Also from my side, a very warm welcome on behalf of the Lenzing AG and the Lenzing management board to this analyst call to discuss the result of the first half year 2022. How was the first half year of 2022? We saw a lot of light, but also some shadow. Well, we can report a significant increase in our revenues of about 25% up to an absolute level of close to EUR 1.3 billion. At the same time, however, our EBITDA is slightly down to a level of almost EUR 190 million compared to EUR 218 million in the same period of the previous year. Two main drivers. On one hand side, massive cost development, at the other side, also having two major plants in a ramp-up.
Overall, I am pretty satisfied with our ability to pass on close to 90% of the cost increases. As a result of our EBITDA development, the net income as well as the earnings per share are also down versus the same period in last year. Let's look at some highlights of the first half year. First and foremost, I would like to mention our key projects in Brazil and Thailand. We, as a Lenzing management board, are very proud of our teams. They managed to complete the largest investment program of Lenzing's history or in Lenzing's history in time and in budget. This is a superb accomplishment, taking into consideration that in the peak of these both of these investments, both projects were confronted with the impact of corona and COVID measures in Thailand and Brazil.
A big round of applause from our side to the teams. Now, the good news is that both plants are ramping up very well, and both plants will start to deliver positive earnings, positive EBITDA contribution in the second half of 2022. We also reported already that in the first half year, we worked on our corporate strategy. We wanted to ensure that we are fit for the future. In this strategy, we further sharpen our focus. There are two main areas to mention. There's on one hand side, the strengthened focus on growth of our sustainable premium fibers, and there's on the other hand side, the ambition and the increase of our effort and energy when it comes to circularity. We are often called the champions of sustainability.
Now we want to become the champions of circularity, and we'll put a lot of energy and efforts behind it. When we take this strategy, we developed new financial targets for the year 2027, and those have been also published before. We are aiming healthy market condition assumed for over EUR 1 billion EBITDA in the year 2027 and more than 12% ROCE in the same year. Looking at our outlook and guidance, and of course it is difficult in these days to give a clear guidance and a clear outlook, taking the uncertainty in all the markets around us. However, let me make one statement right at the beginning and very clear and loud. We're gonna stay with our guidance, which means we're gonna deliver in the year 2022 significantly more EBITDA than in the year 2021.
Which brings me to a topic, which is currently on top of all minds in media, in investors, in industry, and probably also in every one of us as a private person: energy. Is the energy supply secure? What is the impact of the massive energy prices we see? Yes, Lenzing is impacted by the energy crisis, directly from increasing energy costs and indirectly from increasing raw materials. Although globally, less than some of you may think. Let me elucidate what I mean by that. Lenzing is operating worldwide 9 sites. Although all these sites see cost increases on energy, the level of increase varies a lot from plant to plant, from energy type to energy type. A true real risk of supply of energy, we only see in continental EURope. In continental EURope, we only operate 3 out of the 9 sites.
Two of these three sites in Lenzing and Pasching produce pulp. With pulp in our biorefinery concept, we have a high degree of self-sufficiency. To give an example, on the Lenzing site, we have a self-sufficiency above 90%. That leaves us with our site in Heiligenkreuz, a site which represents 8% of the global fiber capacity of Lenzing. There, yes, we are exposed to gas, and yes, the situation is critical. Even more so, I'm delighted to see really constructive work from both the regional government, and here a special thank you to the Landeshauptmann Doskozil, as well as from the energy provider, Burgenland Energie, to have a midterm solution which not only delivers higher degree of sustainability, but also a higher degree of energy autarky.
If we believe the statements of the Austrian government, the supply situation of gas in Austria is better than in Germany. Meaning that the reach of the available gas in the storage capacity in Austria is significantly longer. Nevertheless, we hope that we get further support on that, and also from the governmental side. When we come to the next page, you see actually our footprint. Of course, Lenzing is preparing itself in the best possible way for the situation of an acute energy shortage and the rising prices. We analyze the situation on an ongoing basis and we are in constant contact with the relevant stakeholders, experts, and decision-makers. On this basis, we have identified possible scenarios and action plans, and also implement those action plans. For example, we are trying to replenish our energy and raw material stocks as high as possible.
As all of you know, availability on the world market is, for the one or other material, extremely limited. As mentioned before, Lenzing has a global footprint and therefore, a lot of the challenges we can balance out on this global network in order to serve our clients, customers and partners in the best possible way. However, in most of the times, these plan B solution come at higher cost. Lenzing is also continuing in its path on investment in sustainable energy. We started this journey much, much earlier than the energy crisis, actually years ago. Let me here present two projects which are very close to completion and ready to get commissioned soon. There's on one hand side our site in Indonesia, in Purwakarta.
