Lenzing Ag Ord

Ladies and gentlemen, thank you for standing by. I'm Moritz, your Chorus Call Operator. Welcome and thank you for joining Lansing Group's Annals Call. Throughout today's recorded presentation, all participants will be in the list known below. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by 1 on your touch-tone telephone. Please press the star key followed by 0 for operator assistance. Your hosts today are Stefan Silaft, Nico Reiner, and Christian Skilig. I would now like to turn the conference over to Stefan Silaft, CEO of Lansing.

Thank you, operator. Also from my side, a very warm welcome to the presentation of Lansing's result of the first nine months 2023. With me today is Nico Reiner, our CFO, and Christian Skilig, our CPO. Let's go through our agenda for today. We will start with the executive summary, followed by an update on market developments by Christian and myself. Afterwards, Nico Reiner will guide you through the financials, and I will talk about our new holistic performance program, the completion of our expansion conversion program, and how we expect the next quarter. We will end this session, as always, with a Q&A. Let's start with an overview of the key developments and strategic highlights. The markets relevant to Lansing continue to be weak, and this keeps demand, especially for our fiber products, under pressure. Raw materials, such as chemicals and energy costs, remain volatile on elevated levels. In the light of the continued weak market environment, we took action and are implementing a new holistic performance program. This program will increase our resilience by strengthening the top line, enhancing our cost excellence, as well as full focus on free cash flow generation. As we have announced just recently, we successfully concluded our strategic investment projects as our site in Indonesia has received the EU eco label for environmental friendly fiber production. With that move, all of Lansing fiber sites are now 100% converted for specialty fiber production. Let's move quickly to the financial results. Revenue in the first nine months decreased to 1.9 billion euros, which compares to 2.0 billion euros in the first three quarters of 2022. The EBITDA reached 219 million compared to 263 in the first nine months of 2022. The net results after minorities and hybrid bonds was negative at Euro 149 million in the first nine months, which compares to plus 57 million in the same period 2022. The free cash flow significantly increased again in Q3 to positive 27 million euros, which compares to minus 33 million in the second quarter and minus 132 million in quarter one of this year. Looking at our guidance, we confirm that we expect EBITDA in 2023 to be in a range of 270 million euros to 330 million euros. With this, I would like to hand over to Christian Skillig for an update on some of our key cost elements.

Thank you, Stefan. Good morning. Good afternoon from my side as well. In the first quarter of 2023, both energy and chemicals costs came further down compared to the last quarters. However, if you compare those costs to the previous years, prices are still elevated. On the left-hand side, you can see the decline in energy costs. European natural gas prices were just above 30 euro per megawatt hour in the third quarter. However, what you don't see yet in the chart in the wake of the Israel Hamas war, they started to rise again and even exceeded 50 euro per megawatt hour in mid of October. Levels last seen in April of that year. Remember that in the first quarter of 2020, The price was below 10 EUR per MWh. In the US, gas prices started to rise already in the third quarter, as you can see in the chart. On the right-hand side, you see the price development of caustic soda. Prices normalized further in Europe and China, but increased slightly in Southeast Asia. Prices in all regions are still 30 to 50% above the level seen in early 2020. Also keep in mind, those are quarterly average market prices, which means the price increase in China following a hurricane in September is not yet fully reflected. Please keep in mind that those developments of market prices do not fully reflect the impact for Lansing as we are sourcing at better conditions in Europe and we partially source from Asia if the price delta is very high and benefit thereby from our import and storage facilities in Italy. By that, I hand back to Stefan Silla for the developments of the demand side.