Lenzing Ag Ord

Good afternoon, ladies and gentlemen, and welcome to the Lensiq-AG analyst conference call and live webcast. My name is Yousef, the Coruscant operator. I would like to remind you that all participants will be in listen-only mode and that this conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star followed by 1 on your telephone. For operator assistance, please press star and then 0. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Rohit Agrawal, CEO. Please go ahead.

Thank you, and good afternoon to everyone. Ladies and gentlemen, welcome to the presentation of Lenzing's results of first half 2025. With us today is also Nico Reiner, our CFO, whom you know well. But let's start with an overview of the key developments. Revenue and EBITDA continue to improve also in first half of this year. In a market environment that remains challenging and is marked by the rise, in geopolitical uncertainty, especially the aggressive customs policy that we are observing. Our revenue reached 1.34 billion euros, an increase of 2% compared to the first half of 2024. EBITDA increased by 63% and reached 269 million euros in the first six months, and the EBITDA margin increased from 13% to 20%. Unlevered free cash flow was at 89 million euros in the first half of 2025, with an increase in the second quarter compared to the first quarter this year. Overall, our performance continues to show positive developments. However, international debit measures and the resultant uncertainty led to tangible stress along the textile value chain and slowed our recovery. Now let us address a topic that has been very much characterized the last couple of months globally, international tariff measures and the resulting uncertainty. While in Q1, the key focus was mainly on the dispute between the US and its neighbors Mexico and Canada, as well as the 10% and later 20% on all imports from China, we saw only limited impact on our Q1 result. The actual escalation from reciprocal tariffs followed in early April, this led to both supply and demand shocks, a collapse of China-US trade, and to an impact of global value chains. Ongoing and repeatedly changing international tariff measures and the resulting uncertainty led to tangible stress on especially along the textile value chain, impacting also lending in Q2 2025. The second half of July and early August have brought some updates in U.S. data policy, impacting key countries in the value chains differently. However, the high uncertainty remains. All in all, everybody in the industry is scrambling to deal with the situation and planning scenarios, given the high uncertainty. Still, we believe lensing is better positioned than other fiber manufacturers given our global footprint. And needless to say, we are working on a set of mitigation measures which include switching supply rules for input materials such as dissolving pulp and chemicals, and also shifting fiber volumes between our production sites to optimize the existing and possible garages to support our customers. In general, we maintain very close contact to our customers and regional value chains to handle the situation in the best possible way with our partners and pass on additional costs where possible. Let's look now in more detail how markets have developed. Let's start with a brief overview on demand, prices, as well as input costs. On the demand side, global apparel markets saw a slight increase, while non-woven markets continued to remain more robust. With regards to market prices, we saw a slight decrease of selected generic fiber prices in the second quarter. On the cost side, energy and caustic soda market prices remained elevated versus pre-crisis levels. Let's look at the relevant markets for lensing, textiles and non-wovens. When adjusted for inflation, demand for apparel worldwide was up by 2% in the first half of 2025 versus a year ago, based on the developments in the second quarter where the U.S. stood out. Sales spiked in April and May due to consumers in the U.S. pre-poning purchases since they feared higher clothing Prices were status-kicking. Also, the changes to de-minimalist tariff exemptions helped fuel regular retail sales. Sales in Europe were flat compared to last year. The cost of living environment remains challenging and consumer confidence is subdued. Chinese demand remained surprisingly resilient against the backdrop of overall cautious discretionary spend. Now let's turn our attention to nonwovens. Also in nonwovens tariffs play a major role where particularly Chinese sellers are looking for alternative outlets for volumes so far going into the U.S. End markets show high resiliency with a relatively stable consumer demand. The trend towards less plastics is ongoing and the carbon footprint and other sustainability credentials are increasing becoming a differentiator for nonwoven manufacturers in France, and also driving interest for more sustainable fibres. Now let's have a look at the fibre prices on the Chinese market. Again a reminder, the prices shown on this slide are generic market prices. Lensing prices are mainly created at a premium, and the current share of specialties is at over 90%. However, The generic market prices shown here do give an indication of the price development in the fiber market. Let's start with BISCOS. Generic BISCOS prices in China performed relatively stable in the first quarter. However, over the course of the full first half year, prices softened by about minus 7% in local currency or minus 6% in dollar terms as geopolitical uncertainties and protectionist measures particularly regarding the US trade policy affected export prospects of the Chinese textile and apparel industry. The situation of the cotton market was also challenging in the first half of 2025. For the ongoing 24-25 season, the worldwide harvest is expected somewhat above consumption, leading to a moderate increase in stocks. While prices were less volatile than last year, they remained under pressure due to macro effects. The pressure on dissolving pulp prices increased, and imported hardwood DWP prices declined by minus 18% in dollar terms. However, to note, we don't see this as a structural development, but more of a short-term reaction in the current environment. In the beginning of the third quarter, we already saw a reversal of the downward trend with TWB prices increasing back to about 800 USD per ton, mainly based on increase in Bisco's operating rates in China. Let's move to the cost side. Energy and chemical costs remain much higher than historical levels, but at least cost pressures for some input materials somewhat decreased in Q2 compared to Q1. Geopolitical developments around Russia and Ukraine as well as colder than expected weather in the beginning of the year drove European gas prices higher before the situation eased in the second quarter and reduced demand paid on Southeast Asian coal prices. Cost of soda prices remained high across regions and even increased in Europe but weakened somewhat in Asia. Even with a slight improvement in the second quarter, both energy and capital costs remain on high levels. Let's talk about our performance program, which you are quite familiar with. The relevant markets for us still show no signs of a sustainable recovery, with especially generic federal prices continuing to remain under pressure. It is therefore even more important that we continue to focus on this holistic performance program. The program initiatives are primarily aimed at generating free cash flow and improving EBITDA through strengthened sales and margin growth, as well as sustainable cost excellence. Reminder, it consists of three pillars. Profitable top-line growth with full focus on margin improvement, cost excellence in all we do, and free cash flow generation. The overall impact of the program should result in significant positive free cash flow going forward. And let's look at the second point of a program, cost excellence, which remains a key pillar of a performance program. In 2024, we already realized over €130 million in cost savings, and we expect cost savings to further increase to annual cost savings of more than €180 million for this year. We are clearly well on track to meet this target as well. To make it clear, we're talking about a recurring target with an ongoing impact beyond this year as well. Progress continues to be good in the areas of product costs and quality through intelligent efficiency improvement measures. Successes have also been achieved in purchasing through operational and strategic measures. And looking ahead, the holistic performance program is expected to continue to improve manufacturing costs and to leverage further cost potential, particularly the area of overhead functions. At the same time, the structural and process improvements addressed will lead to positive effects on sales and margin generation. We can certainly be satisfied with our success so far, but there are still improvement areas ahead of us in order to maximize our full potential. A new colleague, Georg Kapokovic, took over the management of the company-wide fiber production site in Lenzing. He will also advance the ongoing performance program, and as a consequence, operational cost excellence and the transformation of the company as a whole. And with this, I hand over now to Nico Reiner for an update on financials.

