Lenzing cuts up to 600 jobs by the end of 2027

Lenzing plans to cut another 300 positions over the next two years. The company announced this following the supervisory board meeting on Monday.

The aim is to "make administrative functions leaner and more efficient" and they expect annual savings of at least 25 million euros from 2026, and 45 million euros from the end of 2027.

Job Cuts at Lenzing: 300 Now, 300 Later

According to the union, around 1,000 employees participated in a company meeting on the factory premises on Monday - simultaneously with the supervisory board meeting - and passed a resolution to preserve jobs. The workforce is "motivated to show how important it is to keep the jobs," emphasized Gottfried Lichtenberger, deputy managing director of GPA Upper Austria.

Works Council Criticizes Decision: "Short-Sighted"

"The employees carried the company through the crisis," stressed Michael Bichler, deputy chairman of the employee works council. Cutting jobs or relocating administrative jobs abroad, presumably to India or the Czech Republic, is "short-sighted," because "in the long term, the external costs for outsourced services will explode," he is convinced. "We need investments at the site and not a new cost-cutting program every six months," which ultimately also ties up capacities.

Lichtenberger also emphasized that it was "remarkable" that the employees themselves had made suggestions on how to become more efficient. "The employees have made their contribution and it is up to the management to take it up."

Impairment Requirement Pressures Profit

Production Facility in Indonesia Also Under Review

The second wave of job cuts is "just a relocation," the company emphasized. They want to "strengthen the international presence in Asia and North America." This internationalization is accompanied by the reduction of 300 positions at the Lenzing site by 2027. Additionally, a strategic review of the production facility in Indonesia has been initiated, with possible options including the sale of this production site.

Accordingly, there is an impairment requirement of up to 100 million euros for 2025. This will negatively impact the consolidated EBIT and the consolidated annual surplus. However, the EBITDA (operating result before depreciation) will be "above the previous year's value" this year, according to the company. For 2027, they aim for an EBITDA of around 550 million euros, "provided the market environment does not change and geopolitical stability prevails," it was stated in a release. In 2024, it was 395.4 million euros. Additionally, an investment package for the sites in Lenzing and Heiligenkreuz has been put together, which foresees investments of over 100 million euros by the end of 2027.

Recent Slight Upward Trend

The Lenzing Group recently reported a slight upward trend despite the disruptions caused by US customs policy. Revenue increased by 2.3 percent in the first half of the year compared to the first half of 2024, reaching 1.34 billion euros. The bottom line was a profit of 15.2 million euros, after a loss of 65.4 million euros in the previous year's half.

Lenzing processes wood into pulp and produces fibers for the fashion, trade, industry, cosmetics, and hygiene sectors. The main shareholder of Lenzing AG is the domestic industrial holding B&C, which holds 37.25 percent. The B&C Group was founded in 2000 by Bank Austria and Creditanstalt. In 2024, B&C gave up its majority in Lenzing, and the Brazilian pulp company Suzano took over a 15 percent stake. Suzano has a purchase option for an additional 15 percent until 2028. 6.97 percent belong to the US investment bank Goldman Sachs, and 40.78 percent of Lenzing shares are in free float. Over the past twelve months, the Lenzing share price has plummeted by more than a quarter.

Reactions from Politics

"From the perspective of the state of Upper Austria, it is now a priority that the social plan negotiated with the works council benefits all affected Lenzing employees accordingly," emphasized Economic Councillor Markus Achleitner (ÖVP), stating that the state is ready to support within the framework of its location program for work in Upper Austria. "It is to be hoped that the investments of more than 100 million euros announced by Lenzing AG until 2027 in Lenzing and Heiligenkreuz will significantly contribute to further securing the two sites," Achleitner continued.

"We are not only losing jobs but also know-how and innovative strength. If the federal government remains inactive here, there is a risk of entire industrial sectors relocating abroad," warned Deputy Governor Manfred Haimbuchner (FPÖ). He calls on the federal government for "a clear strategy that strengthens the competitiveness of the industry, improves location conditions, and stops the relocation of companies." As a first step, regional companies should be preferred over foreign ones in the awarding of public contracts.

"The result is high relocation costs and quality problems," said SPÖ state chairman Martin Winkler, critically viewing the planned relocation of administration to India. "In the end, there is a high risk of spending a lot of money for little improvement in results. It would be better to optimize the processes in Lenzing and aim for an international sales partnership," Winkler suggests alternatives.

"The outsourcing of high-quality jobs in administration and know-how areas to low-wage countries is a structural problem that we must immediately get under control," demanded the economic spokeswoman of the Greens in Upper Austria, Dagmar Engl, calling for "More location policy than location marketing" from Economic Councillor Markus Achleitner (ÖVP) and an "Upper Austria Employment Pact for the Industry" - as well as support for the ecological transformation.

(APA/Red)

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