we bring capacities that | |
enable the sustainable transformation of large | |
business sectors. Ready to join? Learn more! |
Rebuild with us
4 Annual and Sustainability Report 2023 Lenzing Group
Content
"We would like to invite all our partners to join us in renewing the textile and nonwovens industries and in bringing about positive change."
Letter from the CEO
- Page 7
Revenue 2023
2,521,167
EUR '000
Management Report 2023
- Page 22
5 Annual and Sustainability Report 2023 Lenzing Group
Highlights 2023 | 6 |
Letter from the CEO | 7 |
Report of the Supervisory Board | 9 |
The Company 2023 | 12 |
Lenzing Group locations | 13 |
The Lenzing Group strategy | 14 |
Sustainability in the Lenzing Group | 16 |
The Lenzing Group brand world | 17 |
The Lenzing product portfolio | 19 |
Lenzing fiber applications | 21 |
Management Report 2023 | 22 |
General Market Environment | 23 |
The Development of Business in the Lenzing Group | 25 |
The Development of Business in the Division | 27 |
Research and Development | 32 |
Investments | 33 |
Risk Report | 34 |
Report on the Key Elements of the Internal Control System | |
(Section 243a Para. 2 of the Austrian Commercial Code) | 39 |
Shareholder structure and information on capital | 40 |
Outlook | 41 |
Appendix: Notes on the Financial Performance Indicators | |
of the Lenzing Group | 42 |
Consolidated non-financial statement/ | |
Sustainability report | 47 |
Corporate Governance Report 2023 | 176 |
Declaration of Commitment | 177 |
The Corporate Bodies of Lenzing AG | 177 |
Managing Board | 177 |
Supervisory Board | 178 |
Supervisory Board members delegated by the Works Council | 179 |
Independence | 179 |
Advancement of women on the Managing and Supervisory | |
boards and in key management positions (L-Rule 60 ACCG) | 180 |
Diversity concept | 181 |
External evaluation | 181 |
Risk management and Corporate Audit | 181 |
Directors' Dealings | 181 |
Compliance | 181 |
Consolidated Financial Statements 2023 | 182 |
Consolidated Income Statement | 184 |
Consolidated Statement of Comprehensive Income | 185 |
Consolidated Statement of Financial Position | 186 |
Consolidated Statement of Changes in Equity | 187 |
Consolidated Statement of Cash Flows | 189 |
Notes to the Consolidated Financial Statements | 190 |
Auditor's Report | 261 |
Declaration of the Managing Board | 265 |
Lenzing Group Five-Year Overview | 266 |
Financial calendar | 267 |
Glossary | 268 |
Imprint | 276 |
Highlights 2023
Since 2021, Lenzing has invested more than EUR 100 mn in the conversion and modernization of its site in Indonesia. With the successful completion of this investment in 2023, Lenzing is now even better positioned to meet the growing demand for eco-friendly specialty fibers.
February
- Lenzing and NFW (Natural Fiber Welding Inc.) jointly offer sustainable leather alternatives for fashion
March
- Lyocell Shortcut fibers optimized for the growing market for flushable products
- "Advancing Circularity": Lenzing presents online Sustainability Report 2022
April
- Lenzing launches carbon neutral viscose fibers in Europe and the USA
- New "Fiber Recycling Initiative" highlights circular economy with mechanical recycling
- Production site in China successfully converted and modernized
May
- Lenzing celebrates forty years of LENZING™ bio-based acetic acid
- Austria's largest textile recycling project launched
- Lenzing and KARL MAYER GROUP join forces to drive sustainable innovations in flat knitting and warp knitting
- Internationally renowned marine research institute re-certifies biodegradability of cellulose-based fibers
June
- Lenzing receives the Vienna Stock Exchange Sustainability Award
- Presentation of new innovation that reduces the discoloration of cellulose-based garments
- World premiere for the circular economy: Södra and Lenzing receive largest EU LIFE grant for recycling project
July
- Capital increase with subscription rights amounting to around EUR 400 million successfully implemented
- Presentation of new cotton-free special denim collection
- Presentation of new resource-efficient dyeing approach for TENCEL™ lyocell fibers
August
- Lenzing receives third consecutive Platinum award from EcoVadis
- REFIBRA™ technology extended to LENZING™ ECOVERO™ fibers
- Modernization and conversion of the site in Indonesia successfully completed
September
- Setting new standards in supply chain transparency by combining real-time delivery tracking and carbon visibility
- EU Ecolabel awarded for environmentally responsible fiber production at Indonesian plant
- Cellulosic LENZING™ fibers ensure sustainable preservation of glacier mass
October
- Lenzing and Kentaur develop circular workwear for the hospitality sector
- Lenzing and Kaihara further expand partnership with premium denim capsule collection
- Fiber identification system from Lenzing ensures traceability of LENZING™ FR fibers in protective clothing
November
- ITMF Award won for pioneering partnership in the text cycling area
- Lenzing makes recourse to wind power to expand green energy mix in fiber and pulp production
December
- Acquisition of biomass power plant to supply lyocell plant in Burgenland
6 Annual and Sustainability Report 2023 Lenzing Group
Letter from the CEO
Dear Reader,
Behind us lies a challenging year with escalating geopolitical tensions and devastating natural disasters. The Israel-Gaza war, the ongoing war against Ukraine and the crisis in the Red Sea, as well as high inflation and the economic downturn, are having an impact on economic activity and have posed major challenges for the sector. The expected recovery in markets relevant for the Lenzing Group has failed to materialize to date. The continued sharp increase in raw material and energy costs on the one hand and very subdued demand on the other had a negative impact on Lenzing's business trends in the reporting year, as well as on the entire sector. A full return to pre-pandemic growth rates appears increasingly out of reach over the coming quarters, according to the IMF.
