Lenzing: 75 Years & Going Ever Stronger

Lenzing AG, based in Lenzing, Austria, serves the global textile and nonwovens industry with
high-quality cellulosic fibers and is the leading manufacturer in many markets. The product
portfolio is extensive and includes dissolving pulp, standard and specialty cellulosic fibers and
engineering services.

The Lenzing Group has production sites in all major markets and a global network of sales and
marketing offices. The group currently is divided into seven business units including Textile
Fibers, Nonwoven Fibers, Pulp, Energy, Engineering, Plastics and Filaments.

The group has been producing cellulose fibers for 75 years and is the only manufacturer in
the world that has industrial-scale capacities to provide all three man-made cellulosic fiber
varieties — viscose, modal and lyocell.


 Lenzing has been making cellulose fibers for 75 years, producing all three man-made
cellulosic fiber varieties — viscose, modal and lyocell.

Market Situation

Lenzing recently disclosed its 2012 annual results as follows:

Consolidated sales of the Lenzing Group were down slightly from the previous year, declining
by 2.3 percent to 2.09 billion euros compared to 2.14 billion euros in 2011. Adjusted for this
consolidation effect, consolidated sales remained constant. The significant lower average fiber
selling prices compared to the boom year 2011 could be compensated by the strong rise in fiber
sales volumes, which climbed by close to 14 percent year-on-year, from 712,000 tons to 810,000

Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) amounted
to 358.7 million euros … a decline of 25.3 percent from the record EBITDA of 480.3 million euros
achieved in 2011, but above the comparable level of 330.6 million euros generated in the year 2010.
The EBITDA margin amounted to 17.2 percent (2011: 22.4 percent). Earnings before interest and tax
(EBIT) of the Lenzing Group amounted to 255.0 million euros in the 2012 financial year, comprising
a decline of 29.9 percent from the prior-year level of 364.0 million euros. The EBIT margin was
12.2 percent [17.0 percent in [2011].


Lenzing’s annual production capacity totals approximately 890,000 metric tons of fiber in
various production sites around the globe. Table 1 shows the applications by fiber type.

In an exclusive interview with

Textile World Asia
, Dieter Eichinger, Ph.D., vice president and general manager, Textile Fibers, talked about
Lenzing’s market position, success and challenges.

TW Asia: Can one speak of an export share of the group?

Eichinger: Not really. We are a global company with different production and sales
sites, so our export figure is related to Austria, where the export share is around 90 percent.

TW Asia: Where are the main export markets?

Eichinger: The main market, with more than 50 percent, is Asia, with major
countries such as China, Indonesia, Korea, India and Pakistan. In Europe, Turkey is a very
important market; for nonwovens, it is the United States.

TW Asia: Are there any top sellers in your large range of fibers?

Eichinger: All fiber production capacity is fully utilized. There is a growing
demand for fibers in the nonwovens sector — a new segment has been opened up with baby wipes.
Additionally, demand for Tencel® for denim and woven casual as well as knitted activewear has grown
massively; and bed linen, mattresses, quilts and pillows are very successful in the home textile

TW Asia: What are the biggest differences in the markets if you compare them
between today and years ago?

Eichinger: The requirements for the fibers are getting more complex than ever. It
is more and more the duty of the fiber manufacturer to consider where its products are applied in
the best way. This evolution has led to an ever-increasing differentiation among the fiber
producers who are willing to offer not only fibers but also expertise and service.

TW Asia: How do you judge Lenzing’s position in the markets?

Eichinger: Without exaggerating, I can say Lenzing proved over a long time to be
sort of a pulse generator. We see ourselves as a world leader, but not just from a quantity
standpoint. What is even more important to us is that we provide innovation, interact with the
customers intensively and manufacture the product under sustainable business practices. In
addition, our global presence is second to none.

TW Asia: Are you satisfied with this?

Eichinger: I believe that our teams have done a fantastic job so far. However, we
always see some room for further improvement. We want to grow and expand our presence in key
markets in Asia. On top of that, we have a lot of ideas for new fiber applications, which you will
see in the coming years.


Dieter Eichinger, Ph.D.