Thank you, Rohit, and a warm welcome from my side as well. Despite continuously challenging markets, we were able to increase both our revenues and our margins in the first half of 2025 thanks to the measures that we have taken actively. Revenue increased by 30 million euros in the first six months compared to the first half of 2024 and reached 1.34 billion euros. EBITDA increased by 104 million euros to 269 million euros. As the number of CSU certificates held continued to increase in 2024, we decided to sell some of them in the amount of 30.6 million euros in the first six months of this year, which positively impacted the EBITDA. Debridation was at 160 million euros, leading to an EBIT of 109 million euros, which compares to 19 million euros in the first half of 2024. Income taxes amounted to 7 million euros compared to 43 million euros in the first half of 2024 and the financial result was minus 87 million euros compared to minus 41 million euros in the first half of 2024. As a result, there was a loss of 35 million euros for Lansing shareholders, which compares to a loss of 71 million euros in the first half of 2024. Let's move to the next slide. Looking now at cash flow. Trading working capital decreased by 2% compared to the end of the first quarter. Our objective is to have the right balance. I would say that levels at the end of June were a bit on the high side and we aim to further reduce it. With regards to CapEx, Lansing continues to put a clear focus on maintenance and license to operate projects as part of its performance program and CapEx remained on low levels of 29 million in Q2, 11% down compared to Q1. As a result, unleveraged free cash flow increased by 24% to 49 million euros. That was not as high as in the second quarter 2024, particularly impacted on one-offs. We clearly continue to have a very clear focus on cash flow. Let's move to the balance sheet. On the left side of the slide, we show the development of net financial debt. It came down by 4% to about 1.4 billion euros. On the right side, you see the development of our liquidity cushion. It increased by 335 million euros compared to the end of last quarter due to the successful refinancing with the syndicated loan. However, This does not include the impact of the new hybrid as the successful placement took place at the beginning of the third quarter. Let us look at the impact of the new hybrid on the next slide. The successful placement of the new hybrid bond marks another milestone in the professional and forward-looking management of our capital structure. following the 545 million syndicated loans secured in May this year. As you can see here, on a pro forma basis, the liquidity cushion, including the new hybrid, increased to over 1.1 billion euros. With this step, we have essentially secured our financing through 2027 and can continue to fully focus on executing and successful performance program aimed at improving margins and free cash flow. With this, I hand back to you, Rohit. Thank you.