All of these factors ultimately led to an unsatisfactory result in the 2023 financial year. This makes the measures we took decisively and at an early stage all the more appropriate. We launched an ambitious cost-cutting program back in 2022, which delivered the expected results earlier than planned. Building on this, we are currently implementing a comprehensive performance program with a focus on positive free cash flow, stronger revenue and margin growth, and sustainable cost excellence. The overarching goal is to position Lenzing on an even stronger foundation and to further enhance its crisis resilience.
The consequences of the ongoing political crises are increasing the urgency to make our business as independent as possible from global upheavals. The best contribution we can make to a liveable present and future is to lead the way with our innovative strengths and to operate successfully and sustainably. Profitable
and affordable sustainability on a large scale is the challenge facing our industry. In this context, Lenzing took a big step forward during the past financial year. With the completion of the conversion of the production line for modal fibers in Nanjing (China), we are now able to offer our Chinese customers locally
produced TENCEL™ brand fibers for the first time. In Purwakarta (Indonesia), we successfully completed the conversion to a state- of-the-art production facility. The investment significantly reduces emissions and transforms the site into a specialty viscose supplier of the brands LENZING™ ECOVERO™, including the innovative LENZING™ ECOVERO™ Black fibers, and VEOCEL™, which meet the high environmental standards of the internationally recognized EU Ecolabel. Both projects help us to meet the structurally growing demand for our specialty fibers even better.
Is it possible to produce sustainably for the whole world or is there a new limit to growth that is slowing down this development? This is the question that arises for us, for you, and for policymakers who are pushing for economic and ecological change. Lenzing is working tirelessly to make the industries where it is active even more sustainable, and to advance the transition of the textile business model from a linear to a circular economy model. For this transition to be successful, further efforts by the entire sector and a policy designed to ensure a level playing field for sustainability pioneers are required.
As a consequence, this Annual and Sustainability Report is also an invitation to find answers together. We would like to invite all our partners to join us in renewing the textile and nonwovens industries and in bringing about positive change. To achieve this, we need changes in behavior and a proactive, dynamic process at all levels: new approaches in research and development, technologically brilliant solution concepts, and concentrated implementation power paired with operational excellence in order to scale sustainability to previously unattainable dimensions. Let's rethink structures and shape a positive future together!
The capital increase we implemented will help us to achieve this. It affords us the latitude to enhance efficiency and resilience, as well as the financial flexibility that forms the foundation for future
7 Annual and Sustainability Report 2023 Lenzing Group
growth. In addition to expertise, Lenzing also has capacities on a scale that enables the sustainable transformation of large business areas. As a pioneer in the optimized utilization and recovery of all raw materials, we have extended REFIBRA™ technology to the range of LENZING™ ECOVERO™ fibers with recycled content. This gives our partners in the value chain the opportunity to work together to advance the transition to a circular economy in the textile sector.
We have also made progress in decarbonizing our company. At the Heiligenkreuz site, we acquired a biomass power plant to supply the lyocell plant in Burgenland. This strategic investment ensures greater energy independence and a further reduction in carbon dioxide and strengthens not only our environmentally responsible specialty fiber range but also site security. In Purwakarta, Indonesia, we recently started to source electricity from renew able energy sources and are driving the transition to biomass in line with Lenzing's targets to reduce carbon emissions per tonne of product by 50 percent by 2030 and to achieve carbon neutrality by 2050.