We switched to green electricity last month in July 2022, and we are also converting the energy source for our steam supply from coal to biomass. As you are aware, we are investing in the SPV site to ensure that it has the optimum environmental footprint and the optimum quality grade to serve our high level criteria for the brands ECOVERO and VEOCEL . At the same token, we have a project in Austria, to be precise, in Upper Austria. We are constructing several photovoltaic plants, among others, the largest ground-mounted photovoltaic plant in Upper Austria, which has an area of round about 55,000 square meters. In addition, three rooftop systems providing a total capacity of 7 megawatts. We expect to announce very, very soon the commissioning of these plants.
As we said, we are having concepts for all sites, and we are in very, very good discussion, especially for the site in Heiligenkreuz. That brings me to the key projects. Let me start here with our project in Brazil regarding pulp, before I hand over to Thomas for the ramp up of the plant in Thailand. The plant ramped up successfully, started up successfully. So we have now additional capacity of 500,000 tons in Brazil. The commissioning is completed, and we are now in the ramp up curve. By the end of the year, we're gonna be at nominal capacity of that plant. It is the world's largest of its kind, and it will provide not only cost leadership, but it will provide the Lenzing with a special grade of pulp, which will help us to accelerate our growth on premium fibers.
With that, and a big thank you to the team in Brazil who managed this very complex project in time and in budget, I would hand over to the other very successful project to Thailand. Thomas, please tell us more about Thailand.
Thank you, Stephan. Hello, and welcome also from my side. Let me now continue with our second big project in Thailand. In a nutshell, the project is very well on track. Just as a reminder, actually, we built there a new 100 KT lyocell plant, and we delivered the project on schedule and at budget. At the end of the day, this new plant will help us serving the growing demand for sustainably produced fibers. The plant is such, anyway, just a repetition from last time, is operated CO2 neutral, and is therefore an important milestone towards a carbon free future. With regards to the ramp up, actually, we expect full ramp up in Q4 2022.
Here I can only repeat what Stephan said before, a big thank you to the whole team in Thailand, but also a big thank you to all the support functions here, especially in Austria, in Lenzing, in Heiligenkreuz and all the other lyocell sites actually that supported massively and made this milestone possible. Big thank you, big milestone. With that, actually, I hand over now to Robert for the market update.
Thank you very much, Thomas. Thank you very much, Stephan. Also from my side, a very warm welcome. Now, how does the market look like? I think, after more than two years of battling, you can clearly see already here in April 2020, the market came to a standstill from the apparel sales, which is being shown here. The market has continued to recover. What you can see is that overall, the global market is solid above the pre-pandemic levels right now. U.S. market, which still is the biggest from a retail perspective, is holding up very well. The first half year in 2022 was about 17% from the apparel retail sales above 2019 levels. This despite significant delays and higher costs in the area of logistics.
At this moment, a lot of the brands, retailers are choosing for smaller units, smaller delivery lots per collections to really make sure that the goods arrive, that they get a container fit, but also they are able to achieve these retail sales because the consumer has been so far much more conscious to buy. This has helped us also from a sustainable fiber producer perspective. EURope overall is a very mixed picture. You can see that over the half year, we were on the level of 2019. We were improving throughout the second quarter. What you also can see is that China came down significantly. As we all know, China has been confronted with quite serious regional lockdowns due to the COVID.
Most of these are over right now, and as you can see, the market in China recovered very fast. Still, this, of course, is not yet a very solid recovery overall. Consumer confidence hits an absolute low right now. It's not yet fully reflected in the sales today, but we can really see that in EURope with the energy topic that Stephan already referred to, with the ongoing war in Ukraine, consumer confidence is at an all-time low in some countries like in U.K., France or Germany, even lower than during the pandemic. China continues to also be fairly low from a consumer confidence, because although the major lockdowns are over right now, there's still concerns that the COVID might come back and might result in future lockdowns again.
As you can see, consumers are insecure, uncertainty remains very high, geopolitical, energy, inflation, COVID. From that perspective, you know, we have a very high level of uncertainty, unfortunately, that we are confronted with for the near future. If we then look at how does it reflect then on the individual key fibers, you can see on this slide. If I start at the bottom, the dissolving wood pulp prices have, after the COVID period in 2020, recovered very strong in 2021, came down again in the beginning of 2022, and have continued to increase. The market for dissolving wood pulp remains very tight, also due to the further force majEURe incident in South African pulp mills. This then is making sure that the prices continued to increase.
The Chinese pulp producers could only partially reduce this. You know, the pulp prices continue its increase in trend up to $1,220/ton end of July. If you look at the cotton, our cotton market has really skyrocketed. It lost significant ground since the peak in May, which was approximately at $3.82. The current level still, as you can see here, remains very elevated. Now, speculation in the commodity markets, which were really the main driver of the cotton price to go so high, are the main cause of this reversal trend. The cotton fundamentals are still optimistic.
