Lenzing Aktie

Ladies and gentlemen, welcome to the Lenzing AG Q2 and Half Year Results 2026 Conference Call and live webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Georg Kasperkovitz, CEO. Please go ahead, sir.

Good afternoon, everyone. Thank you for joining us. We're excited to present Lenzing's half year 1 2026 results after recently presenting our new strategy to you.

For the course of today's presentation, we will walk you through the key highlights of the last 6 months, discuss the market dynamics, and, of course, present our half year 1 2026 financial results. I will take you through the highlights and the market. Mathias Breuer, our CFO, will lead you through the financials.

The headline for the first half is strengthened resilience. Against the backdrop of heightened demand volatility and uncertainty as well as the cost increases caused by the Middle East conflict, the business demonstrated resilience and improvement.

Revenue was only modestly lower than half year 1 2025 despite a particularly strong half year 1 2025 comparison base and the consequent pruning of low-margin volumes in half year 1 2026. So holding close to that level with increased average sales prices is a reassuring achievement. It reflects our deliberate focus on value over volume and the self-help measures, which we are already rigorously pursuing.

Below the top line, the same discipline shows through in strong gross profit and EBITDA improvement of the Fiber division, cash generation and a further reduction in net debt, a development towards a healthier financial profile also at the core of our recently announced new strategy. So the takeaway for you is simple, a robust first half that keeps us firmly on track and a strong platform from which [indiscernible].

Overall, the market backdrop through the first half was constructive. Demand across our portfolio was robust as customers built up some inventory along the entire value chain and supply/demand dynamics worked in our favor, evidenced by net margin improvement of most fiber products.

In textiles, end demand was stable across Europe and North America, and apparel retail remained resilient. The underlying consumer demand actually held up better than the headlines might suggest.

In nonwovens, demand remained firm, underpinned by high downstream operating rates. The continued brand-led shift towards cellulosic plays directly to our positioning.

Lastly, in dissolving wood pulp, demand is tied to cellulosic fiber production. So a structurally undersupplied market kept the pricing environment favorable. The bottom line for us, stable demand across all 3 parts of the portfolio and a supportive pricing environment, which is exactly what you want to see underpinning the strategy.

The key point of this slide is that elevated prices of competing fibers are a structural tailwind for us and one we expect to persist. Why it matters? Our cost competitiveness versus alternative fibers continues to improve. Year-to-date, cotton is up around 17% and polyester around 20% against viscose at roughly plus 15%.

That gap means cellulosic fibers has become relatively cheaper than the substitute mill blends again, which pull demand towards our fiber family and gives us pricing headroom over time.

Crucially, this is sustainable rather than a one-off. Cotton remains supply-constrained, and polyester pricing is expected to stay elevated by higher crude oil and natural gas prices in the wake of the Middle East conflict. So we expect the elevated competing fiber prices to persist, supporting both demand and pricing for cellulosic over the medium term.

On the cost side, input costs remain above historic levels, and the drivers are largely structural, including the Middle East conflict. Energy prices, and particularly caustic soda, remained elevated through the second quarter. Initial easing in Q1 2025 (sic) [ 2026] has already reversed, and we expect volatility to persist while the geopolitical situation remains unresolved.

Caustic soda, in particular, remains one of our key cost headwinds and sulfur has been even more pronounced, up as much as the threefold year-to-date, which continues to pressure the cost base. The reassurance in this, while these headwinds are real, we are actively managing them through the cost pass-through and the self-help measures I will come to, and that is what has protected our margin.

Let me put the conflict in perspective. Important distinction is that it mainly impacted on our input costs and supply chain volatility, not on customer demand, which has, as in previous crises, remains resilient.

I will follow up on the response that Lenzing is providing to the current market uncertainties. Good afternoon, this is from my side, Mathias here.

So -- and this is the part that really matters. We at Lenzing, we don't react passively. So we take an active approach with full cost pass-through and pricing excellence, which remain a key strategic priority to us. We use the cost increases to adjust the overall pricing level.

The order intake remains robust, supported by positive demand. And on the supply side, we continue to diversify, especially with regard to key chemicals.

We monitor the pricing and the cost structure in a weekly structured process, and we address the developments proactively. And I think this we have proven with our track record. Our cost measures are well underway, around EUR 25 million of the EUR 120 million program that we announced also last week are already fully in the books and successfully realized and contribute to the current profitability. So while the conflict creates some volatility, we have a clear action plan going forward to mitigate as much as possible.

If we go into quantities and price developments, we can see on the fiber side that the volumes remained broadly stable in the quarter, which is a solid result in a still challenging market and with our efforts to cut down on generic segments.

At the same time, selling prices increased during quarter 2 2026, approximately 6%, both in U.S. dollars and in euro. The stable volumes, together with the higher prices, demonstrate the continuous pricing discipline that sits in the heart of our value over volume approach.

In pulp, production volumes increased quarter-on-quarter to 300,000 tons production in the second quarter. Sales volumes continue to reflect the normal quarterly fluctuations we see in this business, which is driven by shipment patterns.

Average selling prices improved quarter-on-quarter, leaving the rock bottom level of USD 780 per ton, you remember, by end of last year to currently a level of USD 850 per ton, reaching a level of approximately $900 within quarter 3.

On that slide, you can see the translation into euro per kilogram, but as the market is trading in U.S. dollar, I just tried to reaffirm that level. In short, a steady dependable pulp performance that added to the group's progress in the quarter.

To sum up the market, overall, we continue to see a constructive backdrop. Challenges remain, particularly on the cost side, but the demand across our portfolio is robust, and favorable supply/demand dynamics continue to support our results.

With the market backdrop in mind, let us now turn to the financial performance. Looking across the past 5 quarters, revenue have remained broadly stable, a sign of resilience given everything what is happening around us. The strategic focus remains firmly on value over volume.

I need to repeat that, including the deliberate pruning of unprofitable volumes. That discipline is increasingly reflected in the profitability. EBITDA grew by around 9% year-on-year despite largely unchanged revenues, supported by both pricing initiatives and the cost excellence and the self-help measures that we have communicated and that we have discussed.

The conclusion is that the improvement of our profitability does not only start with the new strategy that we announced last week. It is well underway, and it will be amplified going forward. Very important also to understand our performance is the quarterly development and this bridge should show it a way from quarter 1 into quarter 2 and how we drove the improvement.

Positive contributions from pricing, from volume, and from mix effects across fiber and pulp supported the quarter. Compared to the first quarter, we had accounted for significantly lower one-offs. So no positive impact from [indiscernible] textile first-time consolidation, which impacted first quarter performance, lower sales of CO2 certificates, and a lower impact from bio-asset valuation compared to quarter 1.

On the cost side, the cost inflation or higher input costs amounted to EUR 11 million quarter-on-quarter. So our cost basis increased by EUR 11 million. That delivered an EBITDA increase of roughly 6% versus the first quarter.

And more important than quarter 2, after the exclusion of positive one-off items like the sale of CO2 certificates, EUR 5.5 million, positive FX development, which accounted for approximately EUR 3 million, and positive valuation of the bio-asset of approximately EUR 10 million, the operational EBITDA is clearly above the EUR 100 million run rate.

So this is a very important message that we wanted to provide you. The takeaway: the operational initiatives continue to deliver tangible improvements, successful execution coming through here in the numbers.

On working capital, CapEx, and free cash flow, we see -- and I think the overarching message for this slide is disciplined financial management and continued execution. This is what we also have proven in last year, and we continue on that path. Working capital remains a key focus area for us. Trade working capital is down to around 17.6% of revenue.

The main driver versus June 2025 was inventory optimization. So the inventories came down materially year-on-year versus quarter 1, 2026. The small sequential uptick simply reflects higher trade receivables in line with stronger quarter 2 revenue. So underlying discipline is intact. Working capital optimization for sure remains an active ongoing focus for us.

On CapEx, it is elevated compared to quarter 2, 2025, but remains within our budget and plans, and it was a deliberate step-up to support the execution of the new strategy like the investment in the tampon business.

On unlevered free cash flow, the year-on-year comparison needs some context. Quarter 2, 2025, was flattered by one-off effects and a lower level of CapEx, as you can see. So this year's quarter 2 looks lower largely for those 2 reasons. If we look on a half year level, we see an improving trend.

If you take a step into working capital development, and here, I think this reiterates the point that I have made on the last slide. Trade working capital overall improved. One of the key drivers you can see here was the optimization of the inventory level, both in fibers and dissolving wood pulp.

This is certainly the standout contributor to that development. Trade receivables, trade payables have remained relatively stable over the recent quarters. And this, again, underlines the broader point. We continue to actively identify and realize optimization opportunities on the way.

With regards to net debt and cash position, the net debt position remains very stable. Net debt has come down slightly year-on-year, which demonstrates the disciplined balance sheet management that we have.

Leverage is by end of second quarter at 3.6x EBITDA -- net financial debt to EBITDA, up from 3.3x by end of 2025. Reason behind is the last 12 months view, which includes now the weaker performance of quarter 3, quarter 4, 2025, while eliminating the strong quarter 1, 2025.

Liquidity remains very strong, provides a solid cushion. The slight decline reflects the repayment of outstanding maturities rather than any deterioration. The theme throughout is prudent financial management and continued progress towards the lower leverage we are targeting over the midterm.

On the maturities, I need to state out that this maturity profile shown here is a snapshot as of today. It does not include any announced or potential capital structure initiatives.

Proactive and disciplined management of the maturities remains key priorities, as I said, in order to support the implementation of the new strategy with ample financial headroom. And over time, the intention is to further smoothen and balance the profile by proactively addressing maturities and improving the debt structure.

With the financial picture covered, let me now hand back to Georg for the outlook.

Thank you, Mathias. So let me briefly reiterate the strategy. We communicated recently to create a more focused, more profitable, and resilient leader in supplying fiber and pulp. We remain focused on executing on 2 fronts, growing nonwovens and resetting the fiber textile business.

Together with our cost and capital efficiency measures and continued innovation, this is what creates a more focused, more profitable, and more resilient business, moving towards a balanced portfolio, a leaner cost base, and fewer, stronger sites.

Turning to the outlook. On the market, the pricing environment is expected to remain constructive and is currently at elevated levels. On costs, headwinds expected to remain elevated, particularly energy and raw materials, and we expect them to persist.

We are actively mitigating this through continuous monitoring of pricing and costs, active cost pass-through, and our profitability enhancement initiatives.

On execution, we remain laser-focused on delivering the new strategy. That is the management team's single largest priority.

On the financial guidance, over the midterm, the strategic ambition is clear: return to revenue growth, deliver an EBITDA uplift of approximately EUR 150 million, and thus achieve an EBITDA margin of 20% to 25%, and reduce the leverage to below 2.5x.

Everything we are executing, the cost program, capital efficiency measures, and continued innovation is geared towards delivering these midterm targets.

Thank you, Mathias. With that, I would like to conclude today's presentation. Thank you very much for your attention, and we are very much looking forward to your questions.

[Operator Instructions] Our first question comes from the line of Patrick Steiner with ODDO.

Patrick Steiner speaking. A few questions from my side. I'll start with the first 2, 3. First on caustic soda prices. If I understood this correctly, you said prices went up again after an ease in Q1.

A few questions related to that. I mean, firstly, how much do you spend on caustic soda in absolute terms in the second quarter, if you have the number for me? And are these higher costs already reflected in the Q2 results? Or should we expect some kind of lag effect with higher costs in the third quarter? That's the first one.

And second one on volumes. If I see correctly, volumes in Q2 were quite stable actually, right? And most of the revenue increase came from pricing. And can you explain to us why? Because we're actually a bit expecting of a more pronounced volume increase related to prebuying activities of Asian customers. And also maybe what your views are on volumes into Q3 and Q4?

I'm going to take the first question on caustic soda. So the monthly spend on caustic soda, which we use in 4 production sites, is slightly above EUR 10 million per month. And with regards to will that now peak or is the peak already in quarter 2, with regard to caustic soda, we at the moment, expect a similar level into quarter 3 compared to quarter 2.

What we currently see is that sulfur is peaking potentially in quarter 3 with a higher price compared to quarter 2. The spend on sulfur is approximately, yes, less than EUR 5 million a month.

On the volumes, I hand over to Georg.

Thank you for the question on volumes. So let me start with volumes and fiber because that also -- to pulp. In Q2, demand for our fiber products was strong for a couple of reasons.

First of all, man-made cellulosic fibers became more cost competitive than alternative fibers, so oil-based fibers. Second thing, we have a new sales organization, which is more effective. I think this is all reflected in our Q2 volumes.

If you look at Q3, the outlook is very promising, and also for Q4 as of today, it looks good. But I need to say, I mean, especially textile fibers, that is spot market. So if customers tell us now that they will order in Q4, that can change.

And with regards to the question, why not increase the volumes. So in principle, we are running on full capacity and whatever we produce is currently being sold out. So one lever also reducing the inventory was we could also sell off some of our, let's say, warehouse stocks that we have upheld over the last months. We simply don't have more capacity to increase volumes at the moment.

[Operator Instructions] Ladies and gentlemen, we have no more registration for other questions. I would like to turn the conference back over to Mr. Kasperkovitz -- apologies. Mr. Steiner wants to ask another question.

A few more left from my side. First of all, I saw SG&A costs going up in Q2 compared to Q1. I suppose that is related to annual inflation in salaries basically. If not, then please correct me, but should we expect a further increase in Q3?

And secondly, can you maybe give us more information on your pricing negotiations with customers going forward, I would probably expect for Q4 and beyond? What's the feedback from customers is getting tougher? Or how is the situation?

So let me start with your question on pricing negotiations and demand from the customers. I mean, of course, the increased price level for all types of fibers, not only man-made cellulosic fibers, puts pressure on -- along the supply chain.

But so far, we are able to defend the current price level, and customers also understand that this is also partly driven by underlying cost. I'm confident that we can keep the price level until the end of the year as of today.

Mathias, will you cover the SG&A?

Yes. So I'm going to take over for SG&A. So first, on SG&A costs, we certainly had the, let's say, inflationary increases or given the labor or the salaries, so the tariff increase. And secondly, we are also reporting outgoing freight in the SG&A bucket, which heavily increased over the quarters.

All right. So thinking about Q3, Q4, we should expect stable volumes and stable to maybe slightly increasing prices as a result of prices having increased over the months and maybe see another positive effect in Q3 in terms of prices, while we see maybe a slightly higher cost base. This makes sense in your view?

I would say in Q3, you can -- I would say it's more or less confirmed. It's all planned. So we continue to run all lines at full capacity, so stable volumes compared to Q2. And as of today, I would expect the same thing for Q4.

