Lenzing Announces New Business Strategy

18.11.2015 -

Austrian cellulosic fibers producer Lenzing has outlined its new business strategy and financial targets for the next five years. The strategy, named sCore TEN, is designed to help the company benefit from the world’s megatrends with sustainability as a key driver of innovation and growth. Lenzing said its main priorities are strengthening its core business, intensifying customer cooperation, increasing the revenue share of specialty fibers, expanding its technological leadership for manmade cellulosic fibers and developing attractive business areas.

CEO Stefan Doboczky said Lenzing will focus more intensively on the most attractive segments in the specialty fiber business and put value before volume.

The strategy comprises five measures. Firstly, Lenzing will strengthen its core by increasing its pulp position through backward integration. This will be done either by raising the group’s own pulp production and/or expanding strategic cooperations. A program to strengthen its commercial processes should achieve a positive EBITDA contribution of €50 million by 2017. Lenzing will also complete a reorganization of its technical service units next year.

Secondly, the group will enhance its customer relationships by establishing regional competence centers for product innovations. It will also give greater decision-making powers to its regional businesses.

The third measure is specialization. Here, Lenzing’s target is to generate 50% of total revenue from eco-friendly specialty fibers such as Tencel, Lenzing Modal and viscose fiber specialties by 2020. Capacity for Tencel will be increased, depending on market needs. Lastly, the group will selectively enhance its R&D activities and open up new business areas.

Lenzing expects that demand for manmade cellulosic fibers will grow by 5-6% until 2020, nearly twice as fast as the global fiber market. It said the primary factors driving demand are a rising world population and increasing prosperity in emerging markets.

Management’s forecasts suggest a 50% rise in per capita textile consumption in emerging markets for the period 2010-2020. In industrialized countries, the nonwovens industry is expected to benefit from increased demand for hygiene products and expand twice as fast as the textile market.