A True Market Leader

TW Asia: Lenzing is the leader in man-made cellulosic fiber. Where do you see the
company today?

Eichinger: With the soft fiber Modal®, we opened a new segment for lingerie,
underwear and knitwear. We have set a new standard for flame-retardant fibers with Lenzing FR® for
the protective apparel industry. Especially with the new technology of Tencel, we have 20 years of
production and 30 years of R&D experience, and we consider ourselves as being the pioneer in
the man-made cellulosic fiber category.

In the field of technical application, it was announced in January 2013 that Lenzing AG and
NanoCarbons LLC, United States, agreed to a future collaboration in the development and exploration
of a new activated carbon powder in electrode technology. The technology is based on a combination
of Tencel fibers and the technology of NanoCarbons LLC. After intense research, Lenzing has
constructed a new pilot production facility to accelerate the development of this technology even
further. According to Eichinger, this move shows that technical applications have become an
important business area for Lenzing.


The Person

Eichinger, 54, studied chemistry and business administration. He is married and the father of
two children. His hobbies are reading and playing golf.

TW Asia: And what is the background of your professional life?

Eichinger: I have worked with Lenzing for 26 years. The job was attractive because
it offered opportunities in many different positions within an internationally active, globally
leading, innovative and growth-oriented company.

TW Asia: What is your personal challenge?

Eichinger: Very clearly, to strengthen the leadership of the Lenzing Innovation,
marketing, quality and service.

Research And Development

TW Asia: In such a big company, R&D seems to be inevitable; is that so?

Eichinger: Yes, by all means. Our slogan is Lenzing Fiber Innovation. If I may say
so, innovation is our DNA. We employ some 160 people in R&D and invest annually some US$30

TW Asia: Do you have patents for products or processes?

Eichinger: A lot. We own approximately 1,300 patents in 57 countries for 218
so-called patent families. Most of our patents relate to the lyocell (Tencel) process.


TW Asia: What do you expect from 2013?

Eichinger: In spite of difficult market conditions in our core fiber business, in
the 2012 financial year, we achieved the second-best business result in our history. This can be
attributed to new record fiber sales volumes and the good performance of Lenzing’s specialty fiber

Although visibility is generally low, based on the prevailing market situation, we consider a
lateral trend on the fiber market to be the most likely scenario.

TW Asia: Is it possible that the export share will continue to rise?

Eichinger: For Lenzing, it is most essential to be close to its customers.
Likewise, a higher export trade will be the consequence.

TW Asia: Where are the promising markets? Where do you see the future of the

Eichinger: In the coming years, China will be in the fast lane. There is little
doubt that the world’s largest market for fibers will continue to grow. Furthermore, we see that
growth-oriented Asian countries and regions such as Indonesia, India, Korea and Taiwan, as well as
emerging markets such as Pakistan, will become more important. Next to our traditional customers in
Western Europe, our sales focus will be closer to Turkey. On the other side of the Atlantic, the
United States continues to be important in the nonwovens market.

TW Asia: Where do you see the biggest problems?

Eichinger: There is this tendency in some countries to build trade barriers, like
in Brazil and India, where antidumping duties are easily established. In spite of slow positive
development, the situation in some African countries remains difficult for political-economic

Essential Collaboration With The Machinery Industry

TW Asia: What are the company’s development priorities for the future?

Eichinger: Tencel will be an even bigger innovation platform; there will be new
technical applications such as Tencel carbon fibers, reinforcements, and the further development of
nonwovens. After the recent launch of Lenzing Modal Color and the introduction of environmentally
friendly Edelweiss technology, further developments will be presented. We also see a close
collaboration with the textile machinery industry to be essential. For example, in air-jet
spinning, we are setting new standards for specific yarns.

TW Asia: In some areas, you are considered to be a leader. What do you intend to
do to keep that image?

Eichinger: We are an enterprise that is programmed to grow on a long-term basis
with a clear focus on man-made cellulosic fibers. We will continue to focus on our core business —
in the meantime, the Plastics business unit is to be sold — and we do not waste time and money on
areas where we are not first-class. To maintain our place in the top league and carry on with our
dynamic growth, we will keep our R&D investment at 1.5 percent of our turnover.

April/May/June 2013