Lenzing to increase cost-cutting as market offers ‘no impetus’ for gains
13/11/2014
Volumes for the first nine months grew 7% year-on-year to 706,900 tonnes.
“The earnings improvement is mainly attributable to the excelLENZ cost-cutting drive but also from the first fibre sales volumes produced by the new Tencel plant in Lenzing,” said CEO Peter Untersperger.
However, sales declined 6.2% to €1.47 due to volatility in the fibre market and the decline in the average fibre selling prices, which fell to €1.55/kg compared with €1.73/kg in the first three quarters of 2013. In May, it pointed to China's cotton stockpiling policy as a destabilising market factor.
As such, the company is planning further cost-cutting as “no significant impetus” is expected from the market.
“We expect cost savings exceeding €90 million for the entire year 2014, of which about a quarter involves personnel expenses. The remaining cost decreases equally relate to reduction in material costs and savings derived from efficiency projects to cut general and administrative expenses,” added Mr Untersperger.
“Planning work has begun to enable a further improvement of the group’s cost structure to be achieved in 2015. Starting in 2016 we will achieve sustainable cost reductions of over €160 million per year. These measures are designed to safeguard the long-term competitive strength of the company and its self-financing capacity for future investments.”
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