Thank you and, very warm welcome also from my side. As you heard, I'm here together with Thomas Obendrauf and Robert van de Kerkhof. If we could go to the next page. Thank you. How were the first nine months of 2022? Lenzing was increasingly affected by the extreme developments or in the global energy and raw material markets in line with the impact for most of the manufacturing industry. The market environment deteriorated sharply, especially during the course of the third quarter and was worsening as the consumer climate placed additional pressure on Lenzing business performance. Very clearly in the third quarter, you could see that consumers really see and feel the pressure from inflation. That brings us to the results.
On the left-hand side, the upper box, you see our revenue grew by 24% to close to EUR 2 billion, mainly driven by higher fiber prices, but also by an increase in the pulp prices and volume. At the same token, it's tough to see that our EBITDA suffered from higher energy costs and raw material costs, and we landed at EUR 263 million, which is 11.6% less versus the same period last year. The net results after minorities and hybrid bonds decreased by 43% to EUR 57 million, and the earnings per share amounted to EUR 2.16 compared to EUR 3.77 in the first three quarters 2021. Let's talk about the key developments.
The Lenzing Supervisory Board has appointed Nico Reiner, and we made a press release about this appointment already yesterday as the new CFO as of January 1, 2023. He succeeds Thomas Obendrauf in his position who informed the supervisory board in March that he would not be available for a further extension of his contract, which expired in June 2022. Having said that, as you know, I'm currently having the role as a CFO at interim, but as you can see also in this call, Thomas Obendrauf is greatly supporting me, and with that we are in the financial department in good hands. Despite our pressure on the financial results, it is very important to mention that we take action and control what we can control.
The first thing we do, and we have started, is a program on the reorganization and cost reduction, aiming at annualized EUR 70 million impact. We also are extremely proud of our two major projects in Thailand and Brazil. The two projects represent the largest capital investment program of Lenzing in its history, and both projects, despite various challenges like Corona, were delivered in time, in budget with excellent safety performance. We can say not only the physical commissioning, but also the commercial commissioning is going well. We continue our journey. We started to drive our energy path and our energy platform to create higher autarchy and reduce its CO2 footprint well before the energy crisis hit Europe so badly. Therefore, we are very pleased to report a lot of progress there. What is our outlook for 2022?
The worsened market environment is increasingly weighing on the consumer sentiment and as a consequence on the relevant industries for Lenzing. That has for sure an impact also on the demand. The business prospects therefore further aggravated in the third quarter. The demand visibility remains extremely low, so even lower than in COVID times. The cost volatility as well as cost levels high. Nevertheless, Lenzing expects that the results in 2022 will be in line with the current market expectations. When we look further out to the year 2027, we, as a management board, are still confirming our targets, which is an EBITDA above EUR 1 billion, a ROCE greater than 12%, and a net financial debt over EBITDA, which is below 2.5 times.
As mentioned before in the summary, we have a new CFO, and here you have a picture of Nico Reiner, who is starting on the first of January, and he will complete then the management board. He previously served for more than 15 years as a CFO in various companies, to mention FLYERALARM, AL-KO, and Geco International. He has a broad experience, worked as a consultant, as well as delivering major investment projects and in the wood materials industry. We are very glad that we could get such a caliber on board, and he will be crucial on our journey to fulfill the targets I just mentioned for 2027.
Until then, I will continue to perform the duties of a chief financial officer on an interim basis while Thomas continues to greatly support me in his as an advisor and in his role as senior vice president of finance. Good. Now, the Lenzing program about reorganization and cost reduction. It is clear that we experience, at the moment, high distortions in the energy and raw material market. Those are now impacting consumers much more in the third quarter, starting in the third quarter, and you will see that later on also with some indices Robert is presenting. That is limiting our short- and medium-term business trends, and therefore we are now forced to accelerate the program which was anyway part of our strategy and our purpose rollout to enhance the accountability, agility, but also the effectiveness and efficiency in our organization.
We launched this program already a couple of weeks ago, and we will see already impact in 2022. When fully implemented, it will have an impact of EUR 70 million in cost reduction on an annualized basis. Which brings me to one of our success stories. You heard it before. It was also seen as one of our risks. Do we really get such a huge investment in time, in budget? We delivered. We are now adding another 500,000 tons of dissolving wood pulp into our capacity. With that, we have an overall capacity of approximately 1.1 million tons.
That is, of course, a great asset to have in terms of backward integration, as you can read on the slide, as this is a site which operates as a cost leader that will help our profitability, but also serves our needs to strengthen our specialty fiber growth. The project was, as mentioned before, finished in budget and in time. Next to the successful startup, we will reach the full run rate, most likely end of the year 2022. Sorry. The commercial ramp up is also well on track, and we were able to generate first turnover also in the external market. For those who don't know, when we talk about our plant in Brazil, LDC, it is a joint venture, where Lenzing holds 51% and Dexco 49%. It is fully consolidated with Lenzing.
That brings me to Thailand, and there's nobody more confident than Thomas to talk about that plant as he was running that next to his CFO duties. Thomas, please.
Thank you, Stephan. Hello, welcome also from my side. Let me briefly guide you through the latest facts with regards to our project in Thailand. Actually, as you know, and as we have communicated, the project was delivered on time and at budget and that actually in circumstances that could not have been more challenging, actually, with COVID-19 in several ways hitting us. The new plant, of course, will help us to serve the growing demand for sustainably produced fibers. The plant itself will be operated CO2 neutral and is therefore a really extremely important milestone towards a carbon-free future. In the meantime, we have already reached the designed output. However, just to put this into perspective, actually for half a day we have reached the designed output so far.
Of course, the target is to run it at that output level for seven days a week and therefore 50 weeks a year. Also the commercial ramp up is successful and according to plan. With that, I hand back to you, Stephan.
Thank you so much, Thomas. Really great accomplishment from the entire team, which makes us extremely proud. Now, what do you need? You need the right capacity on fibers. You need a good backward integration in pulp. You also need, as we learned the hard way as well, a good energy supply. We are working on that since years. We are happy that we can announce some progress in these areas. To give you a couple of the examples of the projects we are running, we have converted, for example, in Purwakarta as part of our project there, SPV Future, recently to green electricity. We will convert part of the energy mix into bioenergy in 2023. Also in Nanjing, we are moving to green electricity.
We started the gradual transition already in the third quarter of this year, and we will have completed it in 2023. As Thomas just mentioned, in Prachinburi in Thailand, all our energy, we are not only operating carbon neutral, all our production energy is based on bioenergy. When we think about highlighting products, and a lot has been mentioned in the past, also in the media there, we are having several projects trying to optimize our energy mix, and I see good progress, and I'm confident that in the next couple of weeks, we can make clearer announcements. What we want to do there is to have an optimal mix out of photovoltaic, biomass and even thinking about geothermal energy.
