The Fiber Division comprises all Lenzing Group business activities with cellulosic fibers, especially those in the textiles and nonwovens areas.
Lenzing stands worldwide for the ecologically responsible production of specialty fibers based on cellulose and recycled materials. With the lyocell plant opened in Thailand in 2022 and the successful investments in existing production sites in Asia, Lenzing is able to generate 100 percent of fiber revenues from the specialty fiber business under the TENCEL™, LENZING™ ECOVERO™, and VEOCEL™ brands.
Since 2021, Lenzing has invested more than EUR 200 mn in production sites in China and Indonesia to convert existing capacity for generic viscose into capacity for specialty fibers in order to better serve structurally growing demand for environmentally responsible cellulosic fibers.
At Purwakarta (Indonesia), Lenzing successfully completed reconstruction and modernization measures to convert to specialty viscose and significantly reduce specific emissions. Viscose fibers produced at the site under the LENZING™ ECOVERO™ and VEOCEL™ brands are marked with the EU Ecolabel,1 an internationally recognized eco label for environmentally responsible products and services.
In Nanjing (China), the conversion of a production line to TENCEL™ modal fibers for textiles and apparel was successfully completed in the first quarter of 2023. For the first time, Lenzing can now also offer its Chinese customers the highly sought-after TENCEL™ fibers that are now produced locally. As a consequence of the conversion, the production site’s fiber portfolio now consists exclusively of specialty fibers.
The investment projects at the existing sites are in line with the Lenzing Group’s scientifically recognized and confirmed net zero target (see also the “Climate change” section in the non-financial statement).
A study published in May 2023 by the Scripps Institution of Oceanography (SIO) at the University of California, San Diego,2 confirmed that cellulosic-based fibers such as LENZING™ Lyocell fibers, LENZING™ viscose fibers, and LENZING™ modal fibers are also biodegradable on the seabed. As early as 2021, studies by the renowned, academic research institute showed that LENZING™ Lyocell fibers can be completely degraded at the ocean surface within a very short time.3
With its biodegradable LENZING™ fibers in geotextiles, Lenzing is also able to make a significant contribution to the sustainable protection of glaciers, which are severely threatened by global earth warming. This has been confirmed by the Institute of Ecology at the University of Innsbruck in cooperation with Austrian glacier railway operators. The promising project was ranked first in the prestigious Swiss BIO TOP Awards for wood and material innovations.
Lenzing also took further steps to enhance transparency and efficiency along the global supply chain during the reporting period: together with a digital supply chain solutions provider, Lenzing introduced a pioneering process for real-time delivery tracking of containers. Combined with advanced artificial intelligence, GPS sensors, and machine learning technologies, Lenzing can provide accurate, real-time information on fiber orders – from delivery status and container location through to tracking ship routes and estimated arrival times. In line with the sustainability targets, the tracking system also gives supply chain partners a better overview of carbon emissions. Lenzing is thereby setting new standards in the area of supply chain transparency, which will subsequently also help brands and retailers to achieve their sustainability objectives.
Lenzing was also awarded Platinum status in the EcoVadis CSR rating for the third consecutive time. This award once again positions Lenzing in the top one percent of companies evaluated by EcoVadis worldwide. The assessment comprehensively covers the four main Corporate Social Responsibility practices: the environment, fair working conditions and human rights, as well as ethics and sustainable procurement.
Lenzing was also once again recognized by the global non-profit environmental organization CDP for its transparent reporting and performance in the areas of climate change, forests, and water security. Lenzing was ranked in all categories in the annual “A list” for the third consecutive year. Based on data from the CDP 2023 questionnaires on climate change, forests, and water security, Lenzing is one of only ten companies to receive a triple “A” – out of over 21,000 companies assessed.
With the positioning of its product brands, the Lenzing Group has been sending a strong message to consumers since 2018. With TENCEL™ and LENZING™ ECOVERO™ as overarching brands for all specialty products in the textile segment, VEOCEL™ as the overarching brand for all specialty nonwoven products, and LENZING™ for all industrial applications, the company showcases its strengths in a targeted manner. Lenzing also enhanced its brands’ visibility in 2023 through targeted communication measures. The TENCEL™ brand again achieved a strong leadership position among the ingredient brands of the textile and apparel industry in the global awareness ranking.