In terms of prices, they might go up a little bit if underlying costs increase because then we need to pass it through. And given current foreseeable cost development, I would expect stable prices.

Last one from my side on CapEx for full year 2026. Maybe in absolute terms, what you would expect? And also how much do you preserve for maintenance CapEx?

Yes. So 2026 is going to be a year that is, I would say, characterized by LTO CapEx. There is not big strategic CapEx except for the tampon business that we invest in in Lenzing, which in total is EUR 15 million. So the amount for 2026 that we expect is in the area of approximately EUR 150 million.

Ladies and gentlemen, there are no further questions. I would like to hand over back to Mr. Kasperkovitz for any closing remarks.

Thank you, everyone, for joining today. If there are no further questions, we close today's call. Thanks again. Have a nice day.

And enjoy the summer. Goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Lenzing AG Strategy Announcement Conference Call and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Georg Kasperkovitz, CEO. Please go ahead.

Good morning, everyone. Thank you for joining us. We are very excited to speak with you today and to share our new strategy. That is really what today is all about. For those I have met, I'm Georg Kasperkovitz. I took over as CEO in June, having joined the company 1 year earlier as COO. Alongside me is Mathias Breuer, our CFO. Mathias joined the company in 2023 and became CFO at the start of this year.

Over the course of today, we will walk you through where the business currently stands and the direction we are taking it.

Here is the agenda we have put together for today. I will start on strategy and markets, and Mathias will take you through the financial section.

Let me be candid about the situation. Pulp remains profitable. Fiber markets remain challenging. The macroeconomic and geopolitical headwinds have proven persistent and they continue to weigh on the whole industry. In manmade cellulosic fibers, we see a structural shift, not a temporary downturn to wait out. Demand for textile fibers remains volatile. Pricing recovery is taking longer than expected. At the same time, Asian competitors have significantly improved their position on scale, on cost and on quality. Put simply, competition has intensified and premium value capture has narrowed. Sustainability remains important, but customers are less willing to pay a premium for it.

It became clear that Lenzing's previous better growth strategy was no longer fit for purpose. This is why we have initiated a strategic reset. So what does the new strategy look like? We have 3 clear priorities: grow nonwovens; reset textiles; and capitalize on pulp. Each of these priorities has been chosen to make Lenzing more resilient and the fiber division more profitable. We are focusing on the parts of the portfolio that are less cyclical and structurally more attractive.

At the same time, we are simplifying and streamlining the rest. These priorities are supported by 3 value creation levers. First, profitable growth. We are no longer chasing tonnes for their own sake. We will grow where we have an advantage and can earn attractive markets -- margins. That improves both the quality and the resilience of our earnings.

Second, cost reduction. A leaner SG&A base has helped us in the past. Now we are going further. We are simplifying the organization, cutting SG&A cost to the core and continue to optimize our operating costs, including energy.

Third, capital efficiency. We will concentrate capital on our strongest assets. That improves returns, strengthens cash generation and creates flexibility for future growth. The key message is simple. We recognize that the fiber market and competition has fundamentally changed. Our response is disciplined and within our control. We are going -- we are growing the most resilient part of the portfolio, reducing costs and improving capital efficiency. This is how we will create sustainable value regardless of where we are in the cycle.

Yes. Good morning, ladies and gentlemen, also from my side, I'm Mathias Breuer here in the call. Before we go into the strategy, just let me reflect on the current trading update, pre-announcements to quarter 2 figures that we plan to announce on August 5.

So on the next page, a first glimpse on market situation and both on dissolving wood fiber, viscose and also competitive fiber. Cotton. Stepping back on the short term, we saw some macroeconomic and geopolitical disruptions that somehow in our segment eased the ongoing effort for accurate pricing. We also saw improving downstream demand in China with regard to textiles, which fed through also to generic viscose prices, and encouragingly, the demand for sustainable cellulosic fibers stayed resilient, which underpins stable pricing in our segment of the market. This was also supported in the first 2 quarters of the year by price hikes in competitive fibers like polyester and cotton as you can see it here on the page, driven by higher cost of oil and fertilizers, respectively. So this is the point we most want you to leave with, although Q2 was constructive on pricing, the investment case going forward is not dependent on favorable market conditions.

Our progress going forward is driven first and foremost, by the execution of our strategy and does not depend on market tailwinds. This is what we want to discuss today.

On preliminary quarter 2 performance, just starting with the top line, revenue was essentially flat at approximately EUR 650 million, and we would stress that by design, we're deliberately prioritizing value over volume. So flat revenue with rising profit is exactly the trade we want to be making. EBITDA was up 9% to EUR 123 million and the margin improved 2 points to 19%, a very reassuring development, continuing our trajectory of the first quarter in 2026. That improvement came from controllable actions, better pricing, a richer product mix with the fiber ASP up to EUR 2.14 per kilogram and dissolving wood pulp ASP up to EUR 700 per tonne in quarter 2 as well as the continued cost discipline that we have proven that we can control over the last quarters.

On the balance sheet, the net financial debt came down 5% to EUR 1.36 billion, helped by stronger cash generation and the working capital and inventory optimization, again, an early down payment on the lower leverage we are targeting over the midterm.

A word on free cash flow. The unlevered free cash flow was lower year-on-year, but that reflects some one-off effects in the comparable quarter and deliberately a higher level of CapEx in quarter 2, 2026 to support the strategy. The most important takeaway here on this slide are the run rate benefit of everything that we are doing is not yet fully captured in these reported numbers. What you are seeing is early progress, not yet the finished picture.

This brings us now to the strategy part, and moving back to Georg.

Thank you. Mathias has shown you the first financial proof points. Now let us explain why we believe this is only the beginning, starting with the markets we serve, because there's one point we want to make very clear. We operate in steadily growing markets.

What you see on the slide is global fiber demand has grown by around 3% per year since the 1960s through oil crisis, financial crisis and the global pandemic. Fiber demand is remarkably resilient, and our segment is even more attractive. Over the last 15 years, man-made cellulosic fibers have consistently outgrown the overall fiber market. Lyocell grew by nearly 16% per year, viscose staple fiber by around 5%.

The conclusion is straightforward. We are exposed to markets with strong long-term demand fundamentals. That's a very good place to start, which is why our strategic reset is not about changing the markets we serve. It's about repositioning Lenzing to capture that growth more effectively and more profitably. This is what the rest of our strategy is designed to do, and that brings us to the next slide.

The opportunity becomes even clearer when we look ahead. Manmade cellulosics are expected to grow by around 5.5% per year through 2040, significantly faster than both natural and synthetic fibers. The reason is what the industry calls the cellulose gap. Supply growth in cotton is constrained. At the same time, demand for sustainable fibers continues to increase. Cellulosics are most scalable and cost-effective way to close that gap, and that matters strategically.

The fastest-growing segment of the global fiber market is exactly where we compete. In other words, the market is growing in our direction. We're not betting on a recovery in declining category, we are doubling down on the category with strong structural tailwind and decades of growth ahead. That gives us confidence that our strategy is aligned with where the market is growing.

Let me frame how the strategy actually comes together. We have 4 key objectives, and each is designed to achieve an outcome that matters. Sustainably higher profitability, increased competitiveness in the demanding market, strengthened resilience in an increasingly volatile geopolitical environment and most importantly, lower earnings volatility and reduced cyclicality.

Our strategy comes down to 4 actions: shift the product portfolio; take out costs; reduce capital employed; and invest where innovation creates value. These are the 4 building blocks that will get us there. And they map directly on to the value creation levers we set out at the start.

Product portfolio transition and innovation drive profitable volume growth, while the cost and capital measures deliver the cost and capital efficiency levers. We won't go through them in detail here because each one deserves its own discussion. And that's exactly what the next section does.

So let me walk you through each initiative in turn. Here is the challenge we are addressing. Textile is a highly cyclical business. The cycle typically last 5 to 7 years with peak to trough swings of up to 40%. There's a significant amount of volatility to carry. Nonwovens, on the other hand, tell a very different story. The market has grown almost continuously and has proven far more resilience through economic and industry disruptions. That is why we are rebalancing our fiber portfolio.

By 2030, we are targeting a much more balanced business mix, roughly 1/3 textile, 1/3 nonwovens and 1/3 pulp. The path is straightforward. We reduced our exposure to generic textile volumes and adjust fiber capacity through site closures. At the same time, we continue to grow nonwovens and increase external pulp sales as capacity is freed up. The result is a fundamentally stronger Lenzing, more profitable, more resilient and less cyclical.

Textile and nonwovens require different strategies, and we are very deliberate about that. In nonwovens, we play offense. We are accelerating cellulosic adoption in hygiene, growing our TENCEL business, upgrading our U.S. plant in mobile into a specialty nonwoven side and harvesting value from standard wipes. Nonwoven is a fiber market where customers value reliability, quality and verified sustainability and where long-term partnerships create lasting value.

In textile, we play for profitability. We are exiting loss-making generic volumes and harvesting value from our lyocell and viscose businesses, but we're not retreating. We are growing the niches where we truly differentiate, particularly modal and flame retardant fibers, and we continue to invest in innovation. Through TreeToTextile, we have the exclusive opportunity to commercialize the next generation of manmade cellulosic fibers, 25 years after Lenzing disrupted industry with lyocell.

So what does that mean financially?

So moving on to the performance program that will accompany also our strategic transformation. And we want to ground our cost ambitions in -- somewhat in track record because at Lenzing, we have proven that we can implement what is in our hands. We delivered over EUR 70 million of savings compared to 2022 and 2023 and more than EUR 200 million compared to 2023 at the end of 2025. We have consistently done what we have said that we would do.

The next step is a new performance program targeting now more than EUR 120 million by end of 2027, focused on a leaner overhead structure and as well to a minor extent, operational improvement and energy optimization. This will include the EUR 45 million announced last year in September. We've already started. We've already implemented EUR 25 million to be fully effective already in 2026. For the remainder, we have a clear implementation road map to deliver the benefits by the end of 2027. We understand the execution risk here. And in our view, this is very manageable. We know exactly what needs to be done. And as you can see, we have already started.

Coming also to the footprint implications of our new strategy. The footprint today is a legacy also of years of growth. And the honest reality is that the profitability over those sites is uneven. Our strong assets, we have effectively been supporting less profitable ones, which adversely impacts the overall group returns. So we try, and we plan to manage and strengthen the core. Lenzing is our lighthouse site, LD Cellulose in Brazil and Paskov in the Czech Republic as part of profit engines. Mobile in the U.S. as very important site in the nonwoven sector, and our remaining Asian hubs in China and Thailand.

While on the same time, we simplify elsewhere. We plan to wind down sites in Heiligenkreuz, Burgenland, and Grimsby U.K., and we continue to run an active divestment of the generic viscose site in Indonesia. Needless to say, this is not a decision which came very easy to us, and we take lightly. But ultimately, this is necessary to secure the next step of the transformation.

Exiting these sites, as you also can see here, will result in noncash impairment charges of approximately EUR 150 million. And in addition, we will recognize restructuring provisions of approximately EUR 40 million, primarily related to head count reductions in Indonesia, Heiligenkreuz, Austria, U.K., Grimsby, and also for the SG&A optimization program in the headquarter. These are onetime largely noncash items, and we see that as a natural consequence of making the right long-term decisions now in order for better returns.

So let's move on to innovation. And let me be very clear on one point. Reshaping the product portfolio and the fiber plant footprint does not mean stepping back from innovation, quite the opposite. Innovation remains at the core of who we are. It's one of the key reasons customers choose Lenzing, and it remains a critical driver of our future growth, differentiation and value creation.

You can see that in our prioritized innovation pipeline, Lenzing nonwovens technology, that's a proprietary technology with structural cost advantages already validated by leading European FMCG customers, TreeToTextile, a disruptive next-generation fiber platform, where we have secured the controlling stake. Lyocell filament, where we already hold a leading position in a growing market.

Filtration fibers address the new regulatory requirements in Europe and beyond, and next-generation flame-retardant fibers for the growing PPE market. So the new strategy is about sharpening our commercial focus and improving returns, not about reducing our innovation efforts. We come out of this transformation leaner, more focused and still the innovation leader in our industry.

Let me bring the pieces together because what matters is not the individual actions, it's where they take us. Our goal is clear: to build a more focused, more profitable and more resilient integrated leader in fiber and pulp. Every element of the strategy supports that goal. We're creating a more balanced portfolio moving towards approximately even split across textile, nonwovens and pulp. That gives us a strong earnings profile and reduces our exposure to any single market cycle.

At the same time, we are simplifying the business. By the end of '27, we expect to operate 6 sites instead of 9 with a structurally lower cost base and leaner capital base. And that combination matters. Lower costs and less capital tied up in the business, create the financial flexibility to keep investing in innovation and future growth. In short, we become simpler, stronger and more resilient. Ultimately, all these initiatives point to one objective: sustainably higher profitability and long-term shareholder value creation. Of course, strategy alone does not create results. It's execution, and execution starts with having the right leadership team in place.

So let me turn to the team that will deliver this transformation. The strategy is only as good as its execution. So let me spend a moment on why we are confident we have the right team to deliver it. We have now a refreshed Managing Board in place, myself as CEO, Mathias as CFO; and Christian Skilich as Chief Pulp and Technology Officer. Together, we combine deep industry knowledge, strong operational expertise and a proven track record of delivering transformation.

Just as importantly, we are fully aligned. We have jointly defined the strategy, agreed to targets and taking clear accountability for delivering them. Execution is not just a priority for us. It is that priority. We are fully committed to turning this strategy into measurable results. Execution is where strategies succeed or fail. We have the team, the plan and the accountability in place.

Now let me turn to another key enabler of our value creation, our capital structure.

Yes. Thanks, Georg. And to execute a strategy like this properly, we have to start with the foundation and the first strategic action with that regard is to lay the foundation for a sustainable and long-term capital structure.

So as a first step, we intend to strengthen our equity position through a EUR 300 million capital increase in the form of a discounted rights issue. Two points I would like to emphasize with that regard. The rights issue is fully underwritten by a syndicate of international banks and our key shareholders, B&C and Suzano, have committed to voting in favor of the capital increase at the planned Extraordinary General Meeting as well as participating in the rights issue.

In addition, Oberbank AG as a minority shareholder also has committed to participate in the capital increase in relation to their current shareholding. The shareholder commitment is a strong vote of confidence in both the management team and the new strategy. In parallel, we are in highly constructive and pretty advanced discussions with our financing partners on a new debt package of around EUR 300 million, including an upsizing and an extension of our existing syndicated loan and the new facility.

