Lenzing closes two production sites, shifts strategic focus to nonwovens

Austrian fibre producer Lenzing AG has announced additional drastic measures as part of its ongoing reform efforts.

On Monday evening, the group announced that it will close two more sites. The affected factories are in Heiligenkreuz, Austria, and Grimsby in the UK. Fibre production in Heiligenkreuz is set to cease by the end of this year and in Grimsby by the end of 2027. The company is currently examining “strategic options for the affected sites, including a possible sale or other value-preserving solutions,” according to a statement. A sales process had already been initiated for the PT South Pacific Viscose site in Indonesia.

Lenzing to focus on nonwovens

The reason for these measures is a “strategic transformation of the company,” Lenzing explained. This aims to “strengthen the focus on nonwoven applications and simultaneously realign the textile business” in light of market changes. The intention is to “significantly expand the nonwovens business by 2030.” Investments in production capacity at the Lenzing site will contribute to this goal.

CEO Georg Kasperkovitz commented on the announcement. “We are aware that the planned discontinuation of production at individual sites is a difficult but necessary decision that affects our employees,” he said in a statement. “It is important to me that we act responsibly towards our employees in this situation. We are currently holding constructive discussions with employee representatives about the necessary measures within the framework of existing social plans and applicable local conditions.”

In connection with the site closures, the group expects impairment losses of up to 150 million euros. These are expected to “negatively impact the group’s EBIT and net result for 2026” but will have “no effect on EBITDA in 2026,” the company announced. “In addition, restructuring provisions related to personnel measures of up to 40 million euros are expected to weigh on EBITDA in 2026.” Last year, the group had already decided on extensive job cuts at its headquarters in Lenzing.

Group plans comprehensive refinancing

At the same time, the group announced a comprehensive refinancing programme. This includes a capital increase of 300 million euros; new financing agreements worth 300 million euros; and an “extension of the maturities of existing liabilities until 2030.”

“The multi-stage financing plan enables Lenzing to sustainably strengthen its financial structure,” explained chief financial officer (CFO) Mathias Breuer. “The comprehensive package of measures includes new equity, which will reduce overall debt, as well as an expansion of syndicated financing.” This creates “a maturity profile that is optimally aligned with the ongoing implementation of our strategy,” Breuer emphasised. However, the news was not well received on the stock market. On Tuesday morning, the group’s share price temporarily fell by more than 17 percent.