The company experienced a significant 25.4 per cent increase in earnings before interest, tax, depreciation, and amortisation (EBITDA), reaching €303.3 million. However, earnings before interest and tax (EBIT) suffered, recording a loss of €476.4 million, a stark contrast to the €16.5 million earned in 2022. This loss was primarily due to non-cash impairment losses of €464.9 million, attributed to ongoing economic uncertainties and a rise in discount rates reflecting changes in the interest rate environment. Consequently, earnings after tax plummeted to a loss of €593 million from a loss of €37.2 million in 2022, with earnings per share dropping to minus €20.02 from minus €2.75, Lenzing said in a press release.
Lenzing Group reported nearly stable revenue of €2.52 billion ($2.74 billion) in FY23, a slight decline from €2.57 billion in FY22.
The company saw EBITDA rise by 25.4 per cent to €303.3 million.
EBIT fell to a loss of €476.4 million, leading to a net loss of €593 million from a loss of €37.2 million in FY22.
Earnings per share dropped to minus €20.02.
“The anticipated recovery of markets relevant to the Lenzing Group has failed to materialise to date. Subdued demand and the still sharply increased raw material and energy costs have led to a result in 2023 that we are not satisfied with,” said Stephan Sielaff, chief executive officer of the Lenzing Group. “This makes the measures we have taken decisively and at an early stage to keep Lenzing on track and further boost its resilience to crises all the more significant.”
The implementation of the performance programme is exceeding plan. The programme initiatives are primarily aimed at improving EBITDA and at generating free cash flow through stronger revenue and margin growth, as well as sustainable cost excellence. In addition to the clearly positive effects at the revenue level, the managing board expects annual cost savings in excess of €100 million, of which well over 50 per cent will be effective from the current financial year onwards.
“This performance programme is a powerful instrument to tackle the current economic challenges and enhance Lenzing’s resilience to crises. We are very satisfied with how the programme has unfolded so far. The cash flow trend in the second half of the year shows that these measures are taking effect,” said Nico Reiner, Lenzing Group CFO.
In the third and fourth quarters of FY23, Lenzing generated positive free cash flow of €27.3 million and €15.4 million respectively (compared with minus €132.3 million in the first quarter and minus €33.1 million in the second quarter of 2023).
Capital expenditure on intangible assets, property, plant and equipment, and on biological assets (CAPEX) amounted to €283.6 million in FY23 (compared with €698.9 million in FY22).
Fibre2Fashion News Desk (DP)
