Annual Report 2017 Lenzing Group Highlights 2017
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Annual Report 2017 Lenzing Group Highlights 2017 Jan. Feb. March Apr. May June July Aug. Sept. Oct. Nov. Dec. Innovative REFIBRA™ technology presented in Paris as a contribution to creating a closed loop in the fashion sector All standard Lenzing fibers are derived 100 percent from nature according to the Biobased Product Label issued by the US Department of Agriculture Groundbreaking ceremony for capacity expansion in Heiligenkreuz – increase of 25,000 tons in production capacity for premium specialty fibers All of the Lenzing Group‘s biobased materials are officially bio-certified by the US Department of Agriculture Customer intimacy: Lenzing opens a new sales and marketing office in Istanbul (Turkey) New sustainability strategy: On World Earth Day, Lenzing presents its new sustainability strategy and its sustainability report Innovative Heiko Arnold appointed new Chief Technology Officer of the Lenzing Group Greater transparency in the fashion industry: introduction of LENZING™ ECOVERO™ branded viscose fibers by New location: Lenzing plans to construct a state-of-the-art lyocell fiber production plant in Thailand Award: Lenzing receives the Pegasus business prize in Gold as the best leading company in Upper Austria More innovations and greater customer intimacy: New application and innovation center opened in Hong Kong Entry into the filament market: New TENCEL™ Luxe branded lyocell filament yarn presented in Paris Internationality prize: Lenzing Group ranks first in the “International“ category by Austria’s Leading Companies in Upper Austria Stefan Doboczky re-appointed as Chief Executive Officer – new contract runs to the end of 2022 WorldReginfo - ce61a301-c1bb-4543-b02e-6e8435bada6c Highlights 2017 Highlights 2017 Jan. Feb. March Apr. May June July Aug. Sept. Oct. Nov. Dec. Innovative REFIBRA™ technology presented in Paris as a contribution to creating a closed loop in the fashion sector All standard Lenzing fibers are derived 100 percent from nature according to the Biobased Product Label issued by the US Department of Agriculture Groundbreaking ceremony for capacity expansion in Heiligenkreuz – increase of 25,000 tons in production capacity for premium specialty fibers All of the Lenzing Group‘s biobased materials are officially bio-certified by the US Department of Agriculture Customer intimacy: Lenzing opens a new sales and marketing office in Istanbul (Turkey) New sustainability strategy: On World Earth Day, Lenzing presents its new sustainability strategy and its sustainability report Heiko Arnold appointed new Chief Technology Officer of the Lenzing Group Greater transparency in the fashion industry: introduction of LENZING™ ECOVERO™ branded viscose fibers New location: Lenzing plans to construct a state-of-the-art lyocell fiber production plant in Thailand Award: Lenzing receives the Pegasus business prize in Gold as the best leading company in Upper Austria More innovations and greater customer intimacy: New application and innovation center opened in Hong Kong Entry into the filament market: New TENCEL™ Luxe branded lyocell filament yarn presented in Paris Internationality prize: Lenzing Group ranks first in the “International“ category by Austria’s Leading Companies in Upper Austria Stefan Doboczky re-appointed as Chief Executive Officer – new contract runs to the end of 2022 WorldReginfo - ce61a301-c1bb-4543-b02e-6e8435bada6c Selected indicators of the Lenzing Group Selected indicators of the Lenzing Group Key earnings and profitability figures EUR mn 2017 2016 Change Revenue 2,259.4 2,134.1 5.9% EBITDA (earnings before interest, tax, depreciation and amortization) 502.5 428.3 17.3% EBITDA margin 22.2% 20.1% EBIT (earnings before interest and tax) 371.0 296.3 25.2% EBIT margin 16.4% 13.9% EBT (earnings before tax) 357.4 294.6 21.3% Net profit for the year 281.7 229.1 23.0% Earnings per share in EUR 10.47 8.48 23.5% ROCE (return on capital employed) 18.6% 15.1% ROE (return on equity) 24.5% 22.6% ROI (return on investment) 14.5% 11.8% Key cash flow figures EUR mn 2017 2016 Change Gross cash flow 418.7 385.9 8.5% Cash flow from operating activities 271.1 473.4 (42.7)% Free cash flow 32.6 366.3 (91.1)% CAPEX 238.8 107.2 122.6% Liquid assets as at 31/12 315.8 570.4 (44.6)% Unused credit facilities as at 31/12 213.8 217.7 (1.8)% Key balance sheet figures EUR mn as at 31/12 2017 2016 Change Total assets 2,497.3 2,625.3 (4.9)% Adjusted equity 1,527.7 1,390.5 9.9% Adjusted equity ratio 61.2% 53.0% Net financial debt 66.8 7.2 832.4% Net financial debt / EBITDA 0.1 0.0 694.7% Net debt 172.2 115.8 48.7% Net gearing 4.4% 0.5% Trading working capital 414.4 379.6 9.2% Trading working capital to annualized group revenue 19.4% 17.1% Key stock market figures EUR 2017 2016 Change Market capitalization in mn as at 31/12 2,810.3 3,053.3 (8.0)% Share price as at 31/12 105.85 115.00 (8.0)% Dividend per share 5.00 1 4.20 19.0% Employees 2017 2016 Change Number (headcount) as at 31/12 6,488 6,218 4.3% 1) On the basis of proposed distribution of profits. The above