The sCore TEN corporate strategy, which the Lenzing Group has consistently implemented since 2015, outlines the direction the company aims to take together with its employees, suppliers, customers, partners and investors.
The concept of sCore TEN is based on striving for innovation and above-average business success (SCORE), the strong core business with wood-based cellulosic fibers from sustainable production as the driver of development (CORE), and the focus on growth based on specialty fibers, above all TENCEL™ branded lyocell fibers (TEN). The heart in the logo represents the corporate values and culture, which were developed as part of the strategy process, and stands for Lenzing as a reliable partner.
Lenzing regularly reviews whether its corporate strategy is up-to-date, taking into account internal and external developments. In several areas, the market environment is significantly more challenging than just a few years ago. However, successful growth and development over recent years, including in a very difficult market climate at times, gave further reassurance to Lenzing that its strategic orientation is appropriate. Today, the company is substantially more resilient than just a few years ago, which is above all due to its specialty strategy and its strong brands based on innovation and sustainability.
Lenzing continues to anticipate strong growth in the fibers business. The main growth drivers include steady population growth and rising prosperity in emerging markets. Per capita fiber consumption will continue to expand significantly. After a period of stagnation from 2019 to 2021, Lenzing expects demand for wood-based cellulosic fibers to increase by 5 to 7 percent per year through to 2025 – in other words, around twice as fast as the global fiber market.
Most of the operational and economic goals of the sCore TEN strategy defined in 2015 have been set for 2020, and most of them have been achieved ahead of time. Consequently, the goals were revised in 2019 and are now scheduled to be met by 2024. The strategic cornerstones have remained largely unchanged since 2015: pulp lies at the core of the strategy. It is extracted from the renewable raw material wood. The dissolving wood pulp produced in the Lenzing Group’s biorefineries is processed into cellulosic fibers. Lenzing produces a large part of the required pulp itself. Lenzing aims to achieve a share of more than 75 percent by 2024 in order to hedge even better against future price fluctuations. The focus is on completing the key project in Brazil on schedule in order to achieve this strategic goal.
Quality and sustainability will remain the foundation of success and profitability in the future. Lenzing will consequently continue to invest in the development of its biorefineries, in strengthening its closed loop model, and in providing full transparency along the value chain. The implementation of the climate target endorsed by the Science Based Targets Initiative represents a new focus of the sCore TEN strategy. Lenzing will substantially reduce its carbon dioxide emissions over the coming years. The target is to be climate-neutral by 2050. In line with its strategic commitment for 2024, Lenzing is endeavoring to reduce emissions per tonne of product by more than 40 percent compared with 2017.
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Targets |
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EBITDA |
EUR 800 mn |
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ROCE |
>10 %1 |
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Net Debt/EBITDA |
<2.5 x2 |
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Specialties share |
>75 % of fiber sales |
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Dissolving wood pulp backward integration |
>75 % |
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Decarbonisation |
>40 % specific CO2 reduction per ton of product |
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Lenzing will continue to expand its partnerships and collaborations with companies along the value chain and further enhance its proximity to its customers in order to strengthen its quality position on the market. Moreover, Lenzing will continue to work hard to increase the visibility of its brands and support customers and consumers in their purchasing decisions by creating a better understanding of products and their impact on the environment and society. A strong focus will also remain on brand management.
Specialty fibers are Lenzing’s great strength. Lenzing operates globally today and, with its aspiration to innovation leadership, is the best partner when it comes to high-quality specialty fibers. Lenzing aims for further organic growth in this area in order to be even more resilient to volatile markets in the future. The current focus is on the start-up of the new, state-of-the-art lyocell plant in Thailand and the implementation of the investment projects at the existing sites in China and Indonesia. Specialty fibers’ share of fiber revenue is thereby expected to rise to more than 75 percent by 2024.
The recent year’s positive trend, which includes a solid balance sheet policy, helps Lenzing to successfully implement its key projects, including in a difficult market environment. However, the company’s relatively strong position does not allow any scope for complacency. Lenzing will consequently continue to focus on stringent cost discipline in the years to come.
In order to reflect the company’s priorities even better in its strategy, particularly with regard to its decarbonization goals, Lenzing also further developed its mission and vision in 2020 (see sCore TEN diagram).
Strengthen the core
The increase in Lenzing’s self-supply with pulp to 75 percent by 2024 will be secured by backwards integration – by increasing the Group’s own pulp production volume and/or by expanding strategic partnerships. Lenzing will also continue to focus on its core business: the sustainable production of high-quality wood-based cellulosic fibers.
Customer intimacy
Around two thirds of Lenzing’s customers are based in Asia. For this reason, the company is increasingly offering consultancy services, product development and customer support where its customers and partners in the value chain require them most, which is locally. Lenzing has also shifted management decisions to these regions. These steps will bring the company not only closer to its customers, but also closer to their success.
Specialization
Lenzing plans to generate more than 75 percent of its fiber revenue with environmentally compatible specialty fibers such as lyocell and modal fibers by 2024. As a consequence, Lenzing will distinguish itself to an even greater extent from its competitors and will be less susceptible to cyclical fluctuations.
Forward solutions
Lenzing is continuing to expand its research and development activities and is investing primarily in sustainable technology as well as in selected areas of the value chain. In line with the sCore TEN corporate strategy, the focus is consequently on growth that is based on sustainable innovations. At present, the Eco Filament Technology for the production of TENCEL™ Luxe branded filaments and the LENZING™ Web Technology definitely rank among the most exciting projects in the global market.
New business areas
Lenzing harnesses its core expertise in order to develop new and attractive business areas over the medium to long term.
