The Fiber Division comprises all business activities of the Lenzing Group with the different generations of wood-based cellulosic fibers.
Specialty fibers are Lenzing’s great strength. With the opening of the lyocell plant in Thailand and the investments in existing production sites, Lenzing will generate 100 percent of its fiber sales from the business with wood-based, biodegradable specialty fibers under the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands.
Lenzing is currently investing more than EUR 200 mn in production sites in China and in Indonesia in order to convert existing capacities for conventional viscose into capacities for environmentally responsible specialty fibers. In Nanjing, Lenzing is about to successfully convert a line to TENCEL™ modal fibers. As part of the substantial investments at the Indonesian site in Purwakarta, Lenzing is creating additional capacity for LENZING™ ECOVERO™ fibers. The site will thereby become a pure specialty viscose supplier before the end of 2023.
In addition to the new lyocell plant in Thailand, which operates on a carbon neutral basis, investments at existing sites are also in line with Lenzing’s targets to reduce carbon dioxide emissions per tonne of product by 50 percent by 2030, and to be climate neutral by 2050.
With the positioning of its product brands, the Lenzing Group has been sending a strong message to consumers since 2018. With TENCEL™ und 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 2022 through targeted communication measures. The TENCEL™ brand remains the fastest growing ingredient brand in the textile and apparel industry and has already reached second place in the global awareness ranking.
The external revenue of the Fibers Division reached a level of EUR 2.09 bn in 2022, 64.9 percent of which was attributable to textile fibers and 35.1 percent to fibers for nonwovens and special applications. Fiber sale volumes decreased to approximately 814,000 tonnes (down from approximately 909,000 tonnes in 2021) due to the significant deterioration in the market environment, particularly during the third and fourth quarters. The share of specialty fibers in fiber revenues increased to 73.7 percent (from 72.5 % in 2021). The division’s earnings (EBITDA) amounted to EUR 32.9 mn, while the operating result (EBIT) amounted to minus EUR 92.8 mn.
A very difficult environment determined the market for textile fibers in the second half of 2022. In the first half of the year, demand for wood-based specialty fibers of the TENCEL™ and LENZING™ ECOVERO™ brands still performed very well. It was still possible to pass on rising production costs to customers for the most part, although this had a negative impact on performance from the first quarter onwards. The lockdown in Shanghai imposed in March presented further supply chain challenges in China.
Global fiber demand then slowed substantially in July due to the worsening consumer climate, the uncertain market outlook and high stock levels along the textile value chain. Accordingly, demand for Lenzing fibers also decreased in the second half of the year and was significantly below the level of the first half.
Lenzing continued to extend its pioneering role in sustainability, innovation and transparency in the textile sector, including in this very difficult market environment. With the presentation of the carbon-neutral fibers of the LENZING™ FR brand, for example, Lenzing expanded its carbon-neutral fiber portfolio for the protective and workwear segments. Lenzing received the ITMF Award 2022 from the International Textile Manufacturers Federation (ITMF) for its resource-conserving Indigo Color technology, which has been deployed in the production of TENCEL™ modal fibers specifically for denim fabrics since 2021. In addition, the company achieved a real milestone in the production of ecologically responsible viscose with 300,000 tonnes of LENZING™ ECOVERO™ brand fibers.
The TENCEL™ Luxe filament yarn business continued to perform successfully in 2022. The interest of designers and brands in haute couture, in the luxury and premium segment as well as in the classic apparel segment, is growing constantly. The innovative lyocell filament yarn also received several awards in the year under review, including an ISPO Award and PETA India Awards in two categories.
Lenzing also continued to enhance the awareness and visibility of its TENCEL™ and LENZING™ ECOVERO™ brands with a series of global campaigns and initiatives. The TENCEL™ brand has been supporting customers and partners in the textile and apparel industry with sustainable fiber innovations since 1992. in 2022, Lenzing launched customer and employee activities in various regions to mark the brand anniversary under the motto “Feel Good Fibers Since 1992”. In the first six months, the campaign reached more than 110 mn consumers worldwide.
The success of the TENCEL™ brand is also reflected in its collaboration with more than 650 brand partners, including international brands such as Aramis, Calzedonia, Intimissimi, Levi’s, Marc O’Polo, Timberland and Vogue, as well as aspirational brands such as BN3TH, Calla The Label, Indian Terrain, Mother of Pearl, Muun and Taneira.
Lenzing and the TENCEL™ brand once again enjoyed very positive international attention at the 2022 Oscars. Together with the organization RCGD Global (formerly Red Carpet Green Dress™), three customized dresses made from TENCEL™ Lyocell fibers and TENCEL™ Luxe filaments were presented to a world audience. This was followed in December by the TENCEL™ brand’s collaboration with RCGD Global at the movie premiere of “Avatar: The Way of Water”. To date, the collaboration with RCGD Global has generated more than 2.1 bn impressions via social media and public relations.
The nonwoven fibers sector is an important strategic pillar of the Lenzing Group and is being continuously expanded. In the year under review, Lenzing intensified its development activities in hygiene as well as in technical applications in order to expand the application area of its lyocell and viscose fibers and to drive new sustainable innovations in the nonwovens industry. To this end, Lenzing worked intensively with customers and partners along the value chain at its Nonwovens Innovation Center in 2022.
Consumer awareness of responsibly produced materials made from renewable raw materials is growing steadily. This global consumer trend towards less plastic and more environmentally responsible and carbon-neutral products, coupled with laws and guidelines promoting environmental sustainability, further support Lenzing’s growth in this area.
Lenzing recorded solid business growth in nonwoven fibers in the first half of 2022, but faced significantly higher energy and raw material costs in the second half of the year. These could only be passed on to the market with a delay. Overall, demand was stable, while revenue increased significantly thanks to higher fiber prices.
After introducing the first carbon-neutral cellulose fibers to the global nonwovens market last year, Lenzing supported Finnish nonwovens manufacturer Suominen in developing and marketing the first carbon-neutral nonwoven fabric made exclusively from VEOCEL™ fibers. With the Naif brand, Lenzing also gained another co-branding partner for its carbon-neutral VEOCEL™ fibers in baby wipes.
Lenzing also further enhanced the awareness and visibility of its VEOCEL™ brand during the reporting year. The number of licensed products quadrupled year-on-year and the network of co-branding partners and social media engagement was significantly expanded. Following the successful #ItsInOurHands campaign, which aimed to raise consumer awareness of the use of biodegradable wet wipes, the new global VEOCEL™ “Cares for the Future” campaign underscores the brand’s mission to promote a sustainable future for future generations. With a focus on “Cares for Forests”, it highlighted the importance of sustainable raw materials sourcing. At the end of 2022, Lenzing also launched “Cares for the Climate”, a social media campaign that educates consumers in Europe, the USA and Asia about reducing carbon emissions and ecologically responsible solutions and supports them in purchasing their products.
Fibers for special applications
Thanks to their special properties, Lenzing’s wood-based cellulosic fibers are also deployed in a wide range of technical specialty applications. Applications range from industrial high-temperature insulation materials to biodegradable, flushable disposable wipes. Further applications include synthetic leather substrates with high moisture management properties, sustainable packaging materials, materials to maximize the safety of rechargeable batteries, and filter media with enhanced separating properties.
Co-products of fiber production
At the sites where it produces viscose or modal fibers, Lenzing produces LENZING™ sodium sulfate as a co-product, among others. This is used in the detergent and glass industries and for the production of food and animal feed. In the year under review, sales volumes decreased slightly in line with fiber production.