financial indicators are derived primarily from the IFRS consolidated financial statements of the Lenzing Group. Additional details are provided in the section "Notes on the financial performance indicators of the Lenzing Group", in the glossary to the Annual Report and in the consolidated financial statements of the Lenzing Group. Rounding differences can occur in the presentation of rounded amounts and percentage rates. WorldReginfo - ce61a301-c1bb-4543-b02e-6e8435bada6c Overview of the Lenzing Group Revenue EUR mn Investments (CAPEX) EUR mn 2,500 250 2,000 200 1,500 150 238.8 2,134.1 2,259.4 1,000 1,976.8 100 500 50 107.2 70.9 0 0 2015 2016 2017 2015 2016 2017 EBITDA EUR mn R&D Expenditures EUR mn (according to the Frascati method) 600 25 60 22.2% 500 20.1% 50 400 20 40 14.7% 300 30 502.5 55.4 428.3 200 15 20 46.4 290.1 29.8 100 10 0 10 0 2015 2016 2017 2015 2016 2017 EBIT EUR mn Dividend per share EUR 400 16.4% 20 5 350 13.9% 4 300 15 250 3 200 7.6% 371.0 10 5.00* 150 296.3 2 4.20 100 5 151.1 1 2.00 50 0 0 0 2015 2016 2017 2015 2016 2017 *Based on the proposed distribution of profits. The Lenzing Group is an international company that produces TENCEL™ for textile applications, VEOCEL™ for nonwovens and high-quality fibers from the renewable raw material wood with LENZING™ for special applications in other areas. Innovations environmentally friendly and innovative technologies. These like REFIBRA™ recycling technology, the identifiable LENZING™ fibers form the basis for a wide range of textile products – from ECOVERO™ branded fibers and TENCEL™ Luxe branded lyocell elegant ladies clothing to high-end denims and finest lingerie. filament yarn make Lenzing a global innovation leader. LENZING™ fibers are also used in hygiene products, for example The Lenzing Group’s success is based on consistent cus- in biologically degradable wipes. With its technology, products tomer orientation combined with innovation, technology and and sustainable innovations, Lenzing is a worldwide leader for quality leadership. Lenzing is committed to the principles of sus- the redirection of the textile sector towards a resource-efficient tainable management with very high environmental standards and closed loop economy. can underscore this commitment with numerous international Lenzing’s quality and innovative strength set global standards sustainability certifications for its business processes as one of for wood-based cellulose fibers. With 80 years of experience, the the most sustainable companies in the sector. In addition to fibers, Lenzing Group is the only company in the world which produces which form the core business, the Lenzing Group is also active in significant volumes of all three wood-based cellulose fiber ge- the fields of engineering and plant construction – mostly for its nerations. Its products are marketed under the following brands: own locations, but also for external customers. WorldReginfo - ce61a301-c1bb-4543-b02e-6e8435bada6c Annual Report 2017 Lenzing Group Innovative by LENZING™ fibers are “Innovative by nature“ in two ways. Cellulose fibers made of wood are a natural product, which has been used by Lenzing for 80 years to create innovative products for the productionnature of textiles and nonwovens. WorldReginfo - ce61a301-c1bb-4543-b02e-6e8435bada6c Introduction by the Chief Executive Officer 4 Report of the Supervisory Board 6 Innovative by nature – Interview with the Management Board 8 The Company 10 The Locations of the Lenzing Group 12 The Strategy of the Lenzing Group 14 Sustainability at Lenzing 15 The new Lenzing brand world 16 The Lenzing product portfolio 17 LENZING™ fiber applications 18 Investor relations and communications 20 Management Report 2017 24 General Market Environment 26 The Development of Business in the Lenzing Group 28 The Development of Business in the Segments 30 Investments 34 Research and Development 34 Non-financial Performance Indicators 35 Risk Report 38 Report on the Key Elements of the Internal Control System (Section 243a Para. 2 of the Austrian Commercial Code) 41 2 Annual Report 2017 Lenzing Group WorldReginfo - ce61a301-c1bb-4543-b02e-6e8435bada6c Shareholder structure and information on capital 42 Outlook 43 Appendix: Notes on the Financial Performance Indicators of the Lenzing Group 44 Corporate Governance Report 2017 48 Consolidated Financial Statements 2017 56 Contents 58 Consolidated Income Statement 59 Consolidated Statement of Comprehensive Income 60 Consolidated Statement of Financial Position 61 Consolidated Statement of Changes in Equity 62 Consolidated Statement of Cash Flows 64 Notes to the Consolidated Financial Statements 65 Auditor’s Report 131 Declaration of the Management Board 134 Lenzing Group Five-Year Overview 135 Financial calendar 2018 136 Glossary 137 3 Annual Report 2017 Lenzing Group WorldReginfo - ce61a301-c1bb-4543-b02e-6e8435bada6c Introduction by the Chief Executive Officer Dear Ladies and Gentlemen, During the 80 years of our corporate history, we have grown from an Austrian company with production facilities in foreign countries into an international group with strong Austrian roots.