This new financing structure perfect fits also into the implementation road map of our strategy. As you could see with regard to the performance program and also the exit or the consolidation of the site footprint we plan to implement until end of 2027 and focus on a target -- medium target window of 2028 to 2030. Taken together, the objective is straightforward and consistent with the message at the foot of the slide. These measures establish a sustainable long-term capital structure with ample headroom to support the successful execution of our strategy, while proactively addressing near-term maturities within the implementation window.

For the time line, I keep it on a rather high level. Our ambition is to complete the capital increase during the second half of this year. The key steps are the strategy announcement as of yesterday, our half year 1 results, August 5, the planned Extraordinary General Meeting in late August, in which we will seek the necessary capital authorization and then the final launch of the capital increase.

Further details on exact timetable and transaction milestones will be communicated in due course. Having outlined now both on the strategic road map and also the financing measures that support it, let me now turn to what this also means to our financial ambitions going forward.

Let me explain the logic a bit behind the guidance rather than just the numbers. First, on revenue. As expected, closing less profitable sites will temporarily lower near-term reported revenue. We would stress this is deliberate portfolio optimization, not weakening underlying demand. As the initiatives take hold, we clearly expect to return to sustainable revenue growth over the midterm.

On profitability, we expect the margins to improve materially as the portfolio optimization and the value creation initiatives gain traction. The medium-term ambition is an EBITDA margin of 20% to 25%, marking a substantial uplift of EUR 150 million EBITDA in the midterm and thus bringing the leverage down below 2.5x, down from around 3.3x by the end of 2025. And we've already taken an encouraging first step with regard to profitability.

Q2 2026 margin was already 19%, up from 16% in 2025. This is exactly the self-help progress that we pointed to at the outset, and that gives us the confidence that the execution is on track. And what moves us within that EBITDA margin range, it depends on the pace of execution. How quickly we will deliver the transformation and the cost programs, supported by a stable market. Alongside sustainably improving the profitability, we have an equally clear ambition to keep strengthening the financial profile.

The objective is to establish and maintain a sustainable long-term capital structure that supports disciplined investments, financial flexibility and long-term value creation.

Thank you, Mathias. With that, we have reached the end of today's presentation. And the message we hope you take away today is simple.

We're operating in the right markets. We have the right strategy, we have the right team, and we are putting the right financial foundation in place. Now it is all about execution. Thank you for your time and attention. Mathias and I look forward to your questions.

[Operator Instructions] And we have the first question coming from Sebastian Bray from Berenberg.

I have 2, please. The first is on the reported EBITDA in the second quarter of just over EUR 120 million. Could you please help me understand if that it contains any one-off impacts or it's an underlying EBITDA, no biological adjustments, no CO2 credit sales? The reason that I ask is that it's quite a big organic acceleration versus the underlying EUR 80 million in prices in Q1 and prices are still quite strong.

My second question is quite simple. What will happen to financing costs after the EUR 300 million equity raise is done? By how much could these fall from the current interest run rate of about EUR 130 million, EUR 140 million a year?

Thank you, Sebastian. So I'm going to take both questions, right? So starting with the reported EBITDA for quarter 2 and the related one-offs. And I remember that you also had the same discussion on quarter 1, where you fairly stated that there were some larger one-offs that impacted or positively impacted the results. So within the EUR 123 million of reported EBITDA, we still see CO2 certificates in the amount of approximately EUR 5 million, so significantly lower compared to quarter 1, but on par with what we have seen in quarter 2, 2025. Further, there was some positive FX development of approximately EUR 3 million that also pushed the reported EBITDA, and the bio asset revaluation with a positive impact of EUR 10 million.

So walking back now to a true and fair operational performance, I would see it at the level of above -- slightly above EUR 100 million compared to the amount that you discussed on quarter 1.

On your second question, with regards to the financing. So in principle, we do see a pretty stable profile with regards to interest rates going forward. You know and you're well aware that there is the hybrid in 2028 that potentially is going to be refinanced in case this is going to happen. This will have a significant step up with regards to financial results and interest rates that we're going to pay.

The next question comes from Saul Casadio from M&G.

For the strategic update, it is very clear what you -- sorry for my voice, what you're trying to achieve industrially. On the financial side, I just wanted to understand that the rationale for the capital increase, is it to address liquidity need? Is it to refi the hybrid? Is it to address the leverage problem? I'm just trying to understand the need for a capital increase in your plan?

So thanks for the question. I'm going to take that. So the overall package with the EUR 300 million equity rights issue and an additional EUR 300 million of new debt is sized to provide headroom through the execution. So it shall provide the financing for the transformation. First, this is the first aspect. Second, as I mentioned, the exit of several sites will also come with several one-off noncash items that's going to hit into Lenzing's equity ratio. The equity rights issue will support to cure with that regard.

Sorry, sorry, just to clarify. So you have some equity rate covenant based on equity ratios and you expect to potentially be...

We don't have covenants like that. We don't have covenants. It is just about operating on, to us, sustainable equity ratio moving forward.

Okay. And in terms of cash costs for closing the assets that you mentioned, is there any significant cash costs given the fact that you're selling the Indonesia -- you're trying to sell the Indonesian assets. So overall, this restructuring in terms of footprint will be cash positive?

So what you have seen in my slides is one-off restructuring provision of EUR 40 million. This is at the moment, the provision, but will result into cash costs, respectively. This is related to layoff of the head count in Indonesia, in Grimsby, and in Heiligenkreuz as well as in the headquarter. With regards to the deconstruction of the site, we plan that there is an offset with working capital that the sites are currently -- and the scrap value that the sites are currently carrying.

The next question comes from Patrick Steiner from ODDO BHF.

Congratulations on the great efforts, which likely come with very tough decisions. I have 4 questions from my side. Firstly, how did you decide on the volume of the capital increase? I mean do you think it's enough in combination with the cost savings to become profitable and to deleverage the still quite stretched balance sheet? That was the first one.

Second one, on the EUR 150 million EBITDA increase over the midterm. Maybe I haven't got it fully, but how do you define midterm? And what is the base of the EUR 150 million increase? I'll take these 2 and the next 2, so that's easy, I guess.

Patrick, I also -- I'm going to take those 2 questions as well. So first on the volume of the capital increase. As I mentioned on the previous question, the package is sized to provide the headroom throughout the execution, and we deem it sufficient in order to implement the strategy going forward, and it's going to support the deleveraging of the company.

With regards to the EUR 150 million EBITDA increase and your question with regards to the midterm targets, as I said, we plan to implement throughout 2027, the go-to-market implementation with the shift in the revenue stakes is going to take slightly longer, but this should give you an idea about the target corridor that we are heading into. Other than that, I can't provide any further guidance as you might acknowledge.

Okay. A third one, as you've mentioned in the question before, the exit from the sites and the restructuring? I mean, they result in the EUR 150 million impairment and in this EUR 40 million provision, do you think that covers everything? Or do you expect further follow-up cost of provisions you have to incur to finish your asset restructuring basically?

Yes. So this is, for the moment, the best assumption that we do have with regards to the impairments, we're going to do that assessment throughout quarter 3, similar procedures as last year, with the impairment on SPV with regard to the one-off related costs. It covers the employee base. And from our assessment with the technicians that we have taken into the sites, we believe that, as I said, working capital that the sites are carrying as well as the scrap value are cash-wise, offsetting the cost for the deconstruction of the business.

Okay. Very clear. Last one. TreeToTextile, can you maybe -- as you've highlighted in the presentation, can you maybe explain in a bit more detail the fundamentals of the fiber in terms of pricing and quality compared to other Lenzing fibers, volume rollout, necessary CapEx and aspects like this?

Happy to take the question. So TreeToTextile is a technology patented and developed roughly 10 years ago. There are other companies like H&M and IKEA involved in the joint venture. Lenzing acquired roughly 3 years ago, a minority stake, and we took over the majority, the controlling stake in the joint venture at the beginning of this year. So we have a pilot line. We produce product. The product is also unbranded, but it's already tested in the market. The features of the product are -- it's very similar to cotton, but it has high absorbency. So I think it's a very attractive product.

And in terms of production process and technology, we consider it as the next generation of the lyocell. So if you look at the history in the '60s, there was viscose. Viscose requires complicated chemical treatments to get produced, then there was lyocell already much more sustainable. And the next generation is what we believe is TreeToTextile.

On the CapEx side, I think it's way too early to give you any kind of estimate. We have a pilot line up and running. We will complete detailed engineering until the end of next year. And then I think we will have a better understanding of the CapEx side.

[Operator Instructions] We have a follow-up question coming from Saul Casadio from M&G.

Yes. Sorry, I was on mute. I just want to have a sense of the -- if you can provide the profitability of the pro forma business after -- excluding the pulp business after shutting down or disposing those 3 assets, just to have a sense of the EBITDA contribution of that part on an LTM basis? And if some of the mills that you shut down are EBITDA negative?

Yes. As for your understanding that at the moment, we provide a company target frame with an EBITDA of 20% to 25% and an uplift of EUR 150 million in absolute numbers, but we don't provide a target on divisional level for fiber and pulp, respectively.

There are no more questions at this time. I would now like to turn the conference back over to Georg Kasperkovitz for any closing remarks.

So let me repeat, first of all, thank you for taking the time and for asking your questions. We really appreciate that. I think the new strategy of Lenzing is fundamental. And I would also expect there might be further questions once you have studied the materials in more detail. So our Investor Relations team is available. And of course, we as the Board are also available for your questions. So if you have any questions, please let us know. The complete details are included in the presentation. Thank you very much for your time.

Thank you.

Ladies and gentlemen, the conference is now over, and you may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Lenzing AG Results First Quarter 2026 Conference Call and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Mathias Breuer, CFO. Please go ahead, sir.

Yes, perfect. So good afternoon, everyone, and thank you for handing over to me, and thanks to everyone for joining our call today. Today, we're going to walk together through Lenzing's result for the first quarter of 2026.

Just a brief look into the agenda. I will start with the key highlights, followed by an update on the market environment as always and then I will take you through the financials in more detail, including the EBITDA, the cash flow, the working capital and our balance sheet position. And finally, we will end with our current view on the outlook before we move to the Q&A session.

Let me start with the key highlights of the first quarter 2026. As we also discussed in March this year, the year began in a very challenging geopolitical and macroeconomic environment, in particular the escalation in the Middle East, which has increased the uncertainty across energy, chemicals, logistics and finally also consumer markets.

Against this backdrop, we delivered a revenue of EUR 616 million, which is an 11% decline year-on-year and slightly below the fourth quarter of 2025, reflecting the still challenging market environment and lower pulp volumes. Please keep in mind that especially the first quarter of 2025 was particularly strong with a worsening economic situation over the following quarters 2025 following the tariff announcements in April.

Our EBITDA increased significantly compared to the fourth quarter 2025 to EUR 116 million, corresponding to a solid EBITDA margin of 19%. This underlines the continued impact of our pricing and cost excellence initiatives and the measures that we have taken, supported by some one-off effects that we will also discuss in today's meeting.

The cash generation was particularly strong. The unlevered free cash flow reached EUR 66 million, supported by, again, disciplined CapEx control and continued working capital management. Overall, Q1 confirms that we are making progress on what we can control, cost discipline, cash generation and commercial steering. With that, we were able to deliver a net profit of EUR 24 million after 3 consecutive quarters in a loss position.

Now let's step a bit closer to the current market environment. The global apparel market in the textile industry showed stable growth in the first quarter, but the consumer sentiment remains cautious. We saw first signals of an easing situation after the tariff announcement last year, then the backdrop with the conflict in the Middle East. However, demand was supported by stronger trends in the U.S. and China. Lower income consumers continued to reduce discretionary spending.

The nonwoven markets, in contrary, remained more resilient, particularly in Europe and North America. We continue to see some structural support from the conversion towards more sustainable and plastic reduced materials.

In our dissolving wood pulp division, the demand remained closely linked to the production of regenerated cellulosic fibers. We experienced high downstream operating rates together with some supplier disruptions with some of our competitors, supported an improvement in our price level.

Overall, the market prices for both fiber and dissolving wood pulp improved during the quarter. Just as a reference, the CCF China index for viscose increased by 1.4%. The CCF for lyocell increased by 3.4% over the quarter. So there is also a bit of a market recovery that we could see over the first quarter. But overall, the broader market environment remains volatile and visibility, especially over the entire year, is still limited.

Let me now address the impact of the war in Iran on our business and the mitigation measures that we have defined. As we discussed also last time, we do not have direct business with the Iran. Our sales exposure to the Middle East is limited. However, we are seeing some indirect effects across our value chains. These include some higher logistic costs, increasing chemical prices, wood and energy costs from the second quarter onwards, and risks around the chemical supply security.

We are closely monitoring the price and the cost development, and we have defined clear mitigation actions. This includes a pass-through of higher costs where possible, a much more tense pricing policy that we are currently doing, and also pricing process where even on a daily and weekly basis, we adopt and adjust minimum prices.

We further on focus on value-accretive allocation of volumes across customers and regions, and we strive to establish alternate supply routes for key chemicals. In addition, we continue to prepare further cost-saving initiatives. Our focus is to limit negative effects as much as possible.

Turning now to the fiber business first. The fiber sales volumes remained broadly stable compared with the fourth quarter of 2025 at 220,000 tons. So it's a plus 1% compared to the last quarter. This still reflects our measures that we have taken during 2025 to adjust our capacities, especially in our Indonesian assets.

The demand stabilized and we see a strong push through the supply chain at the moment with a strong order book development. The average fiber sales prices improved in the first quarter. In euro terms, the prices increased by 3% to EUR 2.01 per kilogram, while in U.S. dollar terms, they increased by 2.7% to USD 2.35 per kilogram.

The increase was supported by a favorable FX development and an improvement in our price premium versus the generic market prices. We just talked about the CCS viscose index that increased to 1.4%. So you can see that in the mix, we were still able to outperform the overall market. The development is consistent with our strategy to focus on disciplined pricing and value-generating volume allocation rather than volume growth at any price. So the premiumization strategy is paying off.

Let me now turn the page to the pulp business. The dissolving wood pulp production volumes decreased by 5% compared with the fourth quarter to 292,000 tons. The third-party sales volumes were down by 18% to 166,000 tons. The lower external sales volumes were driven by an increased internal supply/demand as well as the seasonal impact of the Chinese New Year.

At the same time, the dissolving wood prices stabilized in the first quarter. The average sales prices remained flat at around EUR 0.69 per kilogram. We all remember the downward rally that the dissolving wood pulp price had to face in 2025 where we hit rock bottom in quarter 4.

At the moment, we do see a positive ASP development. We cannot see the in-quarter development here, but let me report on that. The ASP moved from approximately USD 799 per ton in January to more than USD 820 per ton in March, and we currently see further positive signals into quarter 2.

