For 2021, the fiber manufacturer expects an operating result at pre-crisis level again.
Partial view of the man-made fiber plant in Lenzing.
The local fiber manufacturer Lenzing has had better days. The corona crisis brought about a sharp drop in sales and losses for the company in 2020, and Lenzing is also involved in the affair surrounding the mask company Hygiene Austria, in which the company holds the majority.
The bottom line was that Lenzing posted a loss of EUR 10.6 million in the previous year, following a profit of EUR 114.9 million before that. Sales fell by more than a fifth to 1.63 billion euros.
Even if the fiber market recovered in the second half of 2020, the losses could not be offset. For 2021, the Management Board expects the operating result to develop at a level comparable to that of the pre-crisis year 2019. Lenzing continues to expect an increasing demand for sustainable fibers for the textile and clothing industry as well as the hygiene and medical sectors.
Major projects in Thailand and Brazil
The fiber group, which employs over 7,000 people, is currently working on two mega-projects in Brazil and Thailand. These went “according to plan”. Due to the major projects, investments almost tripled to EUR 668.8 million last year. Commissioning of the pulp mill in Brazil is planned for the first half of 2022.
The construction of a new lyocell plant is planned in Thailand. As a result, the share of specialty fibers in the sales revenue of the Fibers segment is to be increased to more than 75 percent by 2024. The investment volume for the new plant with a capacity of 100,000 tons is around EUR 400 million. Production is scheduled to start towards the end of 2021.
Hygiene Austria scandal
The board of directors will explain the figures in the balance sheet press conference. However, the focus of the conversation is likely to be the mask affair. Hygiene Austria bought some of the corona protective masks in China, relabelled it and then sold it under “Made in Austria”. The public prosecutor's office is investigating suspected serious commercial fraud and organized undeclared work.
At the beginning of the week, Lenzing surprisingly withdrew its two managing directors and also its employees from the joint venture. The listed company accused his partner Palmers of preventing the clarification of the case. Lenzing has already announced that it will entrust an accountant with the management of the Hygiene Austria shares. The fiber manufacturer wants to tick off this unpleasant chapter.
In today's mandatory announcement on the occasion of the company results, Lenzing writes that the project was “co-founded with the deep conviction” that it could make an important contribution to protecting the population in the largest pandemic of the last hundred years with Austrian quality. The promise “Made in Austria” was obviously not guaranteed throughout, according to Lenzing. The company therefore sees the current allegations being dealt with by the responsible authorities.
