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Lenzing to examine cost saving measures

May 29, 2014

Weak pricing levels require cost saving measures.

In response to negative pricing trends in the market for viscose fibers, the Lenzing Group says it will implement additional cost reduction measures. The group's management board informed employees about the necessity of further measures to secure the long-term competitiveness of the Lenzing Group. In relation to this, the management board today announced a wide-ranging review of the group strategy, the results of which should be available by the end of 2014.

As noted in the report on Q1 2014, extensive measures were already implemented within the framework of the cost optimization program “excelLENZ 2.0”. Due to this program, it was possible to prevent layoffs in Lenzing, despite the staff reduction measures already carried out. However, in light of the current level of fiber prices, the company says savings of more than €60-80 million for 2014 are still not enough to ensure the long-term profitability of cellulose fibers production at the European facilities. The targeted cost reductions of up to €160 million by 2016 must also be increased due to the market development.

“In light of the structural changes in competitive conditions, our goal is to lead the Lenzing Group back to its previous competitiveness," says CEO Peter Untersperger. "Further cost optimization is inevitable but, within the framework of strategic restructuring, we will also decide to which products we can manufacture over the long run at which sites with the highest levels of quality and at optimized costs. There can be no taboos. Everything must be looked at.”

Furthermore, a strategy group was established by the management board. This group will look at the development of new specialty fibers for Lenzing AG, the production and market positioning which will help to secure the unique selling proposition and profitability, also of the Austrian sites.

Both the works council and political decision-makers will be informed about the difficult market situation and their support has been requested in this process.

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