Let me briefly comment on input costs. Energy market prices increased again in the first quarter of 2026. This is also a clear outcome of the Middle East conflict. Electricity prices in Austria, natural gas prices in Europe, both remain significantly above the historical levels.

If we look on caustic soda as a reference material for our chemicals, we saw some easing in the first quarter, but the price levels still remain elevated compared with the historical base year 2020. And here, please keep in mind that this development in the chemical cost sector does not contain any impact from the Iran conflict yet.

So we anticipate the NaOH prices to increase by more than 10%, even 20% in the second quarter compared to the price level prior to the conflict. This means that input costs continue to be a material burden for the industry and also for Lenzing. The situation might further increase the volatility, particularly for energy and chemical markets, which we are very diligently currently look at. So we continue to be disciplined in cost to increase operational efficiency and also to be very stringent in our pricing measures with regards to our top line.

A main pillar remains our performance program. And a main pillar of our strategy is also excellence. In line with this, we've already shown a strong performance over the years 2023 to 2025 with the EUR 200 million of cost savings delivered.

Building on this, we have defined additional measures out of the EUR 45 million in personnel expenses that we announced already September last year in 2025. The first EUR 25 million are delivered, so we can tick box that and will be followed by additional cost-saving measures, which are currently under preparation at the moment. So our clear and continuous commitment to deliver on our cost structure.

Now let's shift gears and turn into the financial section. First, the overview, and you can see always the comparison to first quarter in the prior year and the last quarter in 2025 so that you can better reflect on the U turn that we are currently in. Quarter 1 2026 was characterized by lower revenues year-on-year, but a strong sequential improvement in EBITDA and continued progress on cash flow and the balance sheet.

The revenues at EUR 616 million as reported, down 11% year-on-year and 2% compared with the fourth quarter 2025. EBITDA at EUR 116 million, down year-on-year, but up 60% compared with quarter 4. This corresponds to an EBITDA margin of 19%.

Very important unlevered free cash flow amounted to EUR 66 million, which is an up of 66% year-on-year. That decreased 24% compared to a strong quarter 4 that we also steered towards the year-end. The trade working capital, we continued to reduce by 29% year-on-year, down to a level of EUR 425 million now by end of the first quarter. On the balance sheet, the net financial debt declined by 9% year-on-year to EUR 1.36 billion, while the liquidity cushion increased to a bit more than EUR 900 million.

On the next page, let's move through the developments in revenue and EBITDA in more detail. And please note that this page now is compared against quarter 1 of the prior year, whereby in some parts of this presentation, we correspond or we compare to quarter 4 in order to give a better understanding on the current development and the situation.

Year-on-year, in quarter 1, the group revenue declined down to EUR 616 million. We talked already about that. Main driver, lower fiber production and sales volumes compared to the very strong first quarter and exceptionally strong quarter 1 in 2025, and also dissolving wood pulp price developments.

The EBITDA decreased year-on-year to EUR 116 million. The EBITDA and the EBITDA margin were supported by continuous cost excellence and pricing measures that we have taken. Some one-off effects especially and to walk through them, the sale of surplus CO2 certificates in the amount of EUR 14 million. This is not compared to prior year. This is the absolute amount.

The positive valuation effect from biological assets in Brazil in the amount of EUR 13 million and the first-time consolidation of TreeToTextile. You remember that in February, we took over the majority stake in TreeToTextile and thus had to account for the first consolidation in the first quarter.

So there is a best will that we could account and that was EBITDA accretive to us of EUR 12 million, while at the same time we now fully consolidate also the cost of this joint venture, which amounts to approximately EUR 1 million a month. So EUR 2 million is the cost impact, EUR 12 million is the positive EBITDA impact. A key message here is that we were able to defend solid profitability level despite the challenging volatility in the market.

Let us now walk through the EBITDA bridge now against the previous quarter, so quarter 4, 2025, to better discuss the evolution of the market and of the company. Again, EBITDA increased by 60% from EUR 73 million on a weak quarterly EBITDA in quarter 4, 2025, up to EUR 116 million now in quarter 1.

We can see that the improvement is mainly stemming from positive margin effects in the fiber division with a EUR 6 million quarter-on-quarter effect as well as additional cost savings of EUR 16 million, higher sale of CO2 certificates with EUR 5 million quarter-on-quarter effects. Some positive FX impact, EUR 6 million quarter-on-quarter and the already discussed positive one-timers with regard to TreeToTextile, so EUR 10 million in that regard.

These positive drivers were more than offset the ongoing burden from inflation and weaker market-related effects in the Pulp division. So the pulp division quarter-on-quarter is down by EUR 6 million, driven by the lower sales. This bridge again clearly shows that the internal measures are keeping traction and are helping to stabilize the earnings situation even without sustainable market recovery until now.

Looking at the quarterly trends, I think this reconfirms that the picture that I just have drawn. Revenues have slightly decreased over the last years. This reflects the strategic shift from our -- from the volume-driven growth towards value generation, including the targeted cut of unprofitable volumes that started in the course of 2025, also with the idling of some of our assets in that year.

At the same time, our quarter-on-quarter EBITDA increased by EUR 44 million compared to the fourth quarter of 2025. And, yes, the continuous focus is not on maximizing volume, but on improving the quality of our earnings, on improving the margin resilience and improving further the cash generation. I think the first quarter, therefore, represents an optimistic step back into the right direction.

Turning to cash flow. and working capital. Trade working capital decreased significantly year-on-year, mainly driven by lower inventory levels, just reported on the EUR 425 million as per end of quarter 1. CapEx spend remains very disciplined at EUR 28 million. So this is a -- let's say a slow start into the year given the overall CapEx amount that we planned for the year. As a result, unlevered free cash flow increased by EUR 26 million to EUR 66 million for the first quarter, and this clearly remains one of the core management priorities for 2026.

Taking a step closer to the components of working capital, this is just a detail for your reference. So main driver is on the inventories where we continue to adjust all levels of wood, of chemicals of finished good fiber and also of pulp in our sites. So cash in terms of cash generation is clearly pays back. Trade receivables and trade also with a good development year-on-year, a slight increase over the last quarter. Same for the trade payables. I think here, we see an okay development.

Let's move to the balance sheet. The net financial debt, as we have seen on the overview page, improved to EUR 1.36 billion, a good reduction year-on-year. The improvement is mainly driven by free cash flow generation. At the same time, liquidity cushion remains at a very solid level, above EUR 900 million. This is also a level that we discussed in our earnings call 2 months down the road. This gives a solid financial buffer in a period of high market uncertainty and further supports the ability to continue in executing our strategy.

The financing profile or maturity profile and maturity structure remains well balanced. There is no changes with that regard. And thus, I propose that we jump over this page and leave it as it is.

And we move to the outlook. Let's again start with the broader implication of the escalation in the Middle East. The war, as we just discussed, has multiple effects on the textile, nonwoven and pulp industries. So disruptions in oil and gas supply through the Strait of Hormuz performance lead to higher energy costs. This is one important factor. Further secondary effects, availability of chemicals and also on market prices of chemicals, which increased the production cost for pulp and cellulosic fibers from quarter 2 onwards.

Wood prices also remain elevated. So there is a disruption in the construction area, especially in the Middle East, which leads to a slowdown of the sawmills in our region here in Middle Europe. And thus, currently, wood prices are heavily elevated. And our pipe costs are impacted with that regard and container shipping also remains being impacted from the current situation.

As an upside, the higher crude oil prices increased the cost of synthetic fibers. So when we talk about substitution and our, let's say, competition in terms of fiber types. So we have seen a rally in terms of the ASP, average selling price, for synthetic fibers with more than 20% over the last weeks.

Cotton on the same token is affected by higher cost of fertilizers also driven by the Iran war. And just as a remark and you might look it up, as of yesterday cotton price was beyond USD 2 per kilogram after an increase by 4% to $1.70 from December to March.

So there is also certainly some tailwind with regard to substitutional products that support us in our pricing efforts and in passing through our costs to our customers. But we stay exposed to the indirect effects of costs on logistics, on chemicals, on wood, on energy and on potential weaker consumer sentiment, which we try to mitigate as discussed in one of our earlier slides.

If we summarize the outlook, Q1 2026 was constructive despite a challenging geopolitical and macroeconomic environment, including the uncertainty given still with the tariffs, the escalation in the Middle East. We saw improved price trends in both pulp and fiber compared with the fourth quarter of 2025 with further positive indications for 2026.

However, energy and raw material costs are expected to remain elevated, depending on duration. And if the conflict intensifies, this will continue to weigh on the earnings situation starting quarter 2 onwards. Again, we are closely monitoring the development and we'll continue to mitigate negative effects through pricing, cost discipline, alternative supply routes and value accretive or value-oriented volume allocation.

Still, due to low visibility and the high level of uncertainty, we decided to further not provide any guidance for 2026. However, the key priorities remain unchanged: pricing, cost excellence, working capital management and thus the focus on cash.

With that, I will end my presentation and will hand back over to the operator for the Q&A. Thank you.

[Operator Instructions] And the first question comes from Christian Faitz from Kepler Cheuvreux.

Congrats on the results in these very challenging times. A couple of questions on demand, please. First of all, do you have a feel how much customer restocking is happening because some of your clients might fear significant supply disruptions going forward or have feared already starting in March actually? And in that context, indeed, how has demand improved in March versus January and February levels?

And the second pocket of questions would be, do you fear any supply issues for your own plants, particularly in Asia? And you were mentioning the pulp prices -- higher pulp prices in Europe. When would you see wood prices to go down?

Christian, thanks for the questions. So first question was on the restocking effect with regard to the demand. So I agree that when the Iran conflict broke out, the first impulse of our customers that we could see was kind of a bit panic buying and trying to fill up the supply chain. And we are very careful that we outbalance that and understand the demand metrics going forward in order not to run into a situation where demand is dropping and we see a pull effect into our sites and thus also in the working capital.

So this is -- this was clearly also on our agenda as the Management Board. The first reaction and impulse reaction of the customers that we have seen and perceived in March compared to January, February, which was a bit, okay, let's now place orders, we need to fill up the supply chain, is now getting more -- moving into a more consistent pattern. I just talked about also the rally on synthetic fibers and cotton price -- cotton fiber prices.

So this gives us currently some tailwind that we expect also. We are carefully optimistic that in the second half year of 2026, we continue on a healthy demand and that does not fully, let's say, wipe us back. So here, I would say we are carefully optimistic that we can keep that level. However, the visibility still is not very strong. You understand the nature of our business, especially in the textile business, it's a very short-term business that can move very quickly.

On your second question with regard to the supply issues for our own plants. We had already some issues on our Indonesian assets. So we are -- with regards to caustic soda, we are supplied with 2 local suppliers, one of them declared force majeure due to the Iran conflict. We managed to open up alternative supply routes with that regard and are fully supplied also in the SPV.

At the moment, we don't foresee any further -- just to conclude on that. So the supply disruption was lasting not even a week. So we managed it very, very well. For the other side, especially in Europe, but also in Thailand or China, at the moment we don't foresee any supply disruptions. We don't have concrete indications that there is something in line of sight. The big question is, again, a matter of visibility into the second half year.

And the question was on wood. So the wood price really started in February already. And when you talk about wood procurement and wood supply, you always have to follow a defined radius. It doesn't make sense to cover long distances with regards to wood supply because it still elevates -- it simply elevates cost.

So we don't have a concrete answer on when we expect the cost to go down because this all needs to ramp up again. Construction needs to ramp up again, so the utilization of the sawmill is here key. Because when looking at, let's say, typology of a forest, typically the very -- let's say, the nice and linear wood goes into the sawmill and the lower-priced wood goes into the pulp industry. So it's highly dependent, but we hope that we'll find some improvement here in the second half year.

The next question comes from Sebastian Bray from Berenberg.

I have 2, please. The first one is just on what the underlying EBITDA was in the first quarter of the year. So the nominal is EUR 116 million. Am I right in saying that taking off the CO2 credit sales, which are EUR 13.7 million, the revaluation adjustment of EUR 13.3 million and then the goodwill reversal of value upwards of goodwill is as of about EUR 12 million. Is that EUR 78 million, let's call it, EUR 80 million or so underlying run rate? And that's my first question.

And my second one is on CapEx. There's been another quarter where Lenzing has been able to keep this at quite a low level. Is EUR 30 million a quarter just a reasonable assumption for the remainder of the year?

Thanks for the questions. I'll start with the second question because it's faster to answer. So the EUR 30 million is clearly not the level that we can contain. This would be even below 2025, which was for us a rock bottom CapEx. So we still consider a level above 2025 is reasonable for this year. You remember in our last call, we indicated a level of EUR 160 million to EUR 180 million for 2026, which still holds true.

On your second question with regards to the underlying run rate, in principle your math is correct. Keep in -- just keep in mind that also in the prior quarters that we compare against, we also had impact of asset valuation and CO2 certificates. So -- and also for the coming months, there is an excess share of CO2 certificates that we can sell to the market. Yes. But in principle, your math is correct.

And just to check, are the sales of CO2 certificates largely done after the current year? Because my understanding is that the EU will then start to adjust the reallocation of production allowances downwards if a certain quota is not hit for the minimum production level.

It highly depends on the, let's say, political structure and the regime with regard to the CO2 certificates going forward. In principle, we receive more than we consume. So this gives us an excess share that we can sell. And in our current planning assumption, even for 2027, we consider a potential for further sales.

The next question comes from Patrick Steiner from ODDO BHF.

Two remaining from my side. First of all, could you give us more details on the refinancing needs in 2026 and the impact on the interest costs? And secondly, do you already have like a feeling of how these set of effects on prices and input costs will affect your margins over the next 2 to 3 quarters?

Yes. I again start with the second question. So if I understood it correctly, so the increased input costs in quarter 2 and going forward, how those might affect the margins. So as I said, we -- our key goal is to pass through any cost increases with a very stringent price approach. This is key. And if we are consistent with that approach and if we are successful with that approach, we hope that we can mitigate any increases in the fiber section. In the pulp section, I mean, we also talk about our pulp division, we also talk about cost increases where we try to pass forward chemical cost and wood price cost for Paskov. It might have an impact if we are not entirely successful with our approach, but the goal is, again, to fully compensate for that. So that's the clear management priority.

With regards to refinancing needs for end of the year, you're right, there are some maturities, especially on the German Schuldscheindarlehen in quarter 4 that in our planning, we foresee to cover -- first of all, we come from a very -- from a good and solid cash position and liquidity cushion. Second, we foresee smaller refinancing instruments with regards to the refinancing in our planning for that year. Discussions are already starting.

Okay. So no negative effects on interest costs going forward from this refinancing?

