MOSCOW (MRC) -- Textile fiber manufacturer Lenzing reports a steep fall in net profit for the first half of 2020, to EUR1.5 million (USD1.8 million) from EUR78.8 million in the first half of 2019, on revenue down 25.6% from EUR1.09 billion to EUR810.2 million, said Chemweek.
The company says it “faced a historically difficult market environment with increased pressure on prices and volumes resulting from the COVID-19 crisis.” EBITDA dropped 46.6% year on year to EUR96.7 million and EBITDA margin decreased from 16.6% to 11.9%. Second-quarter figures have not been disclosed.
The immediate effects of the COVID-19 crisis increased price pressure on textile fibers across Lenzing’s entire product range, the company says. It also saw declining demand for textile fibers in all regions, mitigated partly by slightly higher demand for fibers in the medical and hygiene segments.
"The COVID-19 crisis has an impact on the entire textile and apparel industry and further increased the price and volume pressure on the global fiber market. Likewise, Lenzing was also confronted with this historically difficult market environment and focused on the health and safety of their employees, the continuation of long-term partnerships, and ensuring their sustainable business development," says Stefan Doboczky, CEO of Lenzing.
Lenzing says that the implementation of measures for structural earnings improvements in all regions and making use of the short-time work model, which was temporarily introduced by the Austrian government, also mitigated the negative effects of the pandemic. Lenzing adjusted its production volumes and sales prices “to market reality” in the first half, it says.
Lenzing’s capital expenditure roughly tripled in the first half to EUR268.7 million. The increase is a consequence of progress made on major projects in Brazil and Thailand, the company says. Meanwhile, Lenzing says that its previously announced Hygiene Austria joint venture (JV) with Palmers Textil, founded in late April, has been producing and selling mouth-nose and FFP2 masks since May. The JV can produce up to 12 million masks per month, Lenzing says.
Lenzing in March suspended its forecast for 2020 as a consequence of the COVID-19 crisis and resulting limited visibility. At that time, the company expected its 2020 results to be below 2019 levels. Lenzing says it remains difficult to give a precise full-year outlook, but the company expects that its revenue generation and operating performance in the remaining two quarters of 2020 will exceed those of the second quarter. The company also assumes that its previously announced sCore TEN performance-improvement strategy “will yield a significant contribution to earnings starting from 2022."
As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.