When we look at the plant in Brazil, then it is worthwhile to mention that not only are we producing pulp there, we are also feeding up to 50% of green electricity into the public grid. That is just one extract. You may have seen the announcement in Austria, where we just opened the ground mounted, largest of its kind photovoltaic plant here close to the Lenzing site. When we come now to sustainability and market, and I would ask Robert to give us an update there, what's going on on the sustainability front as well as on the market front.
Thank you, Stephan. Also very warm welcome from my side. Sustainability and market, a mixed picture. Let me start with the good news. Sustainability. EcoVadis again rated Lenzing among the world's top 1% of the evaluated companies. 90,000 companies, over 9,000 companies are being analyzed, and Lenzing continues to score in the top 1% with a platinum rating. I think we can be very proud of that. Sustainability in our industry is extremely important. When I talk about sustainability, it's much more than just only the environmental topic, because as you all know, the EcoVadis ranking is looking at the environment, but is also looking at aspects like fair working conditions, human rights, ethics, as well as sustainable procurement. I think those are the aspects that we can all be very, very proud of.
A few of our customers that are now buying from Thailand are saying, "Oh, is Lenzing really able to man-manage a site in Brazil or in Thailand?" Different working conditions. As you heard, we both started off these sites very successful. Despite these are new market for us with different working conditions, super performance from our local management teams, and again, this platinum rating. Very proud of that. If I then look at on the product side, also here we continue to highlight with sustainability innovations in the industry that are being highly recognized. I would like to highlight one aspect here, and that's the TENCEL Modal fiber with the indigo color technology.
What we're doing here is we are adding actually a dye while we're spinning the fiber, really optimized for the denim sector, so indigo. With this, very innovative one-step spin dyeing process, we really deliver superior color fastness relative to the conventional indigo dyeing. That means that we can save water downstream in the value chain on spinning and dyeing levels, or specifically dyeing level. Water, electricity, and chemical usage will be significantly less, but also the garment will be longer, let's say wearable, as in the color fastness is something that is going to last much longer. It helps really to the durability of the garment. For this innovation, we won the ITMF award.
ITMF is the world's largest federation in the area of textiles, representing all the international textile manufacturers, corporations worldwide. That really is only good news, both on sustainability and on the product innovation. Now, when we talk about the market, the market is very difficult. The ITMF, which is a global network across the textile value chain, has been performing a survey every two months. These are companies that are in machine making areas. These are companies that are in the garmenting areas. These are companies like fiber producers like Lenzing. Really across the total value chain of textiles. What they analyze is a little bit the mood in the industry. You can see that as of the summer 2021, the mood was positive.
The people really believed that the balance on the left, the balance of good versus poor was really turning much more to the good. Specifically when you then look at the end of last year, the mood in the industry was really very positive. People were optimistic. Even in Q1, it started still very good. Q2, very good start. Then look at July. Suddenly it went from still a solid plus 13%- minus 2%. The market really dipped where the mood changed from good to poor. This is data, of course, that is reflected. Unfortunately, you know, it's reported several weeks later, so it's reflecting a little bit old data. You can see also here in September, the outlook is even less optimistic.
One of the key concerns throughout the value chain, number one, is really the weakening demand across the value chain. That is really consumer driven. That's also linked then to the high raw material costs that are very important throughout the whole value chain. High energy prices, which affect us as a fiber producer. You can imagine throughout the value chain, everybody needs energy. Then of course, the inflation that really drives the rise of ultimate consumer demand. That is really what we are feeling very, very strong. What result does it have now on the market, on the brands and retailers? What we are watching is their inventory levels, what is happening with their product flow. Here you can see the U.S. data.
If you now look back in 2013, this is now August data, from all the way from 2013 till 2022. The variation has been fairly narrow. There has not been so many changes from year-over-year. The two COVID years, inventory levels at retail and at wholesale were lower. People were much more cautious what they were buying. They were in a very narrow range, but suddenly, as you can see, in a very short time period, significantly increasing. Wholesale even increased 70%, retail 28%. The overall retail or the overall garment inventory in the United States went up 44%. That has resulted in, of course, an ordering reduction from the brands and retailers, even cancellations of orders.
As a consequence, the inventory throughout the value chain, be it at fabric level, be it at garment level, be it even at spinner level, so the yarn that is being spun, has been rapidly increasing. That is now that huge correction is what we are feeling with the drop in demand. Now, less demand means lower prices. As you can see that we've been reporting already repeatedly that the cotton was increasing. There was a lot of speculation in the cotton prices. The high level of confidence at retail level saying, "Hey, the consumers are back, the consumers are buying." Also with overall retail turnover being exceeding pre-pandemic levels, really boosted the cotton demand because that was a product that the brands and retailers could sell. That speculation really dipped this summer.
As you can see here, there has not been a small correction, but there's really been a very rapid decline in the cotton prices. Cotton will continue to be very volatile, simply because of the very weak demand. If you then look at the other part of the slide, really the bottom dark line, where you have then the polyester. Polyester prices definitely increased versus 2020, also driven by higher costs of intermediates. The price of polyester also starts to come down in 2022, driven by lower demand. Now, when I'm talking about lower demand, of course, I'm talking to the European producers, the European consumers, because they are buying less because of the huge inflation in Europe driven by energy.
Even also in China, where a lot of polyester garments are being consumed, the demand is dropping because there's many areas still confronted with lockdowns. Overall consumer sentiment in China is also weak, and that is reflecting a lot in this polyester price trend with weak demand. If you then look at the dissolving wood pulp prices, they have increased definitely throughout 2022. You can see that since July they have been dropping, driven by a lower demand in the wood-based cellulosic fiber industry. If you then look at finally then the chart, which is the solid line in the middle, that is the CCF, so the Chinese producer prices for viscose. That viscose price has been coming down, while normally September, October are high season months in China. That is normally when the prices are increasing.
Despite that seasonal normal period, prices actually decline. Demand is extremely weak across the board. This is resulting now in also a very high theoretical loss. If you follow CCF, the high costs are being felt even by the Chinese producers, and prices at this level are not sustainable. We're talking about approximately 2,000 RMB theoretical loss for a fiber produced according to the CCF statistics. The viscose market, despite the price level where we are today, is really not very healthy. Now, if you look then at Lenzing specialty prices, we are monitoring this because we have a much stable pricing. We are fixing with our downstream customers prices by quarter.
That's why in this slide, which we have been showing you already since several years, we are looking at the price trend with the six-month moving average. Now, when I say six-month moving average, that is of course then applied to all these three fiber indexes. We don't want to be always the fastest with increases or the fastest with decreases. We want to really show also brands and retailers that we have a stable and rising pricing policy. You've seen that we had to make a major correction in 2020 due to COVID. Since 2021, we have been able to increase the Lenzing specialty prices. Cotton rapidly coming down, the viscose coming up.