We have also made progress in the transparency of our production and management: certifications from the Higg Facility Environmental Module (FEM), the Higg Facility Social Labor Module (FSLM), and the ZDHC Foundation also reflect our leading position in this area. Diversity, inclusion, and employee engagement are key topics for us to continue to improve and promote talent. We consistently include the achievement of sustainability targets in the performance and remuneration of senior managers.
Our many discussions with our investors and shareholders have not only shown that the challenging fiber market has been recognized, but we have also received a lot of encouragement for our strategic and operational steps. As a consequence, the
capital increase was perceived and supported as a forward- looking measure to strengthen our equity position. A total of
99.5 percent of our shareholders exercised their subscription rights. This is a clear signal that we are focusing on the right meas- ures with our strategy.
In the medium and long term, we expect continued strong demand growth for Lenzing's sustainable products. We are convinced that the two investment projects in China and Indonesia will further reinforce our positioning in this context and that we will pursue a profitable growth track with the key projects in Thailand and Brazil that have been implemented successfully.
We would also like to thank our customers and partners, who value our sustainable products and services, and not least the approximately Lenzing Group 8,000 employees, who have done a fantastic job and continue to give of their best every day, including during challenging times such as these, to strengthen our leading innovation and market position and bring about a turnaround.
Sincerely,
Stephan Sielaff
Chief Executive Officer
8 Annual and Sustainability Report 2023 Lenzing Group
Report of the Supervisory Board
To the 80th Annual General Meeting
Dear shareholders,
The 2023 year was characterized by a number of challenges for Lenzing Aktiengesellschaft. The ongoing war in Ukraine, the flare-up of the Israel-Gaza conflict, continued high inflation, and a simultaneously weak economy are having a significant negative impact on our sector's performance. The past financial year was characterized by continued low demand for cellulosic fibers, with correspondingly lower prices. As a consequence, the recovery in the market that was originally expected failed to materialize, or is unfolding at a much slower rate than originally anticipated.
At the same time, and despite the unfavorable market trend, Lenzing was able to achieve groundbreaking successes for the coming years. The modernization and conversion of the site in Indonesia was successfully completed in the third quarter. This has led to a significant reduction in carbon emissions at the site and certification of the fibers produced there in accordance with the EU Ecolabel. The conversion of a production line to modal fiber production at the Nanjing (China) site was also successfully completed. As a consequence, we are now able to offer our Chinese customers locally produced TENCEL™ brand fibers for the first time. The investments that we have realized over recent years position Lenzing very well to meet growing demand for sustainable specialty fibers in the future.
Building on the successful implementation of the cost reduction and reorganization program launched in the third quarter of 2022, a comprehensive performance program focusing on free cash flow, revenue growth, and margin growth, as well as on a sustainable improvement in the cost structure was launched in 2023. This should further strengthen Lenzing's crisis resilience in the future. The capital increase implemented in the middle of the year with gross proceeds of EUR 400 million supports this objective. The cash and cash equivalents raised were deployed to strengthen the company's financial position and to advance the "Better Growth" corporate strategy, including in a challenging environment.
Significant successes were also achieved in 2023 as part of the sustainability strategy that is firmly anchored within the company. The acquisition of the biomass power plant at the lyocell site in Heiligenkreuz represents a milestone in this context. The trans action will enhance energy independence and site security, as well as significantly reduce carbon emissions. Thanks to its comprehensive sustainability efforts, Lenzing was one of only ten companies worldwide to be awarded a triple "A" rating by CDP. This confirms Lenzing's leading role in transparency and performance in the areas of climate change, forests, and water security. The certifications we have received fill us with pride and confirm the positioning of resource conservation, the circular economy, and innovation as essential cornerstones of our targeted carbon neutrality.
The Supervisory Board fulfilled the monitoring obligations defined by law, the articles of association, and the rules of procedure in connection with these varied activities. The Supervisory Board was involved in fundamental decisions on a timely basis and provided professional advice for the Managing Board. The Managing Board, in turn, submitted regular detailed reports to the Super visory Board on the financial position and performance of Lenzing AG and of the Lenzing Group. In addition, the Managing Board also reported to the Chairman of the Supervisory Board outside the context of scheduled meetings concerning business perfor- mance, the company's position, as well as major transactions. Individual issues were handled in depth by the committees established by the Supervisory Board, which then reported on their activities to the plenary Supervisory Board.
Supervisory Board meetings
The Supervisory Board of Lenzing AG met six times during the reporting year. At these meetings, the Managing Board reported on business performance as well as on major transactions and
9 Annual and Sustainability Report 2023 Lenzing Group
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Lenzing AG published this content on 14 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 March 2024 06:35:03 UTC.