The decreasing trend in the current season, which is now the season ends right now, as you know, in August, shows that the cotton level is remaining at a quite solid price level of about 283. Now, the polyester price, as you can see, is highly fluctuating. Of course, it fluctuates with the oil prices. Right now you can see that there was a peak in June due to the sanctions on Iran. Right now, this has reversed. A little bit it slumped based on the recession concerns as well as the strong U.S. dollar. Now, if you look at the viscose prices, of course, they have been driven up because of high pulp raw materials like caustic soda and energy costs.
They are the main price drivers for viscose also in the second quarter. They were partially the result of the macroeconomic developments like the Russian invasion of Ukraine. The supply disruptions were driving the prices up, particularly in China. Currently, you can see that the viscose industry in China, and we can elaborate a little more on the next slide, is fairly well balanced. We have good operating rates in China. We have very low inventory levels in China. Now, at this moment, the market in China is cooling down due to the seasonal reasons, but also as a reflection of the lockdowns recently. On the next slide, you can see this in more details.
You can see that in Q2, the viscose industry lingered deeply in the loss zone. The solid green bar really went into a big negative. It deteriorated further even in July as the viscose prices started to soften. At the same time, you can see that the very firm pulp costs have eaten away some of this, these price increases for the viscose prices. The prices of pulp, the conversion margin you can see on the right side, range somewhere between EUR 810 and EUR 920. However, it fell to EUR 750 since the end of June. Very difficult viscose market in China for an average viscose producer. Now, what are we doing in Lenzing?
When you look at our specialty prices, they are showing very robust developments. Now, this slide is showing a six-month moving average, so this is not the price level that we have, of course, today. Like Stephan elucidated earlier, we are able to pass on a majority of the increases of various costs in the first half of this year, so our prices continued to increase solidly. It's not increasing as dramatically as, for instance, the cotton index or, for instance, the CCF Index, and this is really also driven by our more stable and solid specialty pricing policy. We see a very solid price increase level throughout the first half of this year. Our customers, they appreciate this solid price reduction, so less steep going up, as you can see with the commodity.
Of course, also if the trend reverses, you know, slower, not less steep coming down as some of these commodity prices. If I then look at what are we doing besides then the whole pricing market, we continue to be very active both in the branding side as well as in the sustainability side. Earlier this year, Nielsen continued its annual study of the Lenzing brand awareness. The TENCEL™ brand was the only brand that throughout the second COVID year, 2021, continued to increase in brand awareness versus some of the other brands in the same markets like our Gore-Tex or Lycra brands that are active in the same industry.
We now have a brand awareness, aided brand awareness of 36, which I think is an amazing achievement 5 years after we relaunched the brand. It really also underscores why our brand is extremely profitable. You can see that the 30 years of TENCEL™ fibers was celebrated. It's a 30-year brand, but the positioning of the brand, you know, is reaching its new highs even after 30 years. It really brings a promise of sustainability and ethical fashion. Now, that is also being promoted by other Lenzing activities. For instance, Lenzing is sponsoring the Lenzing Young Scientist Award, where younger scientists are getting a special prize during the Dornbirn conference in September each year, being rewarded for the innovations that they bring.
These are the future generations that are going to help to keep Lenzing and its applications as really the leading innovators in our industry. The other highlight maybe from this very interesting slide is that Lenzing joined now the Together for Sustainability alliance, which is an alliance of 36 leaders in the chemical industry which strive for sustainable development and support the principles of the United Nations Global Compact and Responsible Care, specifically in supply chains, in global supply chains. I think to be part of this group of leaders is a great position for Lenzing to be in.
Last but not least, you know, as our brand is continuing to increase its awareness, unfortunately, we are also seeing increased abuses of our brands. I'm very happy to announce that we are partnering with Red Points to fight really this counterfeiting. Red Points is a very well-established organization that is helping us with the brand protection, and we are making sure together that fraudsters will not have any advantage from our brand. These are just some of the highlights of what we are doing on sustainability and on branding. Herewith I can give back then to Thomas for some of the financial numbers.
Thank you, Robert. As usual, let me guide you through the most important financials for the second quarter and the first half of 2022, and let me start with revenues. Revenues in Q2 came in with EUR 679 million, compared to EUR 544 million the year before. That's an increase of 25% and brings us in total to close to EUR 1.3 billion compared to slightly above EUR 1 billion, the year before. So again here, a 25% increase. The increase in revenue is primarily due to higher fiber prices, while fiber volume almost remained flat compared to last year. What was also helpful, of course, was that the U.S. dollar and the RMB were stronger compared to the same period, the year before.
