Textile market weak

Fiber group Lenzing seeks new co-owner

Although Lenzing is technically strong, it is struggling with a continuing slump in demand.

(Bild: FOTOKERSCHI/WERNER KERSCHBAUMMAY)

The slump in demand from the fashion industry is hitting the Upper Austrian Lenzing Group, which produces fibers for the global textile industry. Cost-cutting programs and staff reductions are already underway. Now the main owner, B&C Holding, is looking for a strategic partner who can take over shares.

In general, partners are possible for all three major holdings of the domestic B&C Holding, which emerged from the industrial division of Bank Austria. These are Semperit, the aluminum producer Amag and Lenzing. The reason, according to CEO Wolfgang Hofer: "The global economy is more uncertain than ever. We have to prepare for weaker growth in the long term. This requires the right strategy and shareholder structure. In terms of sustainable development and securing the locations in Austria, strategic partners with a long-term stake would be the preferred option."

There are no concrete negotiations on this yet, but talks are now open. It is conceivable that the majority shareholding could be reduced from currently over 50 percent to at least 25 percent plus one share so that B&C can continue to have a say in key decisions.

Two billion euros invested in new plants
The main problem child is Lenzing, in which B&C owns 52.3 percent. Global demand for textiles and thus sales of fibers are weak and are only recovering slowly. Lenzing therefore had to massively devalue its production sites in the previous year and posted a net loss of 563 million euros on a turnover of 2.5 billion euros. At the same time, the Upper Austrian company has invested two billion euros in new plants (Brazil, Thailand) in recent years. The main plant in Lenzing and the second domestic factory in Heiligenkreuz are therefore implementing a more stringent cost-cutting program; more than 800 jobs have been cut across the Group, and that may not be enough, according to Chairman of the Supervisory Board Cord Prinzhorn.

Things are going better at industrial rubber producer Semperit and Amag, both of which have adapted to the changed situation in good time, praises CEO Wolfgang Hofer. Overall, B&C is solidly positioned and financially strong. The company recently acquired a stake in the Innbruck-based start-up "Parity QC", which is involved in quantum computer research.