When you just start seeing right now with Lenzing, the last part of the line is that it's difficult still to see, but I can already tell you prices are flattening out a bit. Of course, in the current market circumstances, very difficult to increase the prices even further. But we have been able to drive the prices up as has already been mentioned, still quite successfully throughout 2022. But it remains a very difficult market environment. Now long- term, because Stephan also shared our bullish and still on the 2027 outlook. Why are we still believing in our 2027 outlook? Fundamentally, the market is still our market. The population continues to grow. Approximately 1% helps overall fiber demand. GDP grows at 3%, result in a 2%-3% growth in fiber market.
Those are the fundamentals that are still fully in place. Now, the drive for sustainability, and I'm engaged with quite a few initiatives with the European Union on the EU Textile Strategy. There are definitely some questions being asked, should we continue to go high speed for the European Green Deal, for all this greening up of the textile industry? They are fully committed. The drive to sustainable fibers will continue, and that is really helping the growth of the wood-based cellulosic fibers. I am convinced that we will be able to go back to a 4%-6% growth rate after the current crisis.
The bigger highlight, of course, is Lyocell being recognized as one of the most sustainable fibers in the whole industry, with great performance from an aesthetics perspective, from a tenacity perspective, but also specifically with the environmental footprint of Lyocell. There we are seeing a significant increase in demand with more and more standard applications adapting the Lyocell fibers, be it in home textile, be it in denim, be it in shirting. There we do see growth rates that are above the 20%. Lenzing, of course, is really well positioned to capture this growth. Now, if you look then at the overall fiber industry, and here I'm talking about every fiber being produced in textiles, nonwoven, and other industrial applications. It's a market that is now around 110 million tons.
This market has, in several occasions, been confronted with major challenges. Here you can see an analysis that has been done by our strategy department. I think it's really an interesting analysis. You see the oil crisis where back in 1975, where you could see really a drop. If I then look at 2010, the global financial crisis, also three years of significant drop. What you really can see is very clearly the fiber market always managed to recover after these crises. The recovery came fairly fast, and the recovery came really very robust, so it continued to grow. Right now we are definitely in another crisis, two years of the COVID pandemic. Right now, of course, the crisis of high cost inflation.
As you can see based on numerous examples, I'm very confident that even here the fiber industry will recover and will grow very fast. With that, I would like to hand over then to Thomas to elucidate in more details on the financials.
Thank you, Robert. As usual, let me guide you through the most important financials for the last quarter and the first nine months of 2022. Let me start with revenues. Revenues came in with EUR 677 million for Q3. That is basically on the same level as in Q2. Compared to Q3 last year we saw an increase by 22%. Year to date we are now close to EUR 2 billion compared to close to EUR 1.6 billion the year before. The increase is mostly driven by higher fiber prices, while fiber sales volume is down by more than 10% in Q3 and roughly 5% down for the first nine months.
What also contributed to higher revenues was, of course, the startup of our new pulp site in Brazil, plus higher revenues for our biorefinery products. With regard to fiber revenue by application, as you can see from the slide, we were mostly hovering around the usual 70-30 split. However, as is obvious in the chart, in Q3 we saw a weakening demand for our textile fibers, while nonwoven fibers basically remained on the same level as in the quarters before. With regard to the specialties share of our fiber sales, we are now at 73%, which is basically on the same level as in the year before. Moving on to costs. Actually, in addition to the lower demand, the earnings trend reflects the sharp rise in energy and raw material costs.
The biggest increase in chemicals is coming from caustic soda. Here I think it is important to mention that we are hit hard, especially in Europe. While in Asia, caustic prices are and were on what I would call actually a high level throughout 2022. Actually, the price level now in Europe has become completely irrational. Luckily, we do have a backup solution with imports from Asia. Energy is, of course, up significantly as well, especially power and gas. Coal in Europe up as well, but of course not by the extent we saw for gas and power. Moving on to EBITDA. As a consequence, we see a drop in EBITDA sequentially, but also compared to last year. Q3 came in with EUR 74 million compared to EUR 80 million the year before.
Year- to- date, actually we are down as well. We are now at EUR 263 million compared to EUR 298 million the year before. EBITDA margin now stands at 11% for the quarter and 13% year to date. Of course, with regard to EBIT, we see of course the same development there. EBIT margin came in now at 3% for the quarter and 6% year- to- date. Moving on to group net profit and earnings per share. Group net profit after minorities and hybrid bonds came in at a negative EUR 5 million for the quarter. Year-to-date, we are now at EUR 57 million, versus EUR 100 million the year before. There are two things I would like to highlight in that regard.
You might be surprised by our financial result, especially in light of our net financial debt. Actually, the financial result is positive for two reasons. First of all, we are capitalizing the interest costs during construction and commissioning phase. However, please keep in mind that it's coming to an end now in Brazil as well. Secondly, we do have some financial assets, especially some intercompany loans that are denominated in U.S. dollar. With the strengthening of the U.S. dollar, we of course see realizing foreign exchange gains in our financial result. The other topic I would like to highlight is regarding our corporate income taxes. As you all know, we are operating plants in several emerging countries, and in most of those countries, we are using the U.S. dollar as our functional currency.
We do so, for example, in Indonesia, in Thailand, and in Brazil as well. When the local currency—and of course the local currency is being used for tax purposes. Whenever the local currency is moving versus the U.S. dollar, we will see, for sure, an impact on the tax line due to exchange rate differences resulting from the translation of different tax items from local to functional currencies. What we saw in Q3 is that the Brazilian real actually weakened quite a bit versus the U.S. dollar, having then, of course, a negative impact on our corporate income tax line. Moving on to cash flow. Operating cash flow, again, hovering around the EUR 80 million level.
Sorry, gross cash flow, of course, I mean, is hovering around the EUR 80 million level. Operating cash flow now are slightly positive. Free cash flow of course negative with CapEx now coming in with EUR 143 million for the quarter. With regards to the trading working capital, actually, by the end of Q3, we were at slightly more than EUR 600 million. In terms of annualized revenues, we are at 23%. That is, of course, the consequence of our high inventory level. Inventories should have peaked by now and our expectation is that trading working capital in percent of revenues will come down to the 20% mark over the next couple of quarters. Now, a brief look also to our balance sheet.
Net financial debt now stands at EUR 1.7 billion, while the economic net financial debt, which is adjusted for the portion that is being guaranteed by our joint venture partner in Brazil, stands at EUR 1.15 billion. The increase is of course a result of the negative free cash flow. Adjusted equity now at EUR 2.26 billion, and adjusted equity ratio at close to 38%. With regard to our liquidity cushion, we still have roughly EUR 1 billion left. Keep in mind that our projects in Thailand and in Brazil are basically finished now, and are in the ramp-up phase. Both projects are basically expected to reach full run rate over the next couple of months.