This is not a high interest financing, so no negative effect.

The next question comes from Gregor Koppensteiner from RBI.

Just a quick question here. How do you cope with this higher energy costs? Do you have any hedges in place? And if yes, what is cured in terms of exposure? And how long is your time horizon? And are there also some hedges for chemicals in place?

Thank you. So we do have a hedging policy for energy costs. First of all, please keep in mind that in -- especially in our Austrian site in Lenzing, we are 90% backward integrated with our own energy production. So there is a, let's say, minor impact with that regard. But we follow a hedging policy of hedging approximately 60% of the open positions, and this holds true for the current year as well as for the following year. So in principle, this approach is aligned within the Management Board and is fully implemented at the moment.

The second question was on hedging for chemicals. No. So we don't do. We are in spot markets with that regard.

[Operator Instructions] There are no more questions at this time. I would now like to turn the conference back over to Mathias Breuer for any closing remarks.

Yes. Let's keep it short. Thanks for attending. And latest in August, I will follow up with second half year. I'm looking forward to that and wish you a good time until then. See you soon. Bye-bye.

Ladies and gentlemen, the conference is now over, and you may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Lenzing AG Financial Results 2025 Conference Call and Live Webcast. I'm Mara the Chorus call operator.[Operator Instructions]

And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mathias Breuer, CFO. Please go ahead.

Thank you, Mara, and good afternoon, everyone, and thank you for joining today's call. For those of you I have not yet met this is my first results call as Lenzing's CFO, and I'm happy to guide you through our results for 2025. As you might know, I have joined Lenzing in 2023 to develop and implement the more than EUR 200 million performance program. My focus as CFO will stay on disciplined financial management, operational performance improvements, supporting profitable growth and further strengthening the cash generation and the balance sheet of our group.

With that, let me walk you through the agenda for today. I will start with a summary of the key developments followed by the market updates as well as our refined strategy. I will then guide you through the financials, and I will talk about the outlook as well as our investment highlights. We will then end the call with the Q&A session, as always. You might have seen that we have put some emphasizes on further transparency and further data in order to give you a better understanding on our business. And yes, I hope that you appreciate that in the presentation going forward, and I'm happy to discuss on that. Stepping to the key highlights.

Let me focus on the first slide. Despite continued challenging market conditions, our performance reflects disciplined execution and the impact of our performance initiatives. We saw a modest revenue decline driven by volume adjustments during the year, while our EBITDA margin benefited from our ongoing performance program, supported by the extraordinary one-off sale of CO2 certificates. Looking ahead, our ambitions go well beyond current levels. We have updated our strategy last September with a clear focus on value generating growth by continuing to reduce overhead costs. And importantly, our stronger focus on cash flow generation is clearly paying off with an unlevered free cash flow improving to almost EUR 280 million, driven by disciplined CapEx control and rigorous working capital management.

Liquidity is clearly one of our key priorities, and we made great progress here as well. After last year's refinancing, our liquidity cushion reached a very solid level of over EUR 900 million by year-end. What remains unchanged are our core strength, innovation and sustainability, where we just recently confirmed our worldwide leadership. Looking ahead, our priorities remain clear. Profitability, strict cost discipline and continuous focus on cash generation.

Before we move into the details of 2025, let me briefly touch on our leadership team, which brings deep industry expertise and full focus on operational excellence. As you know, I recently joined as CFO and I'm very pleased to be part of this team. Together with Georg and Christian, we act as a team, the CEO tasks have been assigned to us. We fully remain aligned behind our strategy and focused on disciplined execution, maximization of profitability and strong cash generation.

Before moving into the details of our performance, let me briefly comment on the market environment. Overall, markets have not been providing any meaningful tailwinds in 2025. Especially, conditions in the textile fiber markets remain challenging, particularly in the last 3 quarters of 2025 after the announcement of the tariffs by U.S. President Trump. Consumer sentiment remained low, driven by those tariff uncertainties, which led to a shift in less advanced fiber applications and the less willingness to pay for sustainability in the textile sector. At the same time, nonwoven markets continued to develop much more stable, particularly in Europe and North America. This stability is largely driven by the ongoing conversion towards more eco-friendly fibers, which continues to support the demand. The demand for dissolving wood pulp remains solid, supported by higher downstream operating rates for generic fibers.

Looking at the market prices for both fiber and dissolving wood pulp, they were down compared to 2024, generic viscose and lyocell prices by approximately 2% and dissolving wood pulp prices by around 10%, both in U.S. dollars. Alongside continued weak consumer sentiment in textile markets pricing pressure for fibers was further driven by increasing supply in the market. In response, we continued to actively manage our product mix. We reduced the production in defined lower-margin products and market segments, which led to a reduction of total fiber sales volumes by 6% compared to 2024.

At the same time, we further increased our focus on premium products with higher margins which led to higher average selling prices in U.S. dollars. This clearly reflects and confirms the direction we have set with our new strategy, despite the trend of declining generic fiber prices by approximately 2% we were able to increase our average selling price in our Fiber division in U.S. dollar by 2.8%. In euro terms, however, our selling prices were slightly lower, reflecting foreign exchange movements.

Let me now turn into our Pulp division. The production increased by 4% in 2025, especially driven by an outstanding performance of our dissolving wood pulp plant in Brazil. We produce approximately 20% above nameplate capacity in this asset, which is a very -- which is very satisfying to us. At the same time, lower internal demand for our own fiber production allowed us to sell a larger share externally, resulting in a 27% increase in dissolving wood pulp sales volumes. Average dissolving wood pulp prices declined in 2025 reflecting lower market prices and negative foreign exchange movements, with a decline of 7.2% in U.S. dollar compared to 11.6% decline in euro.

Let me now turn to the development of key costs in our cost structure. Energy and chemical costs remained significantly above historical levels, particularly energy prices in Europe, although we saw some easing in prices during the fourth quarter. On the other hand, coal prices in Indonesia increased by 8% in the fourth quarter. Prices for caustic soda, our main chemical also remained elevated across regions and were broadly stable in the fourth quarter. Despite this partially slight improvements towards the end of the year, both energy and chemical prices remain a challenging cost factor to us. Looking ahead, ongoing geopolitical developments particularly the war in Iran are likely to increase volatility in energy markets with regards to prices and potentially even supply.

Let me now briefly reflect and recap on the strategy that we announced -- our revised strategy that we announced last year in September. It is built around 4 strategic priorities that together unlock value and prepare Lenzing for the future. This means when looking at the first 2 pillars, we focus on premiumization and excellence. Premiumization means that we will concentrate more strongly on our branded and innovative fibers like TENCEL, VEOCEL and ECOVERO and gradually step back from less profitable commodity segments. By doing so, we improved margins and position Lenzing in areas where we can truly differentiate. Looking back into 2025, this is also an impact that we have seen in terms of increasing the margin to the generic fiber segments in terms of prices, as we have seen on the last page.

The second pillar is excellence. We, as a board and as a company are embedding a culture of efficiency and discipline across the group, not just through one-off savings, but by institutionalizing cost control, we're optimizing our footprint and the streamlining structure. This makes us leaner, more agile and more resilient. On top of our performance program that started in 2023, we are implementing a comprehensive cost optimization program which includes a reduction of around 600 positions in Austria. Annual savings of approximately EUR 45 million are expected to take full effect by the end of 2027.

The third pillar is innovation. Here we will focus resources on fewer but higher impact projects, accelerating time to market and ensuring that our pipeline continues to provide the next generation of premium fibers whether in textiles or nonwovens. And finally, sustainability. This always has been part of Lenzing's DNA, but going forward, it will be leveraged even more as a value driver. With growing regulation and customer demand for sustainable products, our leadership in this area shall become a true competitive advantage. Overall, our strategy is designed to deliver profitable growth, improve margins further and strengthen our cash flow generation over the coming years.

Premiumization is at the core of our refined strategy. Today, around 1/4 of our volumes are still in generic commodity fibers, about 60% are in our branded classic products and 15% are in innovative premium fibers. Our goal is clear. Over time, we will exit the generic segments and shift resources into branded and premium products. This means that competitors can continue to play in commoditized viscose but Lenzing focuses on areas with higher margins and stronger differentiation. In that sense, we also have taken the decision to assess options for our plant in Indonesia, as you know, last September, I will later on elaborate on that. Premiumization for us is more than just a portfolio shift. It makes the business structurally more resilient, less exposed to cyclic swings and better positioned for sustainable growth.

We illustrate how we are implementing our refined strategy, let me highlight 3 concrete examples. First, we are further improving our profitability and resilience. As part of this, we are evaluating the potential sale of our viscose production site in Indonesia. The site did not develop as planned and has been clearly margin dilutive in recent years. The M&A process has been initiated and is ongoing according to plan. Second, we further drive the improvement of our margins. A good example is the expansion of the premium nonwoven capacity in Lenzing. An investment of EUR 15 million will increase the focus on sustainable and high-quality non-woven solutions. Third, we increased differentiation with new fiber technologies. A major step in this direction is the acquisition of the controlling majority in TreeToTextile. TreeToTextile represents the next technological leap in cellulosic fiber. H&M, IKEA and Stora Enso will continue to support our joint scale-up, commercialization as minority shareholders. Together, these 3 initiatives demonstrate how we are already implementing our strategy towards value growth.

The second pillar of our refined strategy is excellence. In line with this, we have implemented our comprehensive performance program. The focus was and continues to be on improving efficiency across all our production sites, optimizing procurement processes and costs and reducing personnel costs. The program has now been successfully completed and delivered full recurring savings of more than EUR 200 million, which is EUR 100 million above the original target, which was set in 2023. Building on this success, we have defined additional measures to further improve operational efficiencies. These measures should be leading to additional annual savings of EUR 45 million latest by 2027. They will continue to support our strategic focus on operational efficiency and cash flow generation. So a clear commitment of Lenzing to deliver.

Let me briefly highlight where some of the savings are seen in our P&L. A significant part can be seen in SG&A costs, which reduced EUR 40 million, EUR 20 million each in selling and administrative costs, and we were able to reduce personnel costs by EUR 55 million compared to 2024 or 10% of our total personnel costs. Some of these cost savings are already reflected in the SG&A savings on the left chart. So the right chart also includes savings in the production area.

Innovation and sustainability remain the foundation of Lenzing's long-term strategy. They are what sets us apart from the competition. Even as we streamline, we will not compromise in these areas. On the innovation side, our pipeline continues to create real opportunities. One example, our new TENCEL HV100 fibers, the fiber features variable cut length designed to mirror the irregularities of natural fibers and brings undefined rawness of nature into the TENCEL Lyocell portfolio for woven products such as denim, the clear commitment and clear milestone into our premiumization approach.

On the sustainability side, our leadership is recognized worldwide. We have been rated AAA by CDP as one of only 23 companies worldwide with an A score for climate now 6 years in a row. With Ecovadis Platinum, Lenzing is in the top 1% of companies worldwide in sustainability performance. These achievements are not just certificates. They are an asset that strengthens our brand, enhances customer partnership and increasingly drives premium pricing, especially in the nonwoven segment.

In summary, we continue to operate in a tough market environment, driven by weak customer sentiment in textiles and additional capacities in the Asian fiber market. We control the control level. We have successfully responded with our performance program, and we delivered tangible benefits in terms of improved margins and strong cash generation. At the same time, our revised strategy sets clear priorities, including the strong focus on value generating growth, the shift towards higher-margin products as well as the strategic review of some of our plants. This positions us well to further strengthen our financial performance and create sustainable value going forward. In short, we are managing the challenges of today while we build the foundation for stronger performance tomorrow with our revised strategy.

With that, let me now turn to the financials. And let me start with a brief overview of the key financial indicators for 2025. Revenue was slightly down year-over-year, while adjusted EBITDA increased by 8%, reflecting the impact of our cost initiatives as well as positive one-off effects from the sale of surplus EU emission certificates. Cash flow also improved, supported by very disciplined CapEx control and rigorous working capital management. On the balance sheet, net financial debt and leverage significantly decreased, and we increased the liquidity cushion to EUR 910 million.

Let me now take you through the developments in revenue and EBITDA in more detail. Both revenue and EBITDA were affected particularly in the second half of the year by external factors such as international tariff measures, subdued demand and declining market prices. Despite the tough market, revenues decreased by only 2% compared to 2024 with a clearly weaker second half of the year. Revenues, however, went down by 11% in the fourth quarter compared to the same period in 2024. Thanks to our comprehensive performance program, we were able to improve the operating performance, adjusted EBITDA increased by 8% to EUR 426 million. Here as well, we saw a much better first half of the year, and EBITDA in the fourth quarter decreased EUR 73 million.

Let me now take you through the development of EBITDA in more detail. Looking at this EBITDA bridge and starting from last year's EBITDA of EUR 395 million, we see a positive impact from cost savings as well as the sale of CO2 certificates. So of topics that we internally can control, we contributed with EUR 130 million of recurring and one-off effects to the profitability of 2025 with another EUR 45 million with the surplus sale of CO2 certificates in total, EUR 175 million. Those were, however, we could not fully compensate market headwinds that we clearly had to face.

Foreign exchange developments as well as inflation had a negative impact of combined around EUR 100 million. The impact of U.S. tariffs of EUR 10 million and the valuation of our biological assets in Brazil increased by EUR 8 million less than in 2024. If you look at our divisions, we can see a positive margin contribution through additional volume in our Pulp division of EUR 27 million. However, with negative price development accounting for EUR 43 million as dissolving wood pulp prices decreased during 2025.

In the Fiber division, we see an adverse picture. While volume was short compared to 2024, with an impact of EUR 31 million, we were in a position to increase our prices in U.S. dollar with an impact of EUR 25 million in 2025. With all that, you can see we continue to control what we can control and to manage what can be managed internally. However, the market had some headwinds for us.

Looking at the development. Since 2022, revenues have remained largely stable at EUR 2.6 billion due to the challenging market environment. At the same time, EBITDA increased by EUR 184 million to an adjusted EBITDA of EUR 226 million, driven primarily by our cost-saving initiatives and operational improvements. Our refined strategy also addresses reviewing selected sites, including the Indonesian plant where the M&A process where a potential sale is ongoing. In this context, noncash impairment losses on noncurrent assets, in particular, property, plant and equipment of EUR 82 million were carried out last year. The impairment losses have a negative impact on EBIT but no effect on EBITDA. EBIT, excluding the impact of the impairment, would have been at EUR 100 million approximately, which compares to EUR 18 million reported.

