Lenzing : Still not out of the woods…
We downgrade to Underperform (Neutral) and reduce our target price to € 20 (€ 33). Lenzing’s substantial investments, totaling more than € 3.3bn since 2017, increased the group’s net financial debt from € 119m in 2017 to € 2.0bn in 2024, while EBITDA fell by c. 20%. Lower volume demand, pricing pressure and high input costs led to a further increase of leverage (c. 5x 2024 net debt/EBITDA, excl. hybrid bond) and a massive earnings deterioration in 2022-24. Despite the capital increase in 2023, supporting its balance sheet with a cash inflow of around € 392m, a potential operating earnings recovery should still be overshadowed by the negative effects from the refinancing of Lenzing’s excessive remaining debt burden. While not reflected in our model, we would not completely exclude the possibility of a second equity capital increase.Lenzing is engaged in supplying the global textile and nonwovens industries with man-made cellulose fibers and is a supplier in many business-to-business markets. The portfolio ranges from dissolving pulp, standard and specialty cellulose fibers to high-quality plastic polymer products and engineering services. Co.'s operations are divided into three segments: Fibers, which produces and markets man-made cellulose fibers for the textile and nonwovens industry; Plastics, which produces weaving, labelling films, laminates and woven fabrics; Engineering, which implement projects, supply plant and equipment and provide services arond the world.
Oddo Securities provides securities brokerage and research services. The company offers equity, economic, and derivatives research and credit analysis services. It focuses on insurance, automotive, building materials, pharmaceuticals, telecommunications, information technology, and agri-food industries.
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