Then, of course, the expectation is that these two projects, of course, they come in with a significant contribution to earnings. Last but not least, let us have a look at our maturity profile. There are three things I would like to mention, in that regard. First of all, as you can see here from the slide, the debt maturities are well spread out, over the next couple of years. Second thing already mentioned before, we do have a liquidity cushion of approximately EUR 1 billion. Third thing is, also mentioned already, the big projects in Brazil and in Thailand are finished by now. The other two projects, the conversion projects in China and Indonesia, actually, they will be finished over the next couple of months.
With that, actually, I am at the end of my elucidations and would hand back to Stephan for the outlook.
Thank you, Thomas. I guess the key message is on top of the slide which is interesting for you. Lenzing expects its results 2022 to be in line with the current market expectations. I guess the war in Ukraine, China's COVID zero policy, and also the sharp rise in inflation had a significant impact on the global economy. This worsened market environment is also increasingly affecting us as consumers and the consumer climate in general, as well as the sentiment of the industry which is relevant for Lenzing. As a consequence, our business prospects worsened significantly in the third quarter. Now that resulted in our guidance we give on the outlook. However, Lenzing takes action and controls where possible to increase our business prospects.
As already mentioned before, we implement a structural reform and cost reduction program, which will already lead to initial cost savings in the short- term, i.e., in this year. We will strengthen Lenzing's competitiveness in the mid and long- term even further. It will enhance what we want to drive with our new culture in terms of accountability for pay-for-performance, agility, but effectiveness and efficiency as well. When fully implemented, it will deliver around about EUR 70 million on an annualized level. We will continue to increase our already high energy autarky even further, and thereby reduce our energy dependency, as well as driving our CO2 reduction program forward. Lenzing has the right product that tackles some of the most relevant megatrends. The trend of sustainability and the trend of circularity is not going away.
There might be a little pause in these days, but these trends stay and then Lenzing with its product portfolio, is best positioned. Our commercial teams are highly motivated with, as you could hear from Robert, and they boost currently their activities in order to open new doors for our fibers and address new customers and segments. That is possible also because we are having done the investment in Thailand and we have more capacity available than in the past. We will continue. Despite all the saving efforts we do, we will continue the transformation of our two sites in Indonesia and China in order to improve our product portfolio towards a much more environmentally friendly premium fibers, fiber mix than we have today. As you can see on the right-hand side, we are setting ourselves pretty ambitious targets for 2027.
We will deliver an EBITDA which is bigger than EUR 1 billion with a ROCE which is greater than 12% and a financial leverage which is below 2.5 times. In other words, we as a board, we are very positive for the future. Lenzing has taken the right strategic steps, has implemented them extremely well. We are ready to grow. With that, I would like to finish and open up for questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Please note that questions are only possible via telephone. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to withdraw your question, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from the line of Christian Faitz from Kepler Cheuvreux. Please go ahead.
Yes. Thank you. Good afternoon, everyone. Thanks for this call. Two questions, please, from my side. Can you please talk about the one-time costs for your EUR 70 million cost program? And then second, Mr. Sielaff, obviously you can sell some energy out of the Brazilian plant on the output side, but can you talk about the energy mix for your Brazilian plant on the input side? That would be helpful to know. Thank you very much.
Yeah. Thank you very much. Maybe to your first question. As we elucidated, we are developing this program and, rightfully, as you expect, there will be one-time costs. That depends very much on, in which country, which people exactly, gonna leave the company and therefore I can at this stage not give, a final, estimate yet. As soon as the program is further established, we can update.
Okay. Thank you.
In terms of energy mix, this is a pulp mill. We are producing out of our biorefinery concept the energy in form of a black liquor which then produces the energy and therefore is green energy into the grid as well as energy for our own production.
Okay. Thank you very much.
The next question.
Thank you.
The next question is from the line of Isha Sharma from Stifel Europe. Please go ahead. Isha Sharma from Stifel, you are now live. Please unmute your telephone.
At least we cannot hear the question.
No, unfortunately, we can't hear Ms. Sharma. In the meantime, we will go ahead with Markus Mayer from Baader. Please go ahead.
Good afternoon, gentlemen. Three questions from my side. I think I will ask them one by one. You no longer mention your 2024 targets. Previously you said they are at risk. Should we now read it that they are completely off for you? That's my first question.
I would leave it with a statement we said a lot depends on when and how fast the business will come back and with that, I would say it's the statement we did along the line, our ad hoc is still valid.
Okay. Second question is on the inventory level. You said that the inventory levels on the whole value chain basically is extremely high. How do you think will this destocking take? Also do you expect inventory devaluation risks for you?
We reported about two levels of inventory. One was the inventory level at Lenzing, and Robert talked about the inventory level in the value chain of textile. Your question is related which part?
Basically the destocking part is independent if it's in the industry or in your side. I think it goes hand in hand, yeah. Inventory devaluation risk of course related to your balance sheet.
Okay.
Let me before then, I'll let Thomas answer a little bit about the inventory devaluation. I think if I now look at the overall value chain inventory, it's very difficult to predict how long this will take. We've seen that brands and retailers significantly saw their inventories increasing. Their order books have been reduced, which resulted in some canceled orders. Also, certain commitments from brands and retailers that fabrics that are currently in the inventory will be used in order collections then, even in 2023. Unfortunately, when you look at some of the retailer reports right now, the warm October also is again resulting in fairly low retail sales.
Those numbers are not even available yet, but those are the comments that we hear in the industry. How long it will take for the inventory throughout the value chain to be cleaned up, it will take some time, but very difficult to predict how long. When you look at then our inventory, we have reacted of course very fast. We've seen our inventory increasing, specifically then during the summer months when the order books were still healthy. Then afterwards we did not see new orders coming in. We are at this moment adjusting our production plan quite rapidly. We have a plan to reduce our fiber inventory quite significantly until the end of the year.
We'll still be a little bit above what would be a target level, but it will be significantly below where we are today. From a valuation, Thomas?
I mean, you mentioned already almost everything. According to our plans, we will be very close to our target level already by the end of 2022. We have adjusted our output accordingly. Actually we have the peak in finished goods stock already behind us and inventory is coming down week- by- week. With regards to a potential NRV risk, that of course can, besides the volume component, actually that will also of course depend on price development, especially for standard viscose. However, actually we are doing this valuation on a monthly basis, so whatever had to be reflected in Q3 is already reflected.
Basically then the risk is only then on Q4, if there's a further drop, and then you have to take a certain devaluation risk at the end of the year. Is this correct?
Yes. I mean, actually, on the one side, on the sales prices, of course. Actually of course, we are closely watching the development especially of viscose prices. Of course, what also has an impact is of course the development of production costs and input material as well, of course.
Okay. My last question would be, if you could give an indication on the revenue split of pulp versus fibers in the third quarter or nine months.
