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Lenzing AG / Sales and Earnings Decline in 2013 - Countermeasures Well Underway - Seite 2

supported since the beginning of the year by the newly created
functional Group organization. At the same time, our growth strategy
is oriented to the current market situation on the basis of a
consistent adjustment of risk", CEO Untersperger adds. "The
uninterrupted strong volume demand for Lenzing fibers shows that
against the backdrop of a difficult business environment we are
offering the right products in a sustainably attractive growth
market. We are working intensively and resolutely to optimize our
competitive strengths".

Resolute implementation of cost optimization program The first cost
optimization program entitled excelLENZ 1.0 was already launched in
the beginning of 2013, generating savings of approximately EUR 40 mn.
This was followed by excelLENZ 2.0, which was initiated in November
2013 and is now being resolutely implemented. Cost savings from all
cost modules and all sites operated by the Group of EUR 120 mn
starting in the 2015/16 financial years have been identified. Cost
savings generated by this program of about EUR 60 mn have been
budgeted for the 2014 financial year. Two-thirds of the cost savings
will be derived from cutting material costs, overhead, massively
reducing operating expenses and increasing operating efficiency.
About one-third of the cost reductions will be related to lower
personnel expenditures. In order to cushion these measures, a
comprehensive redundancy program was developed at the end of 2013,
for which provisions of EUR 19.7 mn were allocated in the
consolidated financial statements for 2013.

In the light of current market conditions, the revised Lenzing
strategy focuses on risk optimization and further promoting highly
profitable specialty fibers. Construction of the new TENCEL®
production plant at the Lenzing site is the only capacity expansion
project being implemented by the Lenzing Group at present. No further
viscose fiber growth investments will be carried out for the time
being. The construction of a viscose fiber facility in India was
postponed.

Sales increases for specialty fibers The focus is now on expanding
the share of specialty fibers in relation to total sales volumes. "In
2013 ourspecialty fibers Lenzing Modal® and TENCEL® achieved an
unchanged and attractive price premium of 50%vis-à-visstandard
viscose fibers against the backdrop of good volume demand",
saysFriedrich Weninger, Member of the Management Board with
responsibility for fiber production. "Moreover, we have opened up new
sales markets and regions for TENCEL® in preparation for the start-up
of production at the new TENCEL® plant in Lenzing, and have further