The Development of Business in the Lenzing Group

The Lenzing Group’s business performance improved steadily over the course of 2024, although the recovery of the markets relevant to Lenzing proved to be slow, as anticipated. On the volume side, a clear uptrend was evident. Although prices recorded a positive trend during the reporting year, they continue to stand below the previous year’s level. This, coupled with the continued rise in raw material and energy costs and a tangible increase in logistics costs, exerted a dampening effect on both the Lenzing Group’s business performance and the overall sector in 2024.

The earnings development of the Lenzing Group was also characterized by one-off effects, which had a negative impact on the net result after tax. Nevertheless, Lenzing continued its recovery course thanks to the decisive measures taken in response to the past years of crisis.¹

The Lenzing Group Managing Board is currently implementing a comprehensive performance program with the overriding objective of achieving significantly enhanced long-term resilience to crises and greater agility in the face of market changes. The program initiatives are aimed primarily at an improvement in EBITDA and free cash flow generation through higher profitability and sustainable cost excellence. Extensive actions are being undertaken to strengthen sales activities, such as the acquisition of new customers for the most important fiber types and expansion in previously smaller markets, which are having a positive impact in terms of revenue. In addition, the Managing Board anticipates significant cost savings, of which over EUR 130 mn were already realized in 2024. As a consequence, the performance program is delivering significantly above planned levels. Very good progress was achieved in terms of product costs and quality thanks to smart efficiency enhancement measures. Successes were also achieved in the purchasing area thanks to operational and strategic measures. Looking ahead, including beyond 2024, this holistic performance program is expected to continue to lead to improvements in production costs, and further cost potentials will be leveraged, particularly in the area of overhead functions. In parallel, the structural and process improvements that have been initiated will lead to positive effects in terms of revenue and margin generation.

Revenue grew by 5.7 percent year-on-year to EUR 2.66 bn in 2024, mainly reflecting a higher level of revenue generated from fibers (+10 percent).

The positive effects of the performance program were the main factor driving the operating earnings trend. Earnings before interest, tax, depreciation and amortization (EBITDA) rose by 30.4 percent year-on-year to EUR 395.4 mn in 2024. The EBITDA margin increased from 12.0 percent to 14.8 percent.

The operating result (EBIT) amounted to EUR 88.5 mn (compared with minus EUR 476.4 mn in 2023) and the EBIT margin stood at 3.3 percent (compared with minus 18.9 percent in 2023). The result before tax (EBT) amounted to minus EUR 42.0 mn (compared with minus EUR 585.6 mn in 2023).

The income tax expense amounted to EUR 96.3 mn in 2024 (compared with EUR 7.3 mn in 2023). Among other factors, this reflected the retroactive withdrawal from the Austrian tax group as a consequence of the interest of B&C Holding Österreich GmbH (group parent) falling below 50 percent for 2022. As a consequence, the Lenzing Group was required to pay a tax allocation of EUR 22.2 mn to the group parent in accordance with the group tax allocation agreement. This tax allocation was expensed in the reporting year. Details about the financial effects of the withdrawal from the tax group with B&C Holding Österreich GmbH are presented in note 29 and note 38 to the consolidated financial statements (“Relationship with related companies” section). In addition, the income tax expense was influenced by the value adjustment of tax assets of individual Group companies and by currency effects due to the translation of tax items from the local currency into the functional currency² in a volume of EUR 47.5 million. Moreover, foreign withholding taxes amounting to EUR 5.6 mn were incurred. The remaining effects derive from positive tax results of individual Lenzing companies and related current and deferred tax items.

Cash flow from operating activities improved significantly to EUR 322.5 mn in 2024 (compared with EUR 160.3 mn in 2023); this was supported by measures to reduce working capital. Cash flow from investing activities amounted to minus EUR 185 mn (compared with minus EUR 291.5 mn in 2023). Free cash flow showed a clearly positive trend with an increase to EUR 167 mn (compared with minus EUR 122.8 mn in 2023). Cash flow from financing activities amounted to minus EUR 430 mn in 2024 (compared with EUR 421.1 mn in 2023).

Liquid assets (including liquid bills) decreased by 38.2 percent compared to December 31, 2023, to a level of EUR 451.7 mn as of December 31, 2024, mainly due to the repayment of private placements and other financial liabilities.

Capital expenditures for intangible assets, property, plant and equipment, and biological assets (CAPEX) amounted to EUR 156.3 mn in 2024 (compared with EUR 283.6 mn in 2023) including due to the reduction in the level of investment activities.

Total assets decreased by 4.6 percent compared with December 31, 2023, to EUR 4.98 bn as of December 31, 2024. Adjusted equity was also down by 4.6 percent to EUR 1.73 bn. The adjusted equity ratio remained unchanged at 34.7 percent as of December 31, 2024. Net financial debt reduced by 1.9 percent to EUR 1.53 bn as of the reporting date. Net gearing increased to 88.8 percent (compared with 86.4 percent as of December 31, 2023). Trading working capital rose by 4.9 percent to EUR 578 mn.

The details of the revenue and earnings trends in the year under review are as follows:

1 The key figures in this section are explained in more detail in the financial glossary of the Annual and Sustainability Report 2024.

2 Predominant currency of the primary economic environment of a subsidiary