EANS-Adhoc: Lenzing AG / Difficult Market Situation Continued in Q1/2014 - Countermeasures Have a Positive Impact

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Financial Figures/Balance Sheet/quarterly report
15.05.2014

- New record sales volume of 235,000 tons (+9%) in Q1/2014 -
Declining average fiber selling prices burden consolidated sales and
earnings - Cost optimization program excelLENZ exceeds targets

The first quarter of 2014 for the Lenzing Group was characterized by
the steady erosion of selling prices for man-made cellulose fibers
against the backdrop of the ongoing strong volume demand. Lenzing is
doing its best to counteract the difficult market conditions thanks
to a new record volume of fiber sales and the speedy implementation
of the cost optimization program excelLENZ. Nevertheless, these
measures were not sufficient to prevent a considerable decline in
sales and earnings.

Consolidated sales amounted to EUR 451.7 mn in the first quarter of
2014, comprising a drop of 9.0% from EUR 496.5 mn Q1 in 2013.
Consolidated earnings before interest, tax, depreciation and
amortization (EBITDA) amounted to EUR 46.3 mn in the first quarter of
2014, down 30.2% from EUR 66.3 million in the previous year,
corresponding to an EBITDA margin of 10.2% (Q1 2013: 13.4%). Earnings
before interest and tax (EBIT) fell 52.3% to EUR 16.7 mn compared to
the good comparative level of EUR 35.1 mn in the first quarter of
2013. This comprised an EBIT margin of 3.7% (Q1 2013: 7.1%). The
profit for the period amounted to EUR 7.7 mn, a drop of 63.1% from
the prior-year figure of EUR 20.9 mn.

Adjusted Group equity as of the end of March 2014 rose to EUR 1,118.2
mn, corresponding to an adjusted equity ratio of 46.6% of total
assets (December 31, 2013: 45.5%). The net financial debt was reduced
to EUR 500.4 mn.

Cost optimization program exceeds targets "Market headwinds remain
strong, but we are making every effort to vigorously stand up against
these unfavorable conditions with a broad range of countermeasures.
Our comprehensive cost optimization program excelLENZ is having a
positive impact, and already became fully effective in the course of
the first quarter of the year", explains Chief Executive Officer
Peter Untersperger. "In spite of the latest round of wage and salary
increases, personal expenses could be pruned by 9.5% in the first
three months of the year. Material costs were significantly reduced
on the basis of process optimization steps and efficiency
improvements. In the future we will be more streamlined and in a
position to act more quickly and react more effectively to market
developments, and thus be positioned as a considerably more
cost-optimized company thanks to a large number of organizational and
operational improvements," says a confident Peter Untersperger.

Fiber production plants operating at full capacity, specialty
strategy has proven its worth Lenzing succeeded in operating all its
fiber production facilities at full capacity, achieving a new
quarterly record sales volume of 235,000 tons in the first three
months of 2014, a rise of 9% from the prior-year quarter.
However,average fiber selling prices equaled EUR 1.56 per kilogram in
the first quarter of the year, almost 12% lower than the comparable
level of EUR 1.77 per kilogram in Q1 2013.

The counter-strategy initiated by Lenzing in the previous year
featuring a greater focus on specialty fibers proved to be
successful. In the first quarter of 2014, Lenzing generated very good
sales volumes for its specialty fiber Lenzing Modal® in the first
quarter of 2014 along with an ongoing attractive price premium
compared tostandard viscose fibers which surpassed the average for
2013. A stable price premium at the same level as in 2013 was also
achieved for TENCEL®.

Successful trial runs at the new jumbo TENCEL® plant in Lenzing As
scheduled, the jumbo production facility for TENCEL® at the Lenzing
site entered its final construction phase at the end of the first
quarter of 2014. The technical approval and inspections of the new
machinery were already successfully concluded. Trial runs in the
fiber production process were carried out, and the first TENCEL®
fibers were shipped as ramp-up quantities. From today's perspective,
the first marketable fibers from the new TENCEL® plant should leave
the production lines around the middle of 2014 as planned.

Outlook For the time being, no fundamental change in the current
situation on the man- made cellulose fiber market is expected in the
upcoming months of 2014. The historically high cotton inventories in
China and the unclear Chinese cotton policy have led to considerable
uncertainties on the fiber market. For these reasons, a reduction and
thus further weakening of global viscose fiber selling prices is
anticipated. It is likely to take several quarters until the existing
surplus production capacities for viscose fibers are reduced by
growing volume demand.

In the light of these difficult conditions, Lenzing is pursuing a
strategy of resolutely marketing its specialty fibers Lenzing Modal®
and TENCEL®, ensuring cash optimization and strictly implementing the
cost reduction and efficiency enhancement program excelLENZ. From
today's perspective, the targeted cost savings from the excelLENZ
program of EUR 160 mn in the years 2013, 2014 and 2015 seem to be
realistic. Lenzing is striving to generate cost savings well above
EUR 60 mn in 2014. For the most part, these cost reductions are of a
structural and thus sustainable nature and should continue generating
comparable annual savings beyond the year 2015.

Key Group indicators

(IFRS) in EUR mn 1-3/2014 1-3/20131
Consolidated sales 451.7 496.5
EBITDA 46.3 66.3
EBITDA margin in % 10.2 13.4
EBIT 16.7 35.1
EBIT margin in % 3.7 7.1
Profit for the period 7.7 20.9
CAPEX2 36.6 56.5

March 31, 2014 Dec. 31, 2013
Adjusted equity ratio3in % 46.6 45.5
Number of employees at 6,479 6,675
period-end

1) The previous year's figures were adjusted due to reporting changes
(see Note 2 to the consolidated interim financial statements). 2)
From continued operations; EUR 0.7 mn were invested in discontinued
operations in the period January to March 2013 3) Equity incl.
government grants less prop. deferred taxes

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