On the revenue split, actually, just give me one second. For Q3, actually we had in the fiber division slightly more than EUR 500 million. In the Pulp Division, actually, however, that is before consolidation, of course, we had EUR 300 million as we normally disclose it in our segment report.
Okay, perfect. Thank you so much.
Pleasure.
The next question is from the line of Bartek Pasler from Schroders. Please go ahead.
Hi. Good afternoon. Firstly maybe the sort of technical easier ones. What do you expect your CapEx spending to be next year? And also what is the main, new maintenance level now that you have your new facilities there, please? I've got one more, please.
When you refer to the CapEx spend in next year, I guess it's a fair assumption that it will be mainly on the maintenance CapEx, which is in line with the depreciation, but you need to watch out that LDC and T3 are new plants.
You cannot take the full depreciation, and the rest will depend on our decisions of capacity additions.
Okay. Can you quantify that? What will be the current depreciation for next year, roughly speaking? What's that number?
Look, I mean, we had a level of depreciation, if you just take a look at the last couple of years, in the range of EUR 160 million, roughly. However, now of course, depreciation is increasing significantly due to the new projects in Thailand and in Brazil now going live, and that is what Stephan mentioned before. Like, let's say the historical depreciation we saw, especially in the last two to three years, I think it is a fair assumption to assume that that amount needs to be reinvested more or less. However, actually, as the plants in Thailand and in Brazil, as they are brand new, actually, of course, we will not reinvest to the same extent.
Sure.
There might be some minor adjustments or fine-tuning that need to be done. However, of course, we will not fully reinvest depreciation of next year.
Yes.
The second bucket, of course, what we call it, the expansion CapEx, that, of course, depends on decisions still to be made, on further capacity increases, be it now in Lyocell or whatever area. Those decisions, of course, not yet made, at this point in time.
Okay. Is there any way now you've got your projects, the Thailand and Brazil, almost double up and running, but not fully ramped up, how would you quantify the sort of earnings for those projects at the moment as we stand? Obviously, you've got higher costs. The market has changed a bit. Anything you can quantify around that payback period? Just you've always been very vague around that, and I think maybe we should get some more information now.
Actually, I think what we always disclosed in that regard is that we are aiming for a ROCE at that point in time for more than 10%, and actually we would not have kicked off those two projects in case the projects would not have met the threshold. I think that should be an indication enough on doing the numbers. Second thing is, I mean, actually, as you already mentioned, of course, both projects are currently in the ramp-up phase. Actually, it is fair to confirm that actually Thailand has already reached a breakeven on an EBITDA basis. And with regards to Brazil, we are already seeing positive EBITDA contributions in Q3.
Of course, the difference being that, Stephan Sielaff might not like now this statement, however, technically it is a bit easier to ramp up a pulp mill than it is for a Lyocell site.
I don't mind. We ramp up both positively, so yes.
Finally, maybe on your sort of funding maturities, et cetera, you said you've you sounded pretty confident around your funding levels. But there are. I'm just going back to that page. You've got EUR 270 million next year, EUR 550 or 540 million in the following year. You know, the risk is there at the moment. I think the bigger question is, how do you see your funding structure from here onwards? You've got the hybrids in 2025. You know, that becomes very expensive if you don't refinance that. I'd like to have more comments, even more than comments, more specifics of your view around that. You know, you're thinking of more expansion spending next year.
If that expansion spending takes place, how will you be able to meet those maturities or refinance? You know, what's the relationship there with your banks and funding partners, et cetera?
Look, I mean, first of all, I mean, we are still having a liquidity cushion of close to EUR 1 billion, right? As shown on the slide. Secondly, actually, as I also elucidated during your presentation, we are now at the moment where those major expansion projects that did cost a lot of money, of course, are going live. Actually, we do expect significant EBITDA contributions from all those projects, be it now in Brazil, be it in Thailand, but also for those projects in Indonesia and in China as well. These two projects, while they are of a smaller scope, of course, nevertheless, the CapEx in total there, we also talk about EUR 200 million plus.
Mm-hmm.
Actually we also have expectations with profitability there. All those four projects at the latest in the course of next year will be up and running and contribute to earnings accordingly. With that, of course, profitability levels should improve, and that should of course make the financing significantly easier. With regard to financing potential further expansion projects, that is of course a topic that needs to be decided together with the decision on the project as such.
Okay. The hybrid, what do you see?
What's your view there? What do you wanna?
Look on the hybrid. I would agree to your statement, of course. Keeping this hybrid would of course be very expensive, and we don't have any plans in that regard. Please keep in mind with this is of course shown also as maturing in 2025. That is of course correct. However, it is only maturing by the end of 2025. Basically, there is still three years of time to think about what is the best option on how to deal with it.
Okay. Thank you.
Next try for Isha Sharma from Stifel Europe. Please go ahead.
Hi. I hope you can hear me now. I have a number of questions. Thank you for the presentation. Could you help us with your current utilization rates and if they differ between the different fiber categories? The second one would be, does downtrading impact you? And if yes, how? How does it impact you? You mentioned your specialty prices are stable, sort of leveling. What is your expectation going forward here in the current environment? The third one would be on Lyocell. You said that the demand looks attractive. Are your competitors still struggling with the quality? And how do you expect the competitive landscapes to develop in the next years?
Okay. Let me start. First of all, we hear you well, and welcome to the call. On the operating rate, we can say that we reacted, and we continue to react selectively, depending on the demand. Therefore, your assumption is right. That depends really on the product mix. Currently, our operating rate is slightly lower than the commercial rate. Whereas Thomas elucidated, we have still high stock levels, which we want to get down by year's end. The second question was about...
The prices.
If downtrading impacts you.
Yeah.
How do you expect the specialty prices to develop going forward?
At this moment, it's the demand that is the biggest challenge right now. As I mentioned, we've stabilized the prices because also price drop will not increase the demand. How that situation will change in the next couple of months is very difficult to predict. What we are working on right now is, of course on the textile side, we are expecting those prices will remain stable, at least for the premium product, so the modal and the lyocell. On viscose, the visibility is extremely limited. As I mentioned, there also it's our premium really even for products like ECOVERO is still linked to the standard CCF price, and there is very limited rationale at this moment. Very difficult to predict what is happening there.
Now on the Lyocell demand, as I said, it is something that has been, let's say more stable than what we've seen for viscose and modal. The Lyocell demand is of course at this moment feeling the same pressure as the whole industry is seeing right now. Our competitors are more impacted. Their production, their operating rates are still fairly low. They have increased recently, for certain domestic demand in China. Their quality is not yet up to the level, let's say, good enough for the international brands and retailers. So this is where we are currently still specified. The demand that brands and retailers are fulfilling right now is still fulfilled with our Lyocell fibers. Domestic China is where we see the Chinese competition.