Let me now turn to cash flow. Trade working capital decreased as a result of rigorous and actively managed working capital management of $125 million or 22% in 2025. At the same time, we maintained a very disciplined CapEx control with CapEx spend of EUR 141 million. This led to a significant increase in unlevered free cash flow and an improvement in the cash conversion to 66%. If you take a step closer to the development of net working capital, we can see that the optimization of inventory management and improved supply chain management in both fibers and pulp led to a decrease of inventories by EUR 115 million since the end of 2024.

We also consistently reduced trade receivables. Trade receivables were down EUR 73 million compared to the end of 2024, reflecting disciplined receivables management. While trade payables have decreased in the first 3 quarters, they increased again in the fourth quarter, ending at EUR 324 million. Overall, this development reflects our disciplined approach to working capital management and our continued focus on cash generation.

Turning to the balance sheet and to highlight the key developments in 2025, we do see that net financial debt decreased by 12%, mainly driven by strong free cash flow generation. This resulted in an improvement in our leverage ratio to 3.3x EBITDA. At the same time, we significantly increased our liquidity cushion. This is cash on hand, including not drawn financing lines to EUR 910 million.

Let's have a short recap on the refinancing measures we have successfully taken in the last years. We started with the capital increase in 2023 to bolster our liquidity buffer, at the same time, we did a maturity extension of EUR 250 million. In October 2024, we have converted the project financing of our Brazilian joint venture of USD 1 billion into a stand-alone corporate finance structure with further shift of debt maturities. The successful placement of the new hybrid bond in the amount of EUR 500 million in July 2025, followed the EUR 545 million syndicated loan secured in May 2025. Those measures marked further milestones in the professional and forward-looking management of our capital structure and brings an adequate amortization profile to the company.

With that, let me now turn to our outlook. Let me start with some of the key challenges that we currently see in the market environment. First, the political uncertainty remains elevated, particularly due to the escalation in Middle East. Even though we have no direct business in Iran, we expect indirect impact through continued volatility in energy markets, global supply chain disruptions as well as a negative impact on consumer confidence. Already after 2 to 3 years, at 3 weeks now since the Iran war started we have to experience a steep increase in domestic growth transportation in sea freight surcharges and first request for increased prices in terms of our key chemicals. If the situation continues as such, we expect potential supply shortages in specific markets, be it in Southeast Asia or in Europe.

Second, what we see here on this slide, we continue to see a high degree of uncertainty around global trade policies and tariffs with limited tariff impact, but indirectly also affecting fiber demand and prices, particularly in the textile business. And finally, with new capacity coming on stream, particularly in generic lyocell and those are expected to continue to weigh on pricing and margins. Based on these assumptions, our outlook for the year reflects the following expectations.

Looking back, 2025 was a solid year despite the continuously tough market environment. For the reasons just mentioned, we expect generic fiber market prices to remain under pressure in 2026. However, we have seen improved pricing developments in pipe and fiber in the first quarter compared to the weak end of 2025 with further positive indications for the remaining months of the first half year. Fiber demand is expected to continue to be impacted by subdued consumer sentiment However, also here, we expect some market improvements in half year 1 with a constructive start in Q1 2026 compared to the last month of 2025.

At the same time, we expect demand in pulp to remain relatively stable. Energy and raw material costs are expected to remain volatile and on elevated levels impacted by the geopolitical developments. Despite these challenges, we remain focused on what we can control, particularly disciplined pricing, cost efficiency and strong cash generation, and we expect operational results to continue to be positively impacted by further cost reductions. The start into Q1 was above expectations and very constructive. However, going forward, visibility is very limited due to the ongoing high uncertainties in global tariffs and geopolitical developments. We therefore at the moment give no guidance for 2026. We will review the outlook in the next month and may provide guidance alongside the results of the first quarter. However, this is subject to improved market visibility.

Before going into Q&A, let me summarize now why Lenzing represents a compelling investment case today. We control what we have under control and we deliver. First, we are recalibrating our asset base. That means moving away from a volume-driven model towards one that prioritizes economic value creation. We are reviewing underperforming assets, including the Indonesia site and focusing investment where returns are highest. Second, we are refocusing the organization with leaner structures, institutionalized cost discipline, we are aligning resources with future growth opportunities. Third, we are resharpening our market focus. We are withdrawing from commoditized fibers and concentrating on premium branded products and resilient nonwoven applications. This makes our business less cyclical and more predictable. Finally, we are positioned to regain valuation. We combine a proven ability to execute savings, refinancing, EBITDA growth with unique differentiation through innovation and sustainability. This is how we will restore confidence and create long-term value.

With this, I will hand back over to the operator for the Q&A.

[Operator Instructions] The first question comes from the line of Christian Faitz from Kepler Cheuvreux.

Two questions, please. First of all, Mathias, you mentioned the sequential improvement in Q1 '26, at least in terms of demand trends. I'm fully aware that the already strange geopolitical situation can change from day-to-day at this point. Yet if one was to admittedly naively assume that all of the tensions were over by May or so, how would you see demand in textile and also for nonwovens, i.e., I guess you're talking about a pre-Iran scenario?

And the second question is, having a sound production footprint in Europe, would you, at this point, see a relative "advantage" in terms of raw material sourcing versus your Asian peers, obviously, also including your own setup in Asia?

Thanks, Christian, for the question and hello to you. So First, let me answer your first question. So if I briefly recap it, so you were asking regarding textile and nonwoven demand under normal pre-Iran circumstances. So what we have seen when we stepped into 2026 was that prior to the Iran conflict, demand both in nonwoven and textile was very good and very high and we could exceed our expectation in the first 2 months and now also in March with regard to demand. We have also seen a structural price increase pre-Iran both in fiber and in dissolving wood pulp that will certainly support our, let's say, our improved profitability going forward. So without the Iran scenario, I would have expected a clear trend reverse coming from quarter 3, quarter 4, what we've seen in 2025.

Okay. I guess, yes, I mean it's all speculated, but I just wanted to get a feel for the underlying ex-Iran demand.

Okay. And your second question was on the advantage of being based also in Europe versus Asia. So certainly...

In terms of raw material sourcing and given the Iranian and Strait of Hormuz situation, yes.

Certainly, a global footprint can help. What we currently see is that our Chinese competitors don't suffer from any supply constraints at the moment. So this is what we feel. And also our Chinese plant at the moment is securing the supply. We also have safe supply at the moment in Europe. So compared with the Chinese, I don't see too much disadvantage, but things can change pretty fast, I guess. With our other plants, especially in Southeast Asia, we see the one other potential supply constraint where we currently try to shift around. So here, I think it could be a faster supply constraint in those markets that we have to -- that needs to be seen, yes.

The next question comes from the line of Sebastian Bray from Berenberg.

Can you hear me?

Yes.

I have 3, please. The first is on if there is anything unique going on in Q4 that meant the EBITDA in this quarter was especially weak. My gut feeling is that the company may have wanted to clear out some inventory and underproduced even relative to Q3, but it does look like quite a big drop. Any color? Was the hedging becoming less favorable on the FX side? Was Heiligenhaus causing particular issues? That's my first question.

My second question is on the debt structure and covenants. If I take EUR 75 million as a run rate, I appreciate it might not be the right one, but it's close to what the company reported for Q4 EBITDA including the hybrid, the net debt-to-EBITDA close to 6x of the company. Are there any explicit net debt-to-EBITDA covenants attached to any of the existing or more recently raised debt of the last 12 to 18 months.

And finally, I appreciate the company doesn't provide guidance, and I'm not going to ask for an EBITDA figure for '26. But can you give an idea of the magnitude at current hedges of both the FX, the energy and the sulfur costs for '26.

Thank you, Sebastian, and hi to you. So let me answer and start with the first question. So you asked regarding Q4 performance as it was perceived as very weak and if there were any external impact. So first, we had explicitly low level of dissolving wood pulp prices, so the quarter 4 clearly marked the low with regards to our external pulp prices for 2025. Secondly, and you're right, we tried to clear out some of our inventories which also burdened our average sales price in quarter 4 compared to the prior year. I think that was the main issues that had to be seen in quarter 4 compared to the prior quarters.

With regards to your second question, EUR 75 million run rate. I mean, I understand the logic and understand that the mathematics and 4x multiplier to this weak quarterly run rate would bring us to the leverage that you have just mentioned. I mean there is covenants that we're carrying in the syndicated loan. This is an EBITDA net debt inclusive financial leasing covenant where we're currently are working with a comfortable headroom still in quarter 1.

And your third question was the current hedge impact of FX, energy and chemicals. So we have approximately 80% of net exposure in U.S. dollar hedged for 2026 already. We have approximately 60% of our energy hedged of our open position. However, keep in mind that especially in the pulp side, where we are nicely integrated. And this is mainly attributable for Heiligenhaus, Grimsby and our site in Mobile, while we don't perceive large energy fluctuations in all sites in Asia. On the chemical side, there is no hedging that we can apply. So here we are on the market rates.

That's helpful. Can you remind me what is the actual number covenant on the syndicated debt? Is that disclosed as a multiple of EBITDA?

We don't disclose them.

The next question comes from the line of Patrick Steiner from ODDO BHF.

Three remaining from my side. Firstly, could you give us please an indication of the CapEx levels for 2026? And also maybe some kind of indication what -- how this compares to like a normalized maintenance CapEx level? And secondly, the level of trade working capital, is this sustainable? Should we see an increase in 2026? And thirdly, you mentioned new generic lyocell capacities coming on stream, which are expected to burden margins and prices going forward. Can you give us more information on that?

So first indication on CapEx level 2026. So the CapEx level of EUR 140 million in 2025 was clearly a stretch to us. I mean this is only focused on maintenance CapEx and license to operate CapEx. This is a level that we in principle plan to maintain for the next years to come. However, we need to plan some additional CapEx on top with regard to enhancing our factories. We also announced a EUR 15 million announcement for the tampon business in Lenzing, we announced in total an investment package of EUR 100 million of strategic CapEx into the next year. So if you would add up, add certain surplus to the EUR 140 million base line, then I think you are pretty right.

With regards to net working capital level and your question is this remains sustainable. We certainly made the big step in 2025. And there is still room for improvement. There's still areas that I would like to touch and take it with my operational colleagues. We plan to further decrease the DIO, DSO, DPO ratios by a few days within that year, but a large step is not to be expected. And when we look on your question with regards to new generic lyocell on stream, so especially the -- our largest competitor in China has recently brought on stream some additional generic lyocell capacity, and we expect another capacity coming into the market in 2026. This is potentially an approximately 100-kiloton plant that will hit the market in 2026. We see it mainly for the domestic Chinese textile market. But it clearly brings, let's say, additional capacity into that generic lyocell market, which could further dilute the margin.

[Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mathias Breuer for any closing remarks.

Yes. Thanks, everyone, for joining in and listening to my first earnings release call, very much looking forward to close interaction in the weeks and months going forward. And let's meet one or other at conferences and Investor Relations roadshows. Other than that, we see us in our quarter 1 announcement May 7. Thank you, and goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Lenzing AG Analyst Conference Call and Live Webcast. I am Matilda, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Rohit Aggarwal, CEO. Please go ahead.

Thank you very much. Ladies and gentlemen, welcome to the presentation of Lenzing's results for the first 9 months 2025. With us today is also Nico Reiner, our CFO.

Let's go through our agenda for today. I'll start with a summary of the key developments, followed by the market update as well as our refined strategy. Nico will then guide you through the financials, and I will talk about our investment highlights as well as the outlook. And as usual, at the end, we are looking forward to your questions in our Q&A session.

Let's start with the overview of the key highlights for the first 3 quarters. The market continued to remain challenging, and it's even more important that we have refined our strategy with a clear focus on premiumization and excellence.

Revenue and EBITDA continued to improve in the first 9 months, supported by a strong first quarter. However, market headwinds impacted us continuously in quarter 3. The market environment is marked by geopolitical uncertainty and especially the aggressive customs policy. EBITDA was additionally negatively impacted by restructuring one-offs.

Operational excellence continues to be key for us, and we are further raising the bar on our agility and flexibility. Liquidity is one of our key priorities, and we made great progress. After this year's refinancing, our liquidity cushion reached a very solid level of EUR 1 billion.

What remains unchanged are our core strengths, innovation and sustainability, where we were just confirmed as worldwide leader. This leads us to a confirmed EBITDA outlook by year-end. However, it needs to be said that visibility remains quite limited.

International tariff measures have very much characterized the last couple of months globally. In Q1, markets were impacted only in a very limited way by tariff developments and Lenzing achieved a strong result. However, the escalation from reciprocal tariffs followed in early April. This has led to both supply and demand shocks impacting global value chains.

Ongoing and repeatedly changing international tariff measures and the resulting uncertainty led to tangible stress along the textile value chain and impacting consumer confidence negatively. The direct impact for Lenzing is limited, however, leads to indirect effects on both demand and prices.

On a more positive side, I can say that the nonwoven markets were less affected by these tariff developments. To mitigate the tariff impact, Lenzing took actions in 4 ways. Number one, we maintain very close contact to our customers and regional value chains to handle the situation in the best possible way and to strengthen demand visibility.

Number two, we believe that we are better positioned than other fiber manufacturers given our global footprint, which allows us to shift fiber volumes between our production sites in order to manage cost and trade impact.

Number three, we further strengthened our operational efficiency, which includes the target to reduce around 600 jobs in Austria, mainly in administration.

Number four, we decided to start a review of strategic options, including a potential sale for the Indonesian production site, which supports our strategic focus on branded, high-performance fibers with higher margins.

Let's look now in more detail how the markets have developed. The relevant markets for Lenzing are textiles, nonwovens on the fiber side as well as dissolved wood pulp. When adjusted for inflation, demand for apparel worldwide was up 2% in the first 9 months of 2025 versus a year ago. Consumer sentiment remains low, which is negatively impacting discretionary spending with elevated saving rate and a wait-and-see attitude.

Growth driver was the U.S., which was driven by consumers pulling forward purchases in quarter 2 and quarter 3 in response to tariffs, while Europe and China were mostly flat in a challenging macro and cost of living environment.

Let's turn our attention to nonwovens. Here, end markets show higher resiliency with a relatively stable consumer demand. Compared to previous years, the seasonality period with weaker demand lasted a bit longer into September. However, I can say that the development in October was promising given also a more positive sentiment towards 2026.

The trend towards less plastics is ongoing, and the carbon footprint and other sustainability credentials are increasingly becoming a differentiator for nonwoven manufacturers and brands driven by consumer awareness and retail commitment, especially the U.S. and regulatory pressure in Europe.

DWP demand is mostly driven by the production of regenerated cellulosic fibers. The production cuts we have seen in the viscose industry in quarter 2 were negatively impacting DWP demand and prices accordingly. As operating rates in viscose plants increased in quarter 3 and paper pulp prices stabilize, DWP prices saw some support, at least in U.S. dollar terms.

