Report of the Supervisory Board

To the 81st Annual General Meeting

Dear shareholders,

Despite the ongoing weakness of the market and the high level of macroeconomic and geopolitical uncertainty, the 2024 financial year proved to be a successful year for Lenzing AG. We achieved significant improvements in our operating earnings and free cash flow. These improvements were especially supported by the consistent implementation and overfulfilment of our comprehensive performance program. I would like to take this opportunity to thank the Managing Board and all employees at Lenzing AG for their tireless efforts, which have made these positive results possible in a persistently difficult market environment.

In addition to the operational business performance, we also successfully implemented a number of important strategic initiatives in the 2024 financial year. For example, in September 2024, we rearranged the financing of the LD Celulose joint venture in Brazil with the issue of a USD 650 million green corporate bond. This bond issue was 4.6 times oversubscribed thanks to high demand from institutional investors, which highlights the successful development of the project and the strong positioning of Lenzing AG in the sustainability area. Furthermore, a partnership in the next-generation cellulosic fibers area was arranged with Swedish company TreeToTextile AB in October 2024. Under this agreement, Lenzing AG is to acquire a minority interest in TreeToTextile and will also cooperate in the future with this company’s existing shareholders H&M Group, Inter IKEA Group, Stora Enso, and LSCS Invest.

Looking ahead to the coming financial year, the market recovery is expected to remain slow, and the various uncertainties for a globally active company like Lenzing AG will remain as high as during the past financial year. As a consequence, we as an organization must remain vigilant over the course of the coming year and continue to work consistently on implementing the Group strategy and on improving the long-term competitiveness of Lenzing AG.

The acquisition by Suzano S/A of an interest in the equity of Lenzing AG in the 2024 financial year also led to an important change in the company’s ownership structure. Lenzing’s existing main shareholder, B&C Group, and Brazilian pulp producer Suzano have signed a long-term partnership under which Suzano has acquired a 15 percent interest in Lenzing AG. This transaction was announced on June 12, 2024, and was completed on August 30, 2024, after all official approvals had been obtained. The Managing and Supervisory boards of Lenzing AG welcome this investment and are pleased with the collaboration with this additional core shareholder and its representatives on the Supervisory Board of Lenzing AG, which has already commenced.

The Supervisory Board fulfilled its supervisory duties, as defined by legislation, the company’s articles of association, and the rules of business procedure, in relation to varied activities. The Supervisory Board was involved at an early stage in fundamental decisions, and was available to provide consultative advice to the Managing Board. In turn, the Managing Board submitted regular detailed written reports to the Supervisory Board concerning the financial position and performance of both Lenzing AG and the Lenzing Group. In addition, the Managing Board also reported to the Supervisory Board Chairman outside the context of scheduled meetings concerning business performance, the company’s position, as well as major transactions. Individual issues were handled in depth by the committees established by the Supervisory Board, which then reported on their activities to the plenary Supervisory Board.

Changes on the Supervisory and Managing Boards of Lenzing AG

Several changes occurred to the Supervisory Board over the course of 2024, not least due to changes in the ownership structure. At the 80th Annual General Meeting on April 18, 2024, Dr. Cornelius Baur was elected to the Supervisory Board, and Melody Harris-Jensbach was re-elected to the Supervisory Board. Following the transfer of a 15 percent interest in Lenzing from the B&C Group to Suzano, which was completed on August 30, 2024, Marcelo Feriozzi Bacci, Carlos Aníbal de Almeida Junior, and Dr. Markus Fürst were elected to the Supervisory Board at the Extraordinary General Meeting held on October 10, 2024. Nicole van der Elst Desai, Melody Harris-Jensbach, and Dr. Christian Bruch had previously stepped down from their Supervisory Board positions. We would like to thank the departing Supervisory Board members for their trusting and constructive support and wish them all the best for the future. Finally, on December 6, 2024, a further change occurred on the Supervisory Board, as Marcelo Feriozzi Bacci stepped down from his role as CFO of Suzano, and also stepped down from the Supervisory Board of Lenzing AG.

The Managing Board team was also successfully developed further in 2024. On April 15, 2024, Dr. Walter Bickel was appointed as a member of the Managing Board in order to strengthen the team in his role as Chief Transformation Officer. In this role, Dr. Bickel has since been responsible for the further development and implementation of the holistic performance program, which was successfully launched by the Managing Board in autumn 2023. Furthermore, Rohit Aggarwal assumed the position of CEO of Lenzing AG on September 1, 2024, after Stephan Sielaff, the company’s previous CEO, stepped down as of the end of August 2024 by mutual agreement with the Supervisory Board. We would like to take this opportunity to thank Stephan Sielaff once again for his achievements in paving the way for major improvements during a period in which the company faced many challenges, and for the circumspect manner in which he handed over responsibility to his successor Rohit Aggarwal in the summer of 2024.