How long that competitive advantage will remain is to be seen. So far, you know, we are also working good on our quality, so I'm confident that we can keep our competitive advantage still for some time to come.
Our customers, let me add that, are really loving our brand, TENCEL™. It is the fastest growing ingredient brand. We really see that we are reaching not only customers but consumers. Therefore, we are creating also a pull for our lyocell fibers via our marketing approach.
Thank you. Very helpful. Now if I may slip in a few for Thomas, please. Thanks a lot for the repayment schedule and the slide deck. And also on the details of financial result, as you mentioned that it was a positive number for the first nine months. That was surprising. Could you help us with modeling interest rates, especially at these levels? Because your majority of your debt is dollar denominated and the interest rates, as we know, are rising. Assuming the current levels, what should we think of as a normal run rate for your financial result? That would be great. The second question is on other operating income in Q3. We saw a step up quarter-over-quarter. Could you tell us what drove this? The third one is on depreciation.
Seems like we still haven't seen the full depreciation step up. Should we expect the step up to come in Q4 and then take that as a run rate going forward? Thank you.
I hope I have taken all notes according. The first one was on the financial result. There are two major things as I elucidated in my presentation. The one is actually of course we are capitalizing interest during construction and commissioning phase. For Thailand, that has already ended, however, it now came to an end for Brazil as well. I think as we always communicated, actually the debt we have for the project in Brazil is $1.1 billion. And yes, it is denominated in U.S. dollar. Actually since we stopped now capitalization, of course, the interest expense will show up in the profit and loss statement starting actually from Q4 onwards. That is information number one.
Number two , of course, the financial result is quite a lot impacted out of foreign exchange gains that are coming from financial assets. However, assuming a constant U.S. dollar, of course there will be no other gains. And therefore you would basically now end up with basically the interest expense coming from our net financial debt. Net financial debt, anyway, we disclosed of course with EUR 1.7 billion by the end of Q3. The gross amount of financial liabilities is of course bigger because we have more than EUR 700 million in liquid assets at our banks and of course we earn some interest there. However, of course that is only a small amount. I hope this answers question number one.
Question number two was on other operating income. Actually, we also saw quite a significant FX impact out of the U.S. dollar becoming stronger. That of course for all the other assets but the financial assets, this is then of course reflected accordingly in the other operating income. There's a significant portion coming from a positive FX effect. That's it basically. Last question was on hedging again.
The depreciation, why don't we say it for.
On depreciation. I mean, you might have recognized actually, when you look at our financials that throughout the year, depreciation has crept up quite a bit. I mean, last year actually, we were at the level annualized of around EUR 160 million, so EUR 40 million a quarter. However, now in Q3, we are already at a level slightly below EUR 60 million. However, the EUR 60 million do not reflect yet full depreciation in Brazil. That is yet to come. What you also have to keep in mind is the other two projects we are currently implementing in China and in Indonesia as well. Those projects will also go live over the next couple of months. There's actually more depreciation also coming from that side.
Actually for next year, I think it is fair to say, okay, then if you start with the EUR 60 million from Q3, you still need to add quite some amount for Brazil, for the expansion project in Indonesia and China. It will be significantly above the level we see this year.
That's helpful. Thank you so much.
The next question is from the line of Vladimira Urbankova from Erste Group Bank. Please go ahead.
Yes. Hello, good afternoon. Many of my questions are already answered, so a couple of them are still left. Maybe some fine-tuning or explanation. I would really appreciate if you could tell me what do you mean that 2022 results will be in line with current market expectations. Do you have any particular parameter on your mind like EBITDA? Because in the past you were always guiding EBITDA or do you have some other parameters on your mind as well? Could you yeah little bit specify more closely? Next question would be you said that your cost savings program should bring already some results this year.
How much do you expect to realize already this year, and in which areas we will see these cost savings to be more pronounced? Last but not least, we already touched that forex impact. Could you specify the forex impact in first nine months on your revenues and on your EBIT level? This would be it from my side at the moment.
Yeah. Thank you very much. Let me take your first question. Yeah, when we talk about the guidance and yes, indeed we are talking about EBITDA, and since our talk, a couple of analysts have updated their reports and we only refer to those who have updated their reports since.
When you, if you want to, I can refer to our webpage where you find them. The second question was on the cost savings. You can estimate that the impact will be somewhere between EUR 10-20 million, mostly impacting on one hand side the production cost via procurement and continuous improvement efficiency gains, as well as some overhead costs. FX, I think, Thomas, you will take.
On your question on what is the impact actually out of FX in the other operating income, actually, we talk about the number that is slightly above EUR 20 million. Maybe also to come back on the question in the previous that was previously raised. I mean, in the other operating income, what we also include there is a positive impact out of our CO2 certificates. However, that is only an accounting topic because those certificates being used, of course, they have to be shown in the accounts at the gross amount. So they are shown in the other operating income, however, the expense is then shown in the cost of sales.
In total, like the gross numbers become bigger, the EBITDA impact is basically zero or almost always zero.
Still, on the FX, on the EBIT level, how much was it in absolute terms? I did not catch the number.
As I said before, slightly above EUR 20 million.
EUR 20 million+ for the nine months, you said?
Yes.
Okay. Going forward, do you expect still something, or we should rather be conservatively assuming no Forex impact?
Look, I mean, going forward, actually, I hope it's, I think it is, it would be fair.
No, it's a question related to your guidance, because if you have certain guidance, I would like to know if your guidance assumes that.
Oh, okay.
These great effects continue or they are excluded.
Yeah, yeah. Okay. No, sorry. I misunderstood your question. Actually, of course, our guidance is always based on the FX rate at the times actually when we make this guidance, actually, we were around parity roughly. Assuming that the U.S. dollar/euro exchange rate doesn't change a lot, that is behind the assumption.
Okay, thank you.
The next question is from the line of Sebastian Bray from Berenberg. Please go ahead.
Hello, good afternoon, and thank you for taking my questions. I would have two, please. In absolute terms for the year 2022, what are you thinking of for the interest and the tax charge? For the first nine months, I think we've had financial charges of EUR 14 million or so and tax at about EUR 51-52 million. What would you be expecting for 2022? Can I ask you if you've got any comments as well on the divisional EBITDA split? I haven't seen this. I don't believe it's provided, but I just wanted to check. Is all of the company's EBITDA in Q3 coming from pulp as opposed to fibers? Sorry, I said two, I actually meant three. Last question on investment policy. The 2027 guidance has been left intact.
I assume that Lenzing has discussions at the moment with its banks about CapEx and dividend policy. Is it right to infer from the guidance being left untouched that the company is going to keep investing as it had planned prior to its warning of a few weeks ago for the next few years? Does it have its banks' confirmation that they are comfortable with that? Thank you.
