Release Date: August 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 to EUR1.3 billion for the first half of 2024, driven by their performance program.
- EBITDA increased significantly by EUR28 million to EUR164 million compared to the first half of 2023.
- The company achieved positive free cash flow for the fourth consecutive quarter, amounting to EUR54 million in Q2 2024.
- Lenzing AG (LNZNF) has successfully reduced its net financial debt by EUR525 million, or 27%, compared to Q2 2023.
- The holistic performance program is ahead of schedule, with significant improvements in cost and top-line performance, contributing to better-than-expected operational results.
Negative Points
- The generic fiber market has shown little signs of recovery, with prices remaining under pressure.
- Lenzing AG (LNZNF) reported a net loss of EUR71 million for the first half of 2024, although this is an improvement from the previous year's loss.
- Input costs, particularly for energy and chemicals, remain elevated compared to 2020 levels, impacting profitability.
- The company faces challenges in the textile market, with global apparel demand slightly negative and European demand down by 6% year-on-year.
- Despite improvements, Lenzing AG (LNZNF) is not yet satisfied with its absolute financial results and acknowledges the need for further progress.
Q & A Highlights
Q: Can you provide more specifics on your premium pricing for specialty products compared to the mass market?
A: Stephan Sielaff, CEO, explained that the price premium depends on the fiber type and demand, with lyocell, viscose with ECOVERO, and Modal showing better price premiums over standard products. However, he did not disclose specific price premiums for individual fibers.
Q: How do you see free cash flow evolving towards the year-end?
A: Nico Reiner, CFO, stated that while they do not guide on free cash flow, the company aims to maintain a positive free cash flow quarter-by-quarter. The positive trend seen in the first half is expected to continue, with a clear ambition for a positive free cash flow for the fiscal year 2024.
Q: Could you quantify the savings realized so far this year and expectations for the second half?
A: Stephan Sielaff mentioned that they are targeting savings well above EUR100 million, with more than 50% expected to be achieved this year. However, specific details on savings were not disclosed.
Q: What is the long-term sustainable level of CapEx for Lenzing, given the current depreciation and amortization levels?
A: Nico Reiner noted that the company is focusing on maintenance and license to operate CapEx, without providing specific guidance. He emphasized that every expenditure is scrutinized, suggesting that current levels are indicative of their approach.
Q: Regarding the tax charge in Brazil, what caused the unexpected increase, and could it happen again?
A: Nico Reiner explained that the tax charge was primarily due to FX effects, as the Brazilian Real significantly dropped against hard currencies. He noted that predicting future FX effects is challenging, implying that similar occurrences could happen if exchange rates fluctuate significantly.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