Let's have now a look at the fiber prices on the Chinese market. Please keep in mind that prices shown on this slide are generic market prices. Generic viscose prices in China increased gradually in the third quarter in U.S. dollar terms. In July and August, demand improved and inventories fell as peak season was on the horizon. However, the pace of price increases remained cautious.

At the end of September, the price of medium-grade generic viscose fiber stood just 2% higher compared to the end of second quarter at RMB 13,050 per ton. However, due to the weakened U.S. dollar, prices have decreased in euro terms, which is impacting Lenzing negatively.

The situation on the cotton market did not change much in the third quarter, and international cotton prices fluctuated on a low level within the range. Dissolving pulp prices stopped falling in the third quarter with support from improved demand from viscose plants and some temporary supply constraints. In the third quarter, imported hardwood DWP prices went up by 2% to USD 818 per ton. Here again, prices in euro terms have decreased due to the weakened U.S. dollar.

Lenzing prices are mainly traded at a premium compared to generic prices as the current share of specialties is at around 90%, and we are gradually withdrawing from the lower-margin commodity segments.

Let us now turn to the development of costs. Energy and chemical costs remain significantly higher than historical levels, especially energy prices in Europe, but at least they decreased somewhat in quarter 3 compared to the second quarter.

Geopolitical conflicts such as Russia, Ukraine and the Middle East continue to fuel the volatility of European gas prices. Lower demand due to warmer weather led to somewhat reduced gas prices in summer.

Caustic soda prices remain high across regions, but reduced in general compared to Q2 due to weaker seasonal demand. Even with a slight improvement in the second quarter, both energy and chemical costs remain a major challenge for fiber production.

As the relevant markets for us still show no signs of a sustainable recovery, it is even more important that we continue to keep our full focus on cost excellence, which remains a key pillar of our performance program. In 2024, we already realized over EUR 130 million in cost savings, and we do expect cost savings to further increase to annual cost savings of more than EUR 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 our recurring targets with an ongoing impact beyond this year as well. 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.

As communicated about a month back, we are refining Lenzing strategy. Our refined strategy is built around 4 strategic priorities that together unlock value and prepare Lenzing for the future. Unlocking value happens in the first 2 pillars, premiumization and excellence. Premiumization means that we will concentrate more strongly on our branded and innovative fibers like TENCEL, VEOCEL and ECOVERO and gradually step back from less profitable commodity segments. By doing so, we improve margins and position Lenzing in areas where we can truly differentiate.

The second is excellence. We are embedding a culture of efficiency and discipline across the group, not just through one-off savings, but by institutionalizing cost control, optimizing our footprint and streamlining structures. This makes us leaner, more agile and more resilient. We are implementing tough but necessary measures.

By the end of 2025, around 300 positions will be reduced in Austria, mainly in overhead, supported by a social plan and with full assistance for those affected. This is expected to result in annual savings of over EUR 25 million from 2026 onwards. By 2027, another 300 positions will be reduced through internationalization as we strengthen our footprint in Asia and North America. Both measures will lead to total annual savings of more than EUR 45 million, latest fully effective before end of 2027.

The third pillar is innovation. Now here, we will focus resources on fewer but higher impact projects, accelerating time to market and ensuring that our pipeline continues to provide the next generation of premium fibers, whether in textiles or nonwovens.

And finally, sustainability. This has always been part of Lenzing's DNA, but going forward, it will be leveraged even more as a value driver. With growing regulation and customer demand for sustainable products, our leadership in this area is a true competitive advantage.

Taken together, these 4 priorities, premiumization, excellence, innovation and sustainability ensure that we just don't react to changes in the market, but actively shape them, creating long-term value for customers, employees and shareholders.

Innovation and sustainability remain the foundation of Lenzing's long-term strategy that they are what sets us apart from our competition. Even as we streamline, we will not compromise in these areas. On the innovation side, our pipeline continues to create real opportunities. One example is our new TENCEL HV100 fibers. The fiber features variable cut lengths designed to mirror the irregularities of natural fibers and brings undefined rawness of nature into TENCEL Lyocell portfolio for woven products such as denim.

On the sustainability side, our leadership is recognized worldwide. We have just been reaffirmed our EcoVadis platinum status. And with this, Lenzing is now in the top 1% of companies in sustainability performance. We've also just been confirmed as a global leader in the Canopy sustainability ranking as we have taken once again first place in this year's Hot Button Report  published by the Canadian nonprofit organization, Canopy. These achievements are not just certificates, they are an asset that strengthens our brand, enhances customer partnerships and increasingly drives premium pricing.

And with this, I hand over now to Nico for an update on financials.

Thank you, Rohit, and a warm welcome from my side as well. The third quarter was negatively impacted by weakened fiber demand in continuously challenging markets with revenues decreasing by 3% year-on-year. EBITDA decreased by EUR 27 million to EUR 72 million. This was partially driven by the decrease in revenue just to mention. In addition, one-off restructuring costs for the headcount reduction program to mitigate market impact in the amount of EUR 13 million have also negatively impacted EBITDA. Additionally to that is to mention that we had the annual maintenance shutdown of LDC in the third quarter.

Looking at the first 9 months in total, both our revenues and our margins increased, thanks to the measures that we have actively taken. Revenue increased by EUR 14 million in the first 9 months compared to the 9 months of 2024 and reached EUR 1.97 billion. EBITDA increased by EUR 77 million to EUR 340 million as the number of CO2 certificates held continued to increase, we decided to sell some of them in the amount of EUR 37 million in the first 9 months of this year, which positively impacted the EBITDA.

Depreciation was at EUR 320 million, including an impairment of EUR 82 million, which I will talk about on the next slide. This led to an EBIT of EUR 21 million, which compares to EUR 38 million in the first 9 months of '24.

Income taxes amounted to EUR 6 million compared to EUR 78 million in the first 9 months of '24, and the financial result was minus EUR 119 million compared to minus EUR 72 million in the first 9 months of '24. As a result, there was a loss of EUR 169 million for Lenzing shareholders, which compares to a loss of EUR 135 million in the first 3 quarters of 2024.

Let's make it clear. Even though Q3 was negatively impacted by one-offs such as the restructuring costs, we are not satisfied with the result. However, on a positive note, we saw some stability in fiber demand in September compared to July and August. And October looks also more promising with a currently quite stable order book situation.

Let's move to the next slide. As communicated, our refined strategy also addresses reviewing selected sites, including the Indonesian plant where potential sale is under consideration. In this context, noncash impairment losses on noncurrent assets, in particular, property, plant and equipment of EUR 82.1 million were carried out. The impairment losses have a negative impact on EBIT, but not effect on EBITDA. EBIT, excluding the impact of the impairment, would have been slightly negative at minus EUR 6 million, which compares to minus EUR 88 million reported EBIT. Please note that this impairment amount is not audited for Q3 closing and therefore, subject to change.

Looking now at cash flow. Trading working capital further decreased and was down by 6% compared to the end of the second quarter due to lower inventory levels. With regards to CapEx, Lenzing 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 EUR 32 million in Q3. As you can see, we continue to have a very disciplined approach to capital allocation. As a result, unlevered free cash flow more than doubled to EUR 103 million in Q3, and we clearly continue to have a very clear focus on free cash flow generation.

Let's move to the balance sheet. On the left side of the slide, we show the development of net financial debt. Even though the markets were challenging in the third quarter, net financial debt continues to move into the right direction and came further down by EUR 35 million to about EUR 1.4 billion by the end of September. On the right side, you see the development of our liquidity cushion, it increased by EUR 23 million compared to the end of last quarter and reached a very solid level of EUR 993 million.

Let us look at our debt maturities on the next slide. Let's have a short recap on the refinancing measures we have taken recently. In October last year, we have converted the project financing of our Brazilian joint venture of USD 1 billion into a stand-alone corporate finance structure with a further shift of debt maturities. The successful placement of the new hybrid bond in the amount of EUR 500 million in July this year followed the EUR 545 million syndicated loan secured in May. Those measures marked further milestones in the professional and forward-looking management of our capital structure. With this, we have proven to have access to capital markets despite challenging times, and we have essentially secured our financing through 2027. We can now continue to fully focus on executing our successful performance program aimed at improving margins and free cash flow as well as implementing the refi strategy.

With this, I hand over back to you, Rohit.

Thank you, Nico. Let me summarize now why Lenzing represents a compelling investment case today. First, we are recalibrating our asset base. That means moving away from a volume-driven model towards one that prioritizes economic value creation. We are reviewing underperforming assets, including the Indonesian side and focusing investment where returns are highest.

Second, we are refocusing the organization. With leaner structures, institutionalized cost discipline and a stronger international footprint, particularly in North America and Asia, we are aligning resources with future growth opportunities.

Third, we are resharpening our market focus. We are withdrawing from commoditized fibers and concentrating on premium branded products and resilient nonwoven applications. This makes our business less cyclical and more predictable.

Finally, we are positioned to regain valuation. We combine a proven ability to execute, whether it's savings, refinancing, EBITDA growth with unique differentiation through innovation and sustainability. This is how we will restore investor competition and create long-term value.

We now come to the outlook. I can clearly say that thanks to our performance program, the operational performance in the first 9 months 2025 was solid despite the still challenging market environment in the third quarter.

In terms of fiber demand, I expect that we have already passed the low point with a positive development in September compared to July and August. As Nico also mentioned, we have seen continued promising developments in October and the order book situation looks currently quite stable.

We assume relatively stable demand in pulp and have a cautious outlook on the generic fiber market development in the fourth quarter of 2025. We expect energy and raw material costs to remain on elevated levels. However, market visibility remains still on relatively low levels.

While the market has not helped us so far, we continue to take the future in our own hands. We expect operational results to continue to be positively impacted by the performance program, and we keep the expectation for EBITDA for 2025 financial year to be higher than in the previous year. By 2027, we target approximately EUR 550 million EBITDA, assuming stable market conditions.

With this, I will hand over back to the operator for Q&A.

[Operator Instructions] The first question comes from the line of Christian Faitz from Kepler Cheuvreux.

Two questions, please. First of all, your free cash flow continues to be on a nice good trajectory. Congrats on that. Would you be able to provide us a free cash flow guidance for the few months remaining in the year?

And then second of all, can you tell us a bit about the capacity utilization? I note, obviously, your statements that things in terms of order income have improved, I guess, from September also into October. But where are your capacity utilizations at this point in time versus historical trends?

Thank you, Christian. First question with regard to potential outlook on the fourth quarter for the free cash flow, Nico, please?

Yes. Thank you. So overall, as we have communicated now since, I think, meanwhile, 7 or 8 quarters, we are very much focused on generating free cash flow. And we are continuing this journey. So we overall will still work heavily to improve our free cash flow generation, and we are also clearly positive to have a positive further continuation of that story. But nevertheless, don't forget in the fourth quarter, there are always some one-timers, especially in regards to interest payments and so on. But overall, I think we will clearly continue the journey with a positive free cash flow for 2025.

The second question with regards to the utilization, capacity utilization, can you give us some indication there?

Yes. Thanks, Christian, for that question. What I can say is the year has been a bit of a roller coaster given what we spoke about from a tariff leading to a lot of uncertainty in the value chain. So we've seen movements through the year, which were pretty strong starting quarter 1. We did see the books getting a bit slowdown in quarter 2, quarter 3, and then we are seeing now a recovery.

At this point in time, I can say that we are running fairly back to normal capacity utilization. Of course, based on plants and products, it could vary slightly. But by and large, I would say we are recovering almost back to a full normalized state.

[Operator Instructions] The next question comes from the line of Patrick Steiner from ODDO BHF.

Patrick Steiner speaking. Two questions from my side. Firstly, on your annual expected cost savings of EUR 45 million due to the personnel reduction of the roughly 600 jobs in Austria. You said it will take full effect by the end of 2027. What can we expect for 2026 and '27 in absolute terms? That's the first one.

And the second one, in your Q3 report, you wrote that you expect that the passing of higher costs related to tariffs will lead to falling demand in the U.S. by next year at the latest. Could you please elaborate further on this and how this might hit you in terms of timing and so on? This would be nice.

Thank you, Patrick. So the first question with regards to the [ wave ] or how does EUR 45 million personnel cost reduction savings will be reflected in 2026 and 2027. This one for you, Nico, please.

Yes, Patrick. So we do have our program here separated in 2 waves. So there is wave #1. Wave #1 would mean the first 300. And as already mentioned and commented during the presentation, there will be a EUR 25 million ticket jumping in 2026 and then as a continued improvement also going forward. And for the second phase of cosmos, here, we see further improvement starting already in 2027 and then fully being embedded in 2028. So in 2028, we see the additional EUR 20 million. So if you would sum it up EUR 25 million plus the EUR 20 million, that's the EUR 45 million ticket we have been talking. I think that gives a relatively clear picture.

Then the second question from Patrick is with regards to the expected falling demand that we expect in the U.S. in terms of overall apparel demand. Rohit, please.

Yes. Sure, Patrick, thank you for that question. We've seen a bit of consumer behavior in Americas, which has been largely trying to circumvent or delay. And therefore, they have been doing -- putting forward their purchases in terms of apparel. So there have been a lot of pre-purchasing that has happened, and therefore, that we saw impact on the value chain kind of playing out through quarter 3.

The prices are going to be looking to move up in the U.S. market. We expect that most of the retail would be affected. And we are continuously monitoring that very, very closely. Now if you look at and compare that to overall other supply chains outside textiles, we have seen that, by and large, those demands have stayed pretty flat in terms of -- and consumer behavior has not been impacted that significantly. But again, it's too early at this stage to make any prediction on how that will play out because it will be the scale of what level of price increases the retailers are able to put on the shelves and also how much of efficiency gains will happen in the supply chain through managing the cost mitigation around the tariffs.

So -- but on our side, we are looking to continue to move our product into nonwovens and then we are able to find ways to offset our tariffs and then pass price increases where the contracts allow.

[Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rohit Aggarwal for any closing remarks.

Well, thank you very much for joining us today, and we appreciate the questions. We hope to be able to see you again on March 19 when we will disclose our full year results for 2025. So look forward to interacting that time. Thank you very much for joining us again.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Lenzing AG Update Call and Live Webcast. I am Atell, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Rohit Aggarwal, CEO. Please go ahead.

Welcome, and thank you for joining today's capital markets update. With me is also Nico Reiner, our CFO. Over the next 30 minutes, we'll present how Lenzing has refined its strategy to navigate a challenging market while continuing to build on our leadership in innovation and sustainability. We'll review performance progress, market dynamics and outline the strategic priorities, including the financial guidance that underpin our path to long-term value creation.