Supervisory Board meetings

The Supervisory Board of Lenzing AG held a total of five ordinary and seven extraordinary meetings during the reporting year, at which it was informed by the Managing Board about the course of business and about important business transactions and actions, and at which it supervised the work of the Managing Board and advised the Managing Board on important strategic decisions. Given the lack of market recovery, collaboration with the Managing Board was further intensified. The implementation and further development of the overall performance program was discussed at regular intervals by the full Supervisory Board, and the Value Creation Committee was established for this purpose. The refinancing of the LD Celulose joint venture in Brazil was also closely monitored, with the main responsibility for this transaction being delegated to the Audit Committee. The strategic development of the Group, the sustainability strategy and ESG issues, research and development priorities, digitalization, personnel measures, financing measures, and the budget for the 2025 financial year and its approval were also discussed in detail.

Committee meetings

The Remuneration Committee established by the Supervisory Board held a total of nine meetings during the reporting year and dealt primarily with performance evaluation and goal setting for the Managing Board members as well as further general remuneration topics relating to the Managing Board.

The Nomination Committee held a total of five meetings during the reporting year. These meetings primarily dealt with personnel development measures and succession planning issues, as well as the appointment of Dr. Walter Bickel as Chief Transformation Officer and the new appointment of Rohit Aggarwal as Chief Executive Officer, as well as the associated allocation of responsibilities on the Managing Board. The committee discussed nominations to the Supervisory Board and submitted corresponding nominations for approval.

The Audit Committee held a total of five meetings during the reporting year. Some of these meetings were also attended by representatives of the auditors who reported on their auditing activities, and coordinated these activities with the Audit Committee. Specific financial accounting issues were also discussed in the presence of the auditor. In addition to reviewing and preparing both the separate and the consolidated financial statements, the committee also addressed the additional tasks pursuant to Section 92 Para. 4a of the Austrian Stock Corporation Act (AktG), focusing particularly on critically examining and monitoring the functioning and effectiveness of the internal control, audit, and risk management systems. The results were subsequently discussed with the plenary Supervisory Board. Moreover, at the request of the plenary Supervisory Board, the Audit Committee played a leading role in the refinancing of the LD Celulose joint venture in Brazil.

The Strategy, Growth and Innovation Committee held a total of two meetings during the reporting year, and dealt with the review of the company’s strategic positioning, the monitoring of strategy implementation, and current innovation projects. The ESG Committee held a total of three meetings during reporting year. This committee supports the Managing Board, the plenary Supervisory Board, the Audit Committee, and the Strategy, Growth and Innovation Committee in matters relating to non-financial reporting and strategic ESG issues.

The Transformation/Value Creation Committee, which was established in 2023, was engaged again in 2024 in order to support the overall performance program. This committee held a total of four meetings during the reporting year, and focused especially on monitoring the implementation of the existing program and defining additional performance measures.

Additional information about the composition and working procedures of the Supervisory Board and its remuneration is provided in the Corporate Governance Report and in the Remuneration Report of Lenzing AG.

Audit of the separate annual financial statements and management report, and of the consolidated financial statements and Group management report

The separate annual financial statements of Lenzing AG together with the related management report, and the consolidated financial statements of the Lenzing Group together with the Group management report, including the non-financial statement in accordance with Section 245a of the Austrian Commercial Code (UGB) as of December 31, 2024, were audited by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Linz. The auditor issued an unqualified audit opinion. The Corporate Governance Report was evaluated by PwC Oberösterreich Wirtschaftsprüfung und Steuerberatung GmbH, Linz. It was found that the declaration of compliance with the Corporate Governance Code issued by Lenzing AG (in January 2021) corresponds to the actual circumstances. The Supervisory Board’s Audit Committee reviewed the separate annual financial statements and the consolidated financial statements, as well as the separate management report, the Group management report, and the Corporate Governance Report. The results of this review were subsequently discussed with the auditor in detail. On the basis of its own review, the Audit Committee concurred with the auditor’s audit results. In accordance with its duties, the Audit Committee reported accordingly to the Supervisory Board, and also recommended that the Supervisory Board propose to the Annual General Meeting that KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft be appointed as the auditor for the 2025 financial year. After conducting its review, the Supervisory Board formally approved the management report and the Corporate Governance Report, and adopted the separate annual financial statements for 2024 in accordance with Section 96 Para. 4 of the Austrian Stock Corporation Act (AktG). Furthermore, the Supervisory Board stated its approval of the consolidated financial statements and Group management report, as well as of the non-financial statement, pursuant to Sections 244 and 245a UGB. The Supervisory Board concurs with the recommendation by the Audit Committee and will consequently submit a proposal to the 81st Annual General Meeting for the appointment of KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft as the auditor of the annual financial statements for the 2025 financial year. Furthermore, the Supervisory Board will propose to the 81st Annual General Meeting that KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft be appointed as the auditor of the sustainability report for the 2025 financial year, if statutory provisions require the appointment by the Annual General Meeting of an external auditor of the sustainability report. The Supervisory Board was not informed of any conflicts of interest on the part of Managing Board or Supervisory Board members during the reporting year that would require disclosure to the Annual General Meeting.

The Supervisory Board would like to extend its thanks and acknowledgment to the Managing Board and all employees of Lenzing AG for their outstanding commitment. Thanks to their personal commitment, Lenzing AG overcame the particular challenges posed by the slow market recovery, and continued to implement the Group strategy with undiminished vigor. We also wish to extend our special thanks to Lenzing’s customers, shareholders, suppliers, and business partners for their trust and solidarity.

Vienna, March 11, 2025

Cord Prinzhorn
Chairman of the Supervisory Board