Let me start with your first question. On the segment reporting, actually, this is something we provide for the half year numbers and the full year numbers. However, as you implied in your question, basically, the EBITDA in Q3 is basically coming from the Pulp Division only. That is a fair assumption. With regards to your question on income taxes, as I elucidated during my presentation, we have quite a significant impact out of the setup. Meaning that especially in Brazil, where there's a huge asset base, we are using the U.S. dollar as the functional currency.
Whenever then the local currency, which is always the base for taxation, whenever there is a huge change of the local currency to the U.S. dollar, of course, you see an impact on income taxes. In the long run, excluding actually any FX impacts, actually, we should see a tax rate that is slightly below 25%.
That's helpful. Thank you. The question's around whether Lenzing has been in discussion with its banks with regards to can it pay a dividend for the next few years, and if the keeping of guidance for 2027 means that it has the understanding of its creditors that it can invest as it previously had planned to.
Yeah. We, as you rightfully say, we have a new dividend policy which we stick to, for the years to come. As Thomas elucidated early on, yes, the financing is one element, but we are also expecting a strong enhancement of our operating results from the new plant we just commissioned, and we will commission in the next couple of months, as well as we have a high liquidity cushion. Therefore I'm pretty confident on that one.
Just to clarify, your creditors are happy with the company paying a dividend next year and then returning to 4.5, which is a yield of about 10% at the moment. Is that right?
Sorry. The two things, right? When you talk about dividend paying next year, you refer to the dividend for the year 2022 or for the year 2023. Let's, I think process-wise, we still have a couple of months to go, then we will pull up the net, and then we will discuss together with the Supervisory Board what we do in terms of dividend for this year, and we have our dividend policy for the years to come in place as we announced.
I understand there's good policy, but have your bank said yes to it?
Look, I mean, the dividend policy is nothing that needs approval from the banks, right? That is something that is up to the board to decide on the dividend. However, the question, I think your question is much more around, okay, fine, is it smart to pay out dividends also? However, as Stephan elucidated before, I mean, first of all, we need to distinguish between the years that you are probably looking at. One is at 2022, and for that, no decision has been made yet, and no discussion has taken place so far. For 2023 onwards, actually, there is a dividend policy in place.
With the current net financial debt, of course, this is something that needs to be discussed on board level and then of course, decided on that level and then discussed as well with the supervisory board. However, that is nothing that is up for discussion now.
That, that's understood. It comes back to a discussion of what the covenants are that Lenzing has. At the current level of net debt, or I believe about 4x net debt to EBITDA, are the banks legally in a position to influence the company's dividend policy?
There are negative covenants in place that are market standard. The one question is, of course, okay, fine, what is mentioned in the contract. The other question is, what is the board going to do? I mean, as we always, I think, communicated the long-term target of Lenzing is to be at the level of below 2.5 times net financial debt over EBITDA, right? That is something that is still in place, and those decisions will be made once, well, those bridges will be crossed once we are there.
That's understood. Thank you for taking my questions.
The next question is from the line of Ashraful Mumin from Man GLG. Please go ahead.
Hi there. Question on the ramp up of Brazil and Thailand. You mentioned they should be ramped up fully in the next few months. Could you just comment in regards to EBITDA ramp ups? Does the EBITDA ramp up follow the production ramp up? In the next few months, will we be at, like, peak EBITDA on a monthly basis? If you could just comment on that. Could you give us, if not, like what's the ramp up for EBITDA, you know, over the next few years on those plants?
For sure. I mean, actually, EBITDA sales should follow actually, bottom line and the output accordingly. Actually when output is at nameplate capacity, then also we should be very close to our EBITDA target. Of course, assuming that the quality of the output is also in line. That is maybe the only thing that is causing or can cause a delay with regards to, let's say, the quality financial ramp up and the production ramp up. However, as I think was mentioned already before, it is relatively easy to ramp up a pulp side, right? For a fiber side, especially for a Lyocell side, it takes some time. However, we are very well on our way.
Got it. Just for the Brazil and Thailand sites, they will be ramped up in the next few months if everything goes fine?
Yeah, yeah. Yes. That, that's what we said.
Got it.
We expect Amadeus to be at full speed by end of the year.
Got it. Could you just remind me, what kind of EBITDA contribution on a run rate basis or on a fully ramped up basis you could expect from Brazil and from Thailand separately?
I think for Thailand, actually, we never ever mentioned our EBITDA for this site for good reasons. However, actually what we also said that actually our projects that we implement must be in line with our ROCE target. At the time we decided on Thailand, we said, "Okay, fine, the ROCE target is 10%+." Actually you can assume that actually the Thai project is shall be good enough actually to come up with a ROCE of 10%. With regards to Brazil, I think we have been more explicit with regards to Brazil.
We always said that actually in the long run, okay, we are expecting a so-called structural price of $900 per ton of dissolving wood pulp, so on average, okay.
Yeah.
At the beginning of the project, we were assuming cash costs of slightly above $300. That gives you then an EBITDA per ton of slightly below $600, and times 500,000 tons that would equal $300 million. However, since the project has started, of course, what we saw is now with this inflationary environment we are in, that we are due to the cost pressure, currently not at the $300. Anyway, now we are currently in the ramp-up phase and therefore simply because of economies of scale, we are not reaching that number by design. However, in the long run, actually we should come closer to those numbers.
I mean, on that EUR 300 with inflation, and I guess there's several aspects to that, is that 10% a fair number or it's significantly higher? Assuming it ramps up in the next few months, where is that cost?
Look, I mean, the first thing is, of course, the inflation in Brazil. Of course, this is now a bit difficult to predict on how this will evolve over the next couple of quarters, be it now on salaries and wages, land lease costs, fertilizer, and that kind of stuff. That, of course, is very difficult to predict. The major portion actually of the cost is also transportation, actually from Brazil to Asia. I mean, those costs have come down now to more reasonable level. However, they are still above the level we saw basically when we kicked off the project two years ago.
Got it. Do you, can you give a number? What kind of range are we talking, like 400 now, assuming it ramps up and you get the economies of scale? Or is it higher than 400?
That is something I would shy at this moment because actually simply the environment is very volatile and visibility is fairly low.
Got it. Okay. Just my second question is in regards to your 2023 and 2024 maturities, the EUR 269 million and the EUR 538 million, could you just remind us what those two instruments are or a combination of, and what's the plan? You know, how do you deal with them?
As I said during the presentation, I mean, we have relatively minor maturities in 2023, right? That's around EUR 270 million. We have a bigger amount that comes due in 2024 and 2026. That is actually the result of the private placement, the so-called Schuldschein, that was placed back in 2019. The majority there is actually with a term of five years, and that of course matures then in Q4 2024. Of course, there's a major portion that has a maturity of seven years, and that matures then in Q4 2026.
Do you think the Schuldschein market is open to you guys, today, if you wanted to come and preemptively refinance some of this debt?
