EANS-Adhoc: Lenzing AG / Operating Results in 2014 Exceed Expectations, Higher Cost-Saving Targets Achieved

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annual result/Company Information
24.03.2015

- Dividend proposal: EUR 1.00 per share - Record sales volumes
against the backdrop of declining fiber selling prices -
Countermeasures have a positive impact and improve operating results

Ongoing strong demand enabled Lenzing to achieve a new record sales
volume of 960,000 tons (+ 8%) in the 2014 financial year against the
backdrop of a further drop in fiber selling prices and a very
challenging market environment once again. Operating results could be
substantially improved thanks to the implementation of the excelLENZ
program and its subsequent intensification. The Management Board will
propose to the Annual Shareholders' Meeting that a dividend of EUR
1.00 per share (2013: EUR 1.75 per share) be distributed to
shareholders for the 2014 financial year.

In the 2014 financial year, consolidated revenue fell slightly by
2.3% to EUR 1.86 bn from EUR 1.91 bn in the previous year. The main
reasons for this development were the sale of the Business Unit
Plastics in the course of 2013 as well as the average fiber selling
prices of the Lenzing Group, which once again fell by about 8% during
the year under review to EUR 1.57 per kilogram. On a like-for-like
basis of continuing operations, consolidated revenue remained at a
constant level (up 0.3% from EUR 1,859.0 mn in 2013 to EUR 1,864.2 in
2014).

Countermeasures have a positive impact In spite of the low prevailing
selling prices, Lenzing generated a significant improvement in its
operating results. EBITDA[1](earnings before interest, taxes,
depreciation and amortization) of the Lenzing Group rose by 24.0%
from the challenging 2013 financial year from EUR 193.9 mn to EUR
240.3 mn. The EBITDA margin[2]climbed to 12.9% (2013: 10.4%). This
substantial rise in earnings can be attributed to massive cost
savings achieved within the context of the excelLENZ progam,
improvements in the product mix and the new TENCEL® fiber production
plant in Lenzing accompanied by an overall leaner organizational
structure.

"Our cost reduction program led to savings far in excess of EUR 100
mn in 2014", says Peter Untersperger, Chief Executive Officer of the
Lenzing Group. "We will generate structural and sustainable savings
of about EUR 160 mn p.a. by 2016, about double the amount as
originally budgeted. The operating results in 2014 show that Lenzing
is well on track to assume cost leadership in the man-made cellulose
fiber industry again".

About one quarter of the cost reductions involved personnel expenses,
with remaining cost decreases equally relating to reductions in
material costs and operating efficiency improvements as well as cost
reductions in general administrative expenses.

Value adjustments negatively affect EBIT and annual result Due to the
changed medium-term viscose fiber selling price expectations, write-
offs in the valuation of goodwill, property, plant and equipment and
other intangible assets was carried out for the subsidiaries PT.
South Pacific Viscose (Indonesia) and Lenzing Nanjing Fibers (China)
to the amount of EUR 94.0 mn. Accordingly, earnings before interest
and taxes (EBIT) fell to EUR 21.9 mn from the prior-year EBIT of EUR
58.6 mn. As a result of these non-recurring non-cash effects, the
Lenzing Group reported a net loss of EUR 14.2 mn in 2014.

Market environment requires further countermeasures "We also do not
anticipate any far-reaching price recovery in 2015", says Robert van
de Kerkhof, Chief Commercial Officer of the Lenzing Group. "The
massive drop in oil prices put downward pressure on polyester prices,
which in turn additionally burdened viscose fiber prices. This was
accompanied by cotton inventories bursting at the seams and ongoing
surplus production capacities of China's viscose fiber industry. In
addition to cost optimization measures, we will focus more
intensively on promoting our high quality specialty fibers, in
particular TENCEL® and Lenzing Modal®," he adds.

By leveraging the price premiums of TENCEL® and Lenzing Modal®
compared to standard viscose fibers and due to currency effects,
Lenzing fiber selling prices rose once again in the fourth quarter of
2014 for the first time compared to previous quarterly periods. The
successful ramp-up of the TENCEL® jumbo fiber production plant at the
Lenzing site in Upper Austria in the second half of 2014 made a major
contribution to this development. The new TENCEL® fiber plant with an
annual capacity of 67,000 tons is the world's largest and most
technologically advanced of its kind, and secures 140 top quality
jobs at the Lenzing site.

Reduction in net financial debt "On the basis of active cash
management, we succeeded in reducing the net financial debt in 2014
to EUR 449.5 mn from EUR 504.7 mn at the end of 2013. Lenzing can
point to a very healthy balance sheet, featuring a net gearing of
42.2% and an adjusted equity ratio of 44.9%", says Chief Financial
Officer Thomas Riegler, commenting on the consolidated financial
statements for 2014.

Investments in intangible assets, property, plant and equipment (cash
CAPEX) were significantly cut back in the 2014 financial year to EUR
104.3 mn (2013: EUR 248.7 mn incl. Business Unit Plastics). The focal
point of the investment activity was completion of the TENCEL® fiber
production plant at the Lenzing site as well as efficiency and
modernization investments in the fields of energy and fiber
production.

Outlook for 2015 The difficult economic environment affecting the
fiber industry hardly changed in the first weeks of 2015 compared to
the third and fourth quarters of the year under review. The difficult
market environment on the market for standard viscose fibers is
expected to continue in 2015.

From an operational perspective, a further improvement of the product
mix in the textile segment, especially increasing specialty sales
such as Lenzing Modal® and TENCEL® fibers will be at the heart of
Lenzing's efforts. The company started the new financial year
registering dynamic demand for TENCEL®.

The Lenzing Group is striving to further consolidate its global
competitive positioning by strengthening the commercial organization,
resolutely continuing its excelLENZ program in 2015 and by
restructuring the technical areas (engineering and maintenance
operations, workshops and Lenzing Technik).

Key Group indicators
(IFRS)

(in EUR mn) 1-12/2014 1-12/2013(1)
Group revenue 1,864.22 1,858.97
EBITDA 240.3 193.9
EBITDA margin in % 12.9 10.4
EBIT 21.9 58.6
EBIT margin in % 1.2 3.2
Profit/loss for the period -14.2 30.6
CAPEX 104,3 248,4

Dec. 31, 2014 Dec. 31, 2013
Adjusted equity ratio2in % 44.9 45.5
Number of employees at 6,356 6,675
period-end

(1) On a "like for like" basis
(2) Equity incl. investment grants less prop. deferred taxes

Download link pictures:
https://mediadb.lenzing.com/pindownload/login.do?pin=GIDSY

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----------- [1]All of the following comparative figures refer to
continuing operations ("like-for-like") [2] % relation of earnings
before interest, taxes, depreciation and amortization to revenue

Further inquiry note:
Lenzing AG
Mag. Angelika Guldt
Tel.: +43 (0) 7672-701-2713
Fax: +43 (0) 7672-918-2713
mailto:a.guldt@lenzing.com

end of announcement euro adhoc
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issuer: Lenzing AG

A-A-4860 Lenzing
phone: +43 7672-701-0
FAX: +43 7672-96301
mail: a.guldt@lenzing.com
WWW: http://www.lenzing.com
sector: Chemicals
ISIN: AT0000644505
indexes: WBI, ATX, Prime Market
stockmarkets: free trade: Berlin, official market: Wien
language: English