On Slide 2, you see the big picture and flow of the contents and the presentation. Since 2023, we have been working hard to secure the future of Lenzing in an environment that has become increasingly challenging. Global textile and nonwoven markets remain under pressure and shifting geopolitical dynamics affect the entire industry. Against this backdrop, we have refined our strategy to ensure Lenzing remains competitive and resilient in the long run. The idea is straightforward. We want to unlock the full potential of Lenzing by focusing on what we do best: premium fibers and innovation, while at the same time, making our structures leaner and the processes more efficient.

The refined strategy rests on premiumization, including customer proximity and operational excellence. Premiumization means concentrating on our high-margin branded fibers, such as TENCEL and Lyocell and gradually withdrawing from low-margin commodity segments. Customer proximity means expanding our presence in North America and Asia, staying closer to our partners and intensifying innovation through joint developments in our application centers.

Operational excellence means strengthening our efficiency, embedding cost discipline, reviewing our asset footprint and ensuring that savings are sustainable. What remains unchanged are our core strengths, innovation and sustainability. In short, this refined strategy, sharpens our focus makes us more resilient and positions Lenzing to capture growth in those areas where we truly add value. We are also backing our strategy with a targeted investment program, upgrading our Austrian sites. This leads us to confirmed EBITDA outlook by year-end and a positive outlook for 2027.

With this, I hand over time to Nico Reiner as to report progress versus last year.

Thank you, Rohit, and also a very warm welcome from my side. Let me take a moment to look back at our progress since last year. In 2024, we managed to significantly increase EBITDA, improving our margins to 15% while at the same time reducing leverage. In the first half of 2025 that momentum continued. Revenues grew, EBITDA increased by more than 60% year-on-year and we further strengthened our balance sheet. Our performance program is delivering tangible results. By 2024, we had already secured EUR 130 million in annual savings, and we are firmly on track to reach EUR 180 million plus by the end of this year. On top of this, we successfully refinanced our debt, eliminated near-term maturities and improved working capital efficiency. The bottom line is, we set ambitious targets and we met them. This track record proves that Lenzing can deliver what it promises. And it gives us the credibility and confidence to now take the next step with our refined strategy.

Handing back to you, Rohit.

Thank you, Nico. Let's move to Slide 4. What we see on Slide 4 is that the environment for our industry has changed considerably since the second half of 2022. And many of these conditions are still with us today. Global textile and nonwoven markets remain under pressure. Trade conflicts, new tariff barriers and geopolitical uncertainty continues to weigh on demand flows across regions. Consumer sentiment is subdued and that translates directly into lower textile consumption.

On the cost side, Europe continues to face elevated energy and caustic soda prices, putting pressure on margins. In China, the Lyocell market has become commoditized, intensifying price competition and demand for ECOVERO viscose is developing more slowly than we had anticipated. At the same time, there are steady dynamics that support our strategy. Regenerated cellulosic fibers continue to grow by 5% to 6% annually, clearly outpacing the global fiber market, which grows at only 2% to 3%. Modal remains a healthy niche, and the premium fiber segment still has limited competition. So the message is clear. The generic segments of the fiber market remain highly exposed and pressured while specialty and premium fibers continue to offer growth, differentiation and resilience. This is exactly where we are positioning Lenzing for the future.

Moving over to the next slide. What you can see on Slide 5 is that our refined strategy is built around 4 strategic priorities that together unlock value and prepare Lenzing for the future. But unlocking value happens mostly in the first 2 pillars, premiumization and excellence. Premiumization means that we will concentrate more strongly on our branded and innovative fibers like TENCEL, VEOCEL and ECOVERO and gradually step back from less profitable commodity segments. By doing so, we improved margins and position Lenzing in areas where we can truly differentiate.

The second is excellence. We are embedding a culture of efficiency and discipline across the group, not just through one-off savings, but by institutionalizing cost control, optimizing our footprint and streamlining structures. This makes us leaner, more agile and more resilient.

The third pillar is innovation. Here, we will focus resources on fewer but higher impact projects, accelerating time to market and ensuring that our pipeline continues to provide the next generation of premium fibers, whether in textiles or nonwovens.

And finally, sustainability. This has always been part of Lenzing's DNA. But going forward, it will be leveraged even more as a value driver. With growing regulation and customer demand for sustainable products, our leadership in this area is truly a competitive advantage. Taken together, these 4 priorities premiumization, excellence, innovation and sustainability, ensure that we don't just react to changes in the market but actively shape them, creating long-term value for customers, employees and shareholders.

Let's look a little bit closer to our premiumization strategy. It is at the core of our refined strategy. Together, around 1/4 of our volumes are still in generic commodity fibers. About 60% are in our branded classic products and 15% are in innovative premium fibers. Our goal is clear. Over time, we will exit the generic segments and shift resources into branded and premium products. This means that competitors can continue to play in commoditized viscose while Lenzing focuses on areas with higher margins and stronger differentiation. Flagship brands like TENCEL, VEOCEL and ECOVERO are central to this journey. They not only provide better profitability but also embody sustainability, performance and innovation, qualities that customers and consumers increasingly demand.

Premiumization is more than just a portfolio shift. It makes our business structurally more resilient, less exposed to cyclical swings and better positioned for sustainable growth. It is how we unlock more value for our customers and shareholders by building on what we do best.

Let's move to slide and talk a little bit about our refined target markets and applications. To capture profitable growth, we are refining our geographic and application focus. In the Americas, our goal is expansion. Here, our strong local footprint and increasing regulatory focus on sustainability creates real tailwinds. In Europe, the Middle East and Africa, we will strengthen our position, aligning closely with new sustainability legislation and optimizing our customer mix.

In Asia, which remains highly competitive, our objective is stabilization, concentrating on segments where Lenzing can truly differentiate such as hygiene, filtration and technical applications. Just as important is where our fibers are used beyond traditional textiles, we see strong opportunities in hygiene, medical, packaging, filtration and industrial nonwovens. These applications have more resilient demand patterns and often command higher margins. By selectively shifting production capacity from textiles into nonwovens, we aim to achieve a more balanced revenue distribution between the 2 business areas. This also reinforces our pulp integration, securing competitiveness and long-term profitability.

So the story of this slide is not just about regions, but about using our assets in the right markets and the right application areas. Markets that are structurally growing, are less cyclical and where Lenzing can lead.

Let's talk a little bit about excellence. Excellence is about making Lenzing structurally leaner, more efficient and more resilient. It goes well beyond temporary savings and touches every part of the organization. On the commercial side, we are embedding value-based selling practices and improving pricing discipline. This includes better use of data on products, customers and margins as well as building transparent sales and business development pipelines. We are also strengthening key account management, giving sales teams clearer responsibilities and a more proactive hunter mindset.

On the cost side, we are implementing tough but necessary measures. By the end of 2025, around 300 positions will be reduced in Austria, mainly in overhead, supported by our social plan with full assistance for those affected. This is expected to result in annual savings of over EUR 25 million from 2026 onwards. By 2027, another 300 positions will be reduced through internationalization as we strengthen our footprint in Asia and North America. Both measures will lead to a total annual savings of more than EUR 45 million, latest fully effective before end of 2027.

To support competitiveness and lastly profitability, we have prepared an investment package of more than EUR 100 million for Lenzing and Heiligenkreuz sites until 2027. Heiligenkreuz will reinforce its position as the most environmentally friendly specialty fiber facility worldwide and has an innovation hub through targeted technology investments. At the Lenzing site, further investments with strategic partners are in preparation to support our premiumization strategy.

Additional efficiency measures include a systematic energy optimization in all plants to reduce energy consumption by more than 5%, bringing both cost and sustainability benefits. A systemic optimization program will be rolled out with site-specific road maps in place by 2026. Our goal is to cut reliance on purchase energy, reduce exposure to volatile input costs and secure additional subsidies and cofinancing where possible.

Finally, production footprint optimization. We are reviewing selected sites, including the Indonesian plant where a potential sale is under consideration. We expect to recognize impairment losses of the noncurrent assets, especially property, plant and equipment of up to EUR 100 million in 2025. This noncash charge impairment has a negative impact on a consolidated EBIT and consolidated net income but no impact on Lenzing's EBITDA. Taken together, these initiatives move Lenzing from a patchwork of cost measures to a culture of institutionalized excellence, one that improves profitability, strengthens resilience and secures our long-term competitiveness.

Let's talk about the unchanged core strengths. And innovation and sustainability remain the foundation of Lenzing's long-term strategy. They are what sets us apart from the competition. Even as we streamline, we will not compromise in these areas. On the innovation side, our pipeline continues to create real opportunities. One example is Lyocell Filament technology, which delivers unique properties for high-performance fabrics.

Another is our LNT technology, our lensing nonwoven technology which enables Lyocell-based nonwoven rolled goods designed to replace plastics. These projects not only expand our product range, but also open up new markets in textiles and nonwovens with higher margins and better resilience.

On the sustainability side, our leadership is recognized worldwide. We have been rated A by CDP for Climate 5 years in a row, putting us among the top 2% of companies globally. And with Ecovadis Platinum, Lenzing is in the top 1% of companies worldwide in sustainability performance. These achievements are not just certificates. They are an asset that strengthens our brand, enhances customer partnerships and increasingly drive premium pricing.

Looking forward, we will intensify customer-driven innovations through stronger collaboration with partners and by expanding our application centers. This ensures that R&D is directly linked to real customer needs and market demand while maintaining our position as the industry's technology leader.

Now with this, I hand over time to Nico to talk about financial guidance.

Thank you, Rohit. Despite the impairment and restructuring charges announced today, our EBITDA outlook is confirmed. For 2025, we expect EBITDA to be higher than in 2024. By 2027, we target approximately EUR 550 million of EBITDA, assuming stable market conditions. The main drivers are clear. Cost savings of around EUR 45 million from headcount measures and internationalization, a stronger premium product mix, targeted growth in textile and growth in resilient nonwoven applications such as hygiene, filtration and medical uses.

We will also continue to exercise strict investment discipline. CapEx will be focused on license to operate on strengthening the competitiveness of our Austrian site and on innovation projects that directly support premiumization. This balance of discipline and selective investments gives us confidence that we can achieve our financial targets while strengthening resilience.

Back to you, Rohit.

Thank you, Nico. Let's move to the slide and talk a little bit about investment highlights. And let me summarize why Lenzing presents a compelling investment case today. First, we are recalibrating our asset base. That means moving away from a volume-driven model towards one that prioritizes economic value creation. We are reviewing underperforming assets, including the Indonesian side and focusing investments where returns are highest.

Second, we are refocusing the organization with leaner structures, institutionalized cost discipline and a stronger international footprint, particularly in North America and Asia, we are aligning resources with future growth opportunities.

Third, we are resharpening our market focus. We are withdrawing from commoditized fibers and concentrating on premium branded products and resilient nonwoven applications. This makes our business less cyclical and more predictable.

Finally, we are positioned to regain valuation. We combined a proven ability to execute, savings, refinancing, EBITDA growth with unique differentiation through innovation and sustainability. This is how we will restore investor confidence and create long-term value.

To conclude, the environment remains challenging, but Lenzing has shown that it can deliver results even in difficult times. The steps we announced today, the site review, the headcount measures and the targeted investments in Austria are tough, but necessary to secure our future. They will make us leaner, more efficient and more resilient. At the same time, we continue to build on our unique strengths, premium fiber, sustainable innovation and strong partnerships with our customers. This is how we will create long-term profitable growth while leading the industry towards a more sustainable future.

Thank you for your attention. We'll be glad to open the floor for questions.

[Operator Instructions] First question comes from the line of Sebastian Growe from BNP Paribas.

It would be around capacity and to start then with the Austrian EUR 100 million investment that you have put into the press release. So my question is if you could help us to square the investment between what is related to the energy cost reduction that you have labeled there versus the mentioned investment to new technologies? And could you also shed then more light what is behind the investments with the strategic partners at your Lenzing site in particular?

And the second question that I would have is around Indonesia. So you have been contemplating a potential sale of that production site given that the capacity is by far the largest of all your plans. Can you comment on the utilization in that plant at this point? So I'm clearly getting or trying to get my head around sort of to what extent it's eating potentially if you give it up into the revenue development going forward? And subsequently here by when would you take a final decision in regards to that potential sale?

Thank you, Sebastian. Your first question with regards to a more granularity of the investments. I will hand over to Nico Reiner.

Yes. Thank you, Sebastian. Look, at this point of time, we have a clear plan what we want to do, a key element of it to strengthen competitiveness and resilience of our Austrian sites. And this is the major focus of these investments, which we are doing here. But we do not give any details on the different types of investments. But we, as management, see that this is a real positive addition to our Austrian site. That's why we are convinced why we want to do these investments, giving us this resilience and the strength in the competition to be successful in the future.

And the second question with regards to the potential sale of the Indonesian site. This one is for you, Rohit.

Yes. Sebastian, thanks for the question. I mean, first of all, we don't hand out specific utilization data for specific sites. But what I would like to characterize is SPV has been a site that has done well for period of time, but we see over the last 3, 4 years where conditions in the markets have been continuing to deteriorate as you kind of described, and then that has been challenging for a site like SPV to be continue to be able to compete with the Asian situation as it has evolved over the last couple of years. So we have, at this stage, look for evaluation of options, including a potential sale. And that's where we are. So we'll give more details as we progress the discussions on SPV.

And on the partners, can you be, to the extent possible, any more specific around who might be in scope than for really teaming up with you guys in Austria for that especially technology-related investments?

Sure. Sebastian. So look, I mean, one of the things that we are pivoting towards is how do we kind of find ways to take our innovation and fast track both in terms of scaling the technology as well as accessing the markets and developing the market. And one way of doing that is through working closely with our customers and partners and to be able to allow for the technology to ramp up and commercialize at a faster rate than we would do ourselves. So that's the concept behind. It's about risk management on one hand, but also in terms of our scaling and market buildup, and speed to market as the other dimension to it.

So we are in different technology areas, identified working already without giving names here, but working very closely for them to be able to work with us to get those technologies commercialized. Now having said that, I would like to point out that, for example, technology that is public knowledge that we have invested in TreeToTextile, which is where we have other shareholders and there are strict technologies that we could bring to the market eventually is a good example of where there are more than 1 parties involved in trying to build a new platform which we think is very exciting for the future. So concepts like that is what we are focused on in Lenzing in the future.

[Operator Instructions] Ladies and gentlemen, there are no more questions at this time. I would now like to turn the conference back over to Rohit Aggarwal, CEO, for any closing remarks.

Well, I just want to thank everyone for joining us today and appreciate your interest in Lenzing and Lenzing's future. We look forward to seeing you again on November 6 for the earnings call for quarter 3. And thank you very much again for taking the time today. Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.