Lenzing AG Facing Challenging Global Market: Considering potential sale of its Indonesian production site
September 29, 2025
Lenzing AG, a global leader in regenerated cellulosic fibers, has refined its strategy to enhance its market position and ensure long-term competitiveness amid a volatile global textile and nonwovens landscape. This strategic evolution addresses ongoing challenges, including trade tensions, subdued consumer demand, rising costs, and intensifying competition from Asia. By focusing on high-performance fibers, improving operational efficiency, and optimizing its asset footprint, Lenzing aims to unlock its full value creation potential and solidify its leadership in sustainable cellulosic fibers.
Rohit Aggarwal, Chairman of the Managing Board and CEO, emphasized the company’s commitment to resilience and agility. “In 2025, we are focused on execution. We’ve proven our ability to boost profitability in tough conditions, and now we’re taking decisive steps to enhance our cost structure, streamline operations, and reinforce our position as the global leader in sustainable fibers. By building on our innovation strengths and optimizing our processes, we are positioning Lenzing for sustained value creation.”
Despite a positive first half of 2025, marked by improved earnings and strong cash flow, Lenzing anticipates continued market uncertainty. To navigate this, the company is prioritizing premium branded fibers such as TENCEL™, VEOCEL™, and LENZING™ ECOVERO™, which offer higher margins, while phasing out lower-margin commodity segments. As part of this shift, Lenzing has initiated a strategic review of its Indonesian production site, including a potential sale, which will result in a non-cash impairment loss of up to EUR 100 million in 2025. This charge will impact consolidated EBIT and net income but not EBITDA.
The company is targeting growth in high-value markets, including denim, home textiles, menswear, hygiene, packaging, filtration, medical, and industrial applications. To capture rising demand for renewable nonwoven fibers, Lenzing will shift select production capacities from textiles to nonwovens. Additionally, the company will deepen customer partnerships through its application innovation centers to drive application-specific advancements. This refined focus will strengthen Lenzing’s technological leadership and enhance its regional sales presence, particularly in Asia and North America, to better serve key markets.
To improve cost competitiveness, Lenzing is implementing efficiency measures, including a workforce reduction of approximately 300 employees at its Lenzing headquarters by the end of 2025, primarily in administrative roles. A further reduction of 300 employees at the Lenzing site is planned by the end of 2027 as part of the company’s internationalization efforts. These measures, supported by a new social plan agreed with works council representatives, are expected to yield annual savings exceeding EUR 45 million by 2027. Lenzing is also pursuing energy optimization across all plants, targeting a reduction in energy consumption by over five percent, which will deliver both cost savings and sustainability benefits. A robust operational excellence program will further enhance labor and asset productivity.
COO Georg Kasperkovitz acknowledged the difficult but necessary nature of these changes. “While these measures impact around 600 of our more than 3,500 Austrian employees, they are critical to ensuring Lenzing’s long-term competitiveness. Beyond cost reductions, we are investing in our Austrian sites and strengthening our innovation and sustainability leadership.”
To secure the profitability of its Austrian operations, Lenzing plans to invest over EUR 100 million by 2027 in its Lenzing and Heiligenkreuz sites. Heiligenkreuz will solidify its position as the world’s most environmentally friendly specialty fiber production facility and a hub for innovation through targeted investments in cutting-edge technologies. Additional investments with strategic partners are in preparation at the Lenzing site to support the company’s premiumization strategy.
Looking ahead, Lenzing is well-positioned to capitalize on the projected 5 to 6 percent annual growth in global demand for regenerated cellulosic fibers over the next five years, driven by population growth, rising purchasing power, cotton supply constraints, and increasing consumer preference for sustainable products. The company will focus on high-growth segments like Lyocell and Modal, where it holds a leadership position, while reducing exposure to the mature Viscose standard fiber market. This strategic shift will balance revenues across global regions and between textile and nonwoven applications, while strengthening Lenzing’s pulp business.
With these initiatives, Lenzing is reinforcing its role as a premium supplier of regenerated cellulosic fibers, enhancing resilience and positioning for value-creating growth in a challenging market. The Management Board reaffirms its 2025 EBITDA guidance of exceeding the previous year’s performance and targets an EBITDA of approximately EUR 550 million by 2027, assuming stable market conditions and geopolitical environments.