The Fiber Division’s external revenue reached a level of EUR 1.84 bn in 2023, 65.1 percent of which was attributable to textile fibers and 34.9 percent to nonwoven fibers. Fiber sales volumes grew to approximately 840,000 tonnes (from approximately 810,000 tonnes in 2022). The share of specialty fibers in fiber revenue increased to 78.9 percent (compared to 73.7 percent in 2022). The division’s earnings (EBITDA) amounted to minus EUR 98.7 mn, while the operating result (EBIT) amounted to minus EUR 683.8 mn.
Textile fibers
A difficult market environment for textile fibers characterized 2023. Following the deterioration in the market environment in the second half of 2022, demand remained subdued throughout last year.
A high level of general uncertainty and low consumer confidence led to orders along the value chain standing for the larger part at a very low level. At the same time, inventories were significantly reduced in order to sufficiently optimize net working capital in the light of high interest rates. The trend towards short-term orders also made it more difficult for many customers and partners to plan their requirements.
Although the recovery is proving to be slower than expected, the TENCEL™, TENCEL™ LUXE, and LENZING™ ECOVERO™ textile fiber brands continued to perform well. Lenzing again succeeded in differentiating itself from its competitors in the reporting year thanks to continuous innovation in the areas of sustainability and the circular economy as well as targeted measures in the area of ingredient branding.
Lenzing and Södra received the ITMF Award for their pioneering partnership in textile recycling. The two companies have been partnered since 2021, making a crucial contribution to promoting the circular economy in the fashion industry.
To further expand awareness of the benefits of regenerated cellulosic fibers such as those from the Lenzing Group, the TENCEL™ 2023 brand collaborated with value chain partners. This includes the flagship partnership with Natural Fiber Welding Inc. to provide sustainable leather alternatives for the fashion industry that are completely plastic-free. The partnership of TENCEL™ with fabric and denim manufacturer Kaihara Denim demonstrated the versatile application of TENCEL™ fibers, pushing innovation boundaries in the premium denim sector.
As part of the successful modernization of the production site in Indonesia, Lenzing expanded its range of responsibly produced specialty viscose under the LENZING™ ECOVERO™ and LENZING™ ECOVERO™ Black brands. Lenzing also launched LENZING™ ECOVERO™ fibers with REFIBRA™ technology in the reporting year, thereby boosting the post-consumer recycling share of its production. The proportion of waste was rapidly raised from 10 percent to 20 percent by the time of launch. The addition of the digital hangtag offering to the LENZING™ ECOVERO™ brand supports customers seeking responsibly produced fashion, and contributes to creating a more sustainable industry.
In a further step to enhance traceability and transparency along the textile value chain, Lenzing has introduced the Lenzing Fiber Identification System for LENZING™ FR fibers. The system, with which LENZING™ FR fibers can be identified at every production stage, ensures unparalleled traceability and quality assurance.
Business with TENCEL™ LUXE filaments performed well in 2023. Market interest has continued to grow in all application areas and segments (athleisure, women’s clothing, traditional clothing, etc.). This led to rising revenue throughout the reporting year and to higher production levels in order to meet additional demand. Clothes made from TENCEL™ LUXE filaments were once again in the spotlight in 2023. Highlights include the bespoke dresses designed by Zac Posen and Monique Lhuillier in collaboration with RCGD Global for actresses Bailey Bass and Chloe East for the 95th Academy Awards, the dress by Wiederhoeft worn by actress Nicola Coughlan at the premiere of the film “Barbie” in London, and the bespoke dress by Patrick McDowell worn by Nicole Scherzinger at the British Fashion Awards.
Lenzing also enhanced the visibility and awareness of its TENCEL™ and LENZING™ ECOVERO™ brands with a series of global campaigns and initiatives that generated more than 23.6 bn impressions in online media and 35.7 mn interactions, including video views, on social media.
The success of the TENCEL™ and LENZING™ ECOVERO™ brands in the 2023 financial year is also reflected in the collaboration with around 560 brand partners worldwide, including international and up-and-coming brands such as Aimer, ANTA, Camper, Country Road, Cotton On, FILA, Fruit of the Loom, Jockey, Kraus Jeans, Marco O’Polo, Mother of Pearl, MPG Sports, Reformation, TwoThirds, The Paradise, Pepe Jeans, Patrick McDowell, Peacebird, VOGUE, and Wacoal.