At this point in time, we do not have any plans to go to the Schuldschein market.
Okay. I mean, I guess, how would you envisage in your business plan to pay down the 2023 and the 2024 maturities?
For the 2023 maturities, actually we do have quite some liquidity still available, right?
Yep.
With regards to the maturities that come in the later years, actually, as said before, we also have a couple of projects that are finalized and go live and shall then contribute to earnings as well, right?
Okay. That makes sense. Sorry, last one. Your 2027 EBITDA target. Can you just remind us what needs to be done to reach that in regards to new you know major CapEx projects? Or can you reach that EUR 1 billion EBITDA based on all the plans that you have at the moment?
Thank you for the question. No, we would continue to grow in the Lyocell technology as well as we would invest and strengthen our footprint in the recycling part. With these parts, we believe we are gonna have a strong product portfolio supported by investment into our marketing, and that will deliver the above EUR 1 billion EBITDA in 2027.
Got it. Okay, thank you.
Pleasure.
The next question is from the line of Sean Ungerer from Chronux Research. Please go ahead.
Good afternoon, everyone. Thanks for the opportunity to ask a few questions. Sorry if this wasn't clear on the call earlier, but just going back to gearing and covenants, is there a net debt to EBITDA covenant in place? If so, what is that? That's my first question.
No, there is no such covenant in place at this point in time.
Okay, excellent. That's very useful. Thanks. Then just sort of linked onto capital allocation or cash flow guidance for 2023, this might be a bit of an unfair question, but sort of what you've incurred in terms of working capital, CapEx, and sort of current operating environment, do you envisage that Lenzing will be free cash flow positive in 2023 at this stage?
I'm not 100% sure if I got your question, because the line was very poor. The quality of the line was very poor.
Can I repeat that for you?
Yes, please. Yeah.
Excellent. I was just saying in terms of what you've incurred based on sort of CapEx requirements for next year, working capital being released in Q4, as well as the current operating environment, as well as the sort of project ramp up of the Lyocell in Thailand and the DWP project. My main question linked to all of this is, do you envisage that Lenzing will be free cash flow positive in 2023?
I mean, the answer to that question will depend on many factors, right? I mean, one being, of course, the development of the operating results. The other one, of course, being the level of CapEx we will be facing in 2023. So, and especially as Stefan pointed out before, there actually no decisions have been made on whatever expansion projects might be in the pipeline or not. But at this point in time, still too early to answer the question.
Okay. No, that's fair response. Thank you. Just a follow-up. In terms of your commentary around textile demand being weak and visibility low, will this have any impact on the ramp up of the DWP project in Brazil as well as from an offtake perspective, how do you see the demand coming off for those volumes? Thanks.
Well, put it that way. It again depends on a couple of factors. I would say the technical ramp up, we are running pretty well, and we are starting up depending on the length of the demand drop, and that could also have an impact to the pulp market. But at the moment, we, as I said, our commercial ramp up is going by plan despite the issues that we have already seen on the fiber market. The second question, that was on the pulp plant. What was your second question?
It was just linked to the impact of the ramp up as well as how you see the demand, I guess, for DP in 2023. Not just from a Lenzing desktop perspective, but from a global perspective.
We believe it's gonna be good, well, because we are serving on one hand side, it's of course and mainly for our internal demand. As the quality of our pulp is very special, we see also some other demand outside, so third-party demand. Therefore, we expect a healthy demand for 2023.
Excellent. Thanks for the time, guys.
Pleasure.
We have a follow-up question from Isha Sharma from Stifel. Please go ahead.
Thank you so much for taking my last two quick questions. One is on the financial results. Is it fair to assume roughly 50% floating and 50% fixed rates for the financial debt that you have on your balance sheet? Secondly on the others line, where the EBITDA is mainly just cost, you have mentioned that you will reallocate them next year properly, but could you give us an indication as to the split between fiber and pulp in the first nine months? The third is just a request. It would be great to have quarterly update on the pulp segment. We anyway have to calculate it in the mornings, so it would be great if you gave us more details. Thanks.
Thank you for your question. On what is fixed and what is variable, actually, I mean, you mentioned 50-50% fixed, 50% variable. However, it is roughly 2/3 fixed and 1/3 variable. I mean, anyway, you follow the company very closely. For example, the Schuldschein we issued in 2019, almost all of it is actually fixed and whatever was not fixed it was swapped to fixed. Therefore actually the ratio we have is 2/3 fixed roughly and 1/3 variable. On the other area in the segment reporting, we are currently reworking actually the presentation of our segment report.
I think it is a fair assumption that, I mean, first of all, more costs will be allocated to the divisions. It is a fair assumption to say that the majority of costs that will be allocated will rather be allocated to the fiber division.
Perfect. That's helpful.
Your last question was on providing this information. I mean, as I mentioned before already, I mean, at this point in time, we are disclosing the segment information only for the half year and the full year numbers. That is something I will discuss actually with the board of management on how to proceed, because I fully understand your information need in that regard. I think the segment report is very helpful for you, but for the board, of course, as well. I will discuss this with the board of management and take it from there. Come back to you.
Thank you so much. Thank you.
The last question is from the line of Saul Casadio from M&G. Please go ahead.
Hi. Thanks for taking my question. It's just really a repeat of a question that's been asked before, but, sorry, I didn't get the answer. It's about your FY 2022 guidance in line with market expectation. I assume it's for EBITDA, but not all the Bloomberg numbers are visible. The only two that I see are very different one from each other. One is in the EUR 330, and the other one is in the EUR 400. I just wanted to. Sorry for missing your answer. Just wanted to re-ask the question, given the importance.
Thank you for asking that question again. As we mentioned, there are a couple of analysts who have updated their reports, and those reports we made available on our homepage. If not, you can also contact our Investor Relations department with Sébastien Knus, who can help you and guide you.
I appreciate it, but isn't it? It wouldn't be easier to just give us a number just so that we are all on the same page. I don't understand why you're refraining from that.
Well, I guess it's very fair. It's on the website, and there you should see the number, right?
Sorry, I just haven't had a chance to look at the website. Normally, you know, companies provide a guidance with a number or an interval.
Yeah, we look roundabout, right? The number you see there is roundabout for EBITDA 308.
308. Okay.
Yeah.
Thank you very much.
308. Yeah.
Okay. Thank you very much for providing the number. I appreciate it.
Yep.
Thank you.
There are no further questions at this time, and I hand back to Stephan Sielaff for closing comments.
Yeah. Thank you very much. I think a lot has been said and asked, and hopefully we could give the right answers to your questions and could be of help. Certainly, a difficult quarter. Nevertheless, I see Lenzing extremely well prepared for the future, and as we said, we are ready to grow. We set the right strategic steps and that what is in our control, we executed well. With that, I would close the call and wish you a very nice evening. Thank you so much.