Lower Production

Lenzing in Crisis: Lower Revenue, Higher Profit

Lenzing, headquartered in the town of the same name in Upper Austria, produces fibers.(Bild: APA/TEAM FOTOKERSCHI/WERNER KERSCHBA)

Upper Austrian fiber manufacturer Lenzing reported lower revenue but higher profits in the first half of the year. The decline in revenue was due to a reduction in fiber production and lower revenues from the external pulp business.

The company is currently undergoing a strategic realignment, which will result in the discontinuation of fiber production in Burgenland by the end of 2026. Production in England will wind down in 2027. As a result, approximately 2,000 jobs will be lost at Lenzing worldwide, according to a report in the “Krone.”

Lenzing’s revenue in the first half of the year fell to approximately 1.27 billion euros, down from 1.34 billion euros in the same period last year. Profit after taxes, however, improved from 15.2 million to 35.6 million euros, thanks to positive effects from foreign currency valuations and improved financial results. This puts the fiber manufacturer back on track for a profit this year—at least for now. The publicly traded company has been posting losses consistently since 2022; last year’s loss amounted to 135 million euros.

Overall, the company states that the market environment is characterized by volatile energy and raw material prices, subdued demand, and increased competition from Asia.

Cost-Cutting Programs
The new strategic program, called “Grow Nonwovens, Reset Textiles,” is designed to expand the nonwovens business and focus on premium market segments such as Tencel in the textiles business. The pulp and biorefinery businesses are also to be further strengthened. This is intended to make the company more profitable and resilient. At the same time, the group is withdrawing from the business of standard fibers for textile applications. In fiscal year 2025, efficiency measures had already yielded savings of over 200 million euros. An additional 120 million euros is expected to have an impact on earnings by the end of 2027. This is already the third cost-cutting program that Lenzing has implemented since 2022.

Outlook
In the medium term, Lenzing is again aiming for revenue growth and an increase in earnings before interest, taxes, depreciation, and amortization (EBITDA) of 150 million euros. The profit margin is expected to range between 20 and 25 percent. In the first half of 2026, EBITDA stood at 239.2 million euros (first half of 2025: 268.6 million euros), with a margin of 18.9 percent.

As part of its new strategy, Lenzing plans to shift production capacity from textile fibers to nonwoven fibers and develop new, innovative fibers for the segment. The product portfolio is to be expanded, particularly in the hygiene segment.