During the reporting year, Lenzing also launched targeted programs to further strengthen the protection of intellectual property and trademarks. The global initiative, which was first launched in China, involved cooperation with trade fair organizers, partners along the value chain, and government authorities. The TENCEL™ brand achieved more than 3.76 mn views on LinkedIn with its awareness campaign within the first activation period.
Nonwoven fibers
Nonwoven fibers are an important strategic pillar of the Lenzing Group. Lenzing sells the majority of its products in this area under the VEOCEL™ brand, serving the wipes and hygiene segments in particular. Despite the general market dynamics, these areas were relatively stable in the reporting year and recorded growing consumer interest in wood-based and biodegradable solutions.
With the nonwovens strategy developed in 2023, which builds on the Better Growth corporate strategy, Lenzing aims to strengthen its market position and create the conditions for sustainable and profitable growth through targeted product and application solutions with a view to market requirements. The transformation of the nonwovens industry towards the use of sustainable cellulosic fibers remains a key component of this strategy. The Nonwoven Fibers area is aiming to further diversify its sales markets by focusing specifically on the absorbent hygiene products (AHP) segment as a further strategic growth pillar alongside wet wipes, and by forming a new business development team that is geared towards developing new and existing premium technical segments such as battery, filtration, carbonization, and healthcare applications. In order to improve the offering for customers and partners along the value chain and accelerate time to market, innovation activities were also linked more closely with sales. Examples include the development and introduction of hydrophobic lyocell fibers (LENZING™ Lyocell Dry) at the Hygienix trade fair. Thanks to their innovative ability to pass liquids over their surface, the fibers offer completely new product solutions for hygiene products that could previously only be achieved by using plastic fibers. The new Lenzing fiber is not classified as “plastic” under the EU Single-Use Plastics Directive and offers a very soft and environmentally responsible cellulose-based alternative for brands and manufacturers looking to develop plastic-free feminine and personal care products.
Lenzing continued to work closely with its customers and partners in the nonwoven fibers area in 2023 to develop sustainable solutions for the market, including a fully compostable diaper. Launched in early 2023, the optimized LENZING™ Lyocell Shortcut fiber enables rolled goods manufacturers using wet laid nonwoven technology to achieve better and more uniform processability of the fibers in combination with pulp, enabling the production of high-quality nonwovens, such as for use in flushable moist toilet tissues.
The number of VEOCEL™ co-branding programs was also further increased in the 2023 reporting year, as exemplified by the successful partnership with Neutrogena.
Following the successful conversion and modernization of the Indonesian site in the second half of 2023, Lenzing will be able to offer its customers EU Ecolabel certified fibers as a new standard. The launch of the first completely chlorine-free VEOCEL™ Lyocell fibers on the market, which address the growing sustainability and health awareness of consumers worldwide, represents a further world first.
Furthermore, the LENZING™ Nonwoven Technology (LNT) was presented at the INDEX trade fair in Geneva and at the Go Wipes trade fair in Berlin. This technology has the potential to become a key strategic platform for the cellulosic nonwovens sector by opening up new opportunities for differentiation and diversification. This area is turning its attention from technology development to product development and to preparation for commercialization.
Co-products of fiber production
At all locations where the Lenzing Group produces viscose or modal fibers, manufactured co-products include LENZING™ sodium sulfate. This is used in the detergent and glass industries and for the production of food and animal feed. In the 2023 reporting year, sales volumes decreased in line with fiber production, while revenue grew in line with the market situation.
1 The EU Ecolabel is recognized by all member states of the European Union as well as Norway, Liechtenstein and Iceland. Introduced in 1992 by an EU regulation (Regulation (EEC) No. 880/92), the voluntary label has gradually become a reference for consumers who wish to contribute to a lower environmental impact by purchasing more environmentally responsible products and services.
2 https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0284681
3 LENZING™ fibers that are TÜV certified biodegradable (soil, fresh water & marine) and compostable (home & industrial) include the following products: LENZING™ Viscose Standard textile/nonwovens, LENZING™ Lyocell Standard textile/nonwovens, LENZING™ Modal Standard textile, LENZING™ Lyocell Filament, LENZING™ Lyocell Dry and LENZING™ Web Technology. An exception in certification exists in relation to the fibers LENZING™ Lyocell Filament and LENZING™ Lyocell Dry, for which the necessary tests to confirm biodegradability within a marine environment have not yet been conducted or finalized.