Looking at fiber revenue by application, as you see here on this slide, we are usually hovering around this 70-30 split, so almost 70% for textile fibers, compared to slightly above 30% for our nonwoven fibers. With regards to specialties shares of fiber sales, actually, that number came in with 71%, and that compares to 73% the year before. The minor decrease actually being a consequence of the recovery in standard viscose prices. Moving on to earnings, let me start with EBITDA. EBITDA for the quarter came in slightly above EUR 100 million compared to EUR 123 million the year before. We are now in total at EUR 189 million, compared to EUR 218 million the year before.
That's a drop by 13% as already mentioned by Stephan. The main driver, of course, for this decrease is coming from a significant increase in costs, especially costs for chemicals and here, of course, to mention caustic soda. Then also, of course, significant increases in energy costs and logistics as well. Of course, our EBITDA margin is down accordingly. However, actually bottom line, we were able to pass on roughly 90% of the cost increases to our customers. Now looking at EBIT, actually, of course, EBIT shows the same development as EBITDA. EBIT for the quarter came in with EUR 52 million compared to EUR 84 million the year before.
Now in total, slightly below EUR 100 million and EBIT margin at 7% compared to EUR 139 million the year before and EBIT margin at 13%. Moving on to our segment report. As you for sure might remember, back at the beginning of 2021, we went live with a new segment reporting, now splitting Lenzing Group into a fiber and Pulp Division. Then, of course, all other ending up in one basket. Actually, as you can see here, fiber came in for the first half year with EUR 111 million. That is down quite a bit compared to EUR 171 million the year before.
However, actually, almost completely compensated by a very strong pulp division that increased from EUR 79 million to EUR 126 million. I think this chart easily proves that actually the backward integration for Lenzing Group definitely makes a lot of sense. Now moving on to group net profit. Actually, group net profit for the quarter came in with EUR 40 million, of course, again, down compared to last year, where we had EUR 53 million. We are now in total at EUR 63 million compared to EUR 81 million the year before. With regards to earnings per share, we are now at EUR 2.36 compared to EUR 3.06 the year before. Again, here, of course, the same development as for EBITDA and EBIT, so we are down compared to last year.
However, we are again up compared to the previous quarter. Moving on now to cash flow, and let me start with gross cash flow there. Gross cash flow actually over the last couple of quarters, let's say hovering around the EUR 90 million-ish roughly level. However, what is obvious here, of course, is that operating cash flow was negative in the second quarter with EUR 65 million. Of course, free cash flow, significantly negative with EUR 270 million. What is the background actually of operating cash flow being negative? Actually, as you might have seen already from our balance sheet, our working capital increased quite a bit and there, of course, the increase mostly coming from our inventories.
On the right side, actually, you can see a chart that shows trading working capital in % of annualized group revenue. We are now in the quarter actually at 22%. That is quite significantly above the level we saw in the quarters before this. It is also above our targets actually in the mid-run. Actually, I would say we should rather aim for the 20% mark and in the long run, actually below the 20% mark. However, there is quite some impact coming out of the ramp up of our pulp mill in Brazil and our Lyocell plant in Thailand. That of course needs to be reflected accordingly. Last but not least, couple of words on our balance sheet, and let me start there with net financial debt.
Reported net financial debt came in with EUR 1.5 billion. That is quite, of course, a significant increase compared to previous quarter and year-end 2021. Year-end 2021, we stood at a level below EUR 1 billion, or actually, in EUR 977 million, and as per end of Q1, it was close to EUR 1.1 billion. That is, of course, our reported net financial debt. When we look at the so-called economic net financial debt, where we adjust for the share that is being guaranteed by our joint venture partner in Brazil, we end up as per end of June with a net financial debt that is slightly above the EUR 1 billion EURo mark. Still also there, of course, a quite significant increase.
However, I think what you see from this chart very well is that a significant increase of the net financial debt is driven, of course, by our project in Brazil. With regard to some other balance sheet numbers, let me just focus on a couple of things. The adjusted equity with close to EUR 2.2 billion very solid number and an increase of 3.3% despite the dividend being paid out by end of April, beginning of May. Adjusted equity slightly below the 40% mark. And net gearing of course, as planned, slightly below the 70% mark. And last but not least, on our liquidity cushion, liquidity cushion is now at a level of EUR 1.1 billion.
Of course, we used up a lot of the liquidity that we made available for the big projects. There's sufficient or plenty of liquidity left. Anyway, we are now basically finished with the projects. There will be all the CapEx is paid in Thailand. I would expect still quite some payments for the Brazil project in Q3. However, then by end of Q3, also the Brazil project should be done from that perspective. Overall, I think very solid set of numbers. In a nutshell, I think we delivered a very solid result and what I think we can be very proud about is actually the huge progress we made in Thailand and in Brazil. That positions us nicely, I think, for the second half of the year.
With that, I hand over to Stephan Sielaff for the outlook.
Thank you, Thomas. Let us now try to look into the future. Although predictions, especially precise predictions, are extremely difficult, these days. I think one statement right at the start, we will maintain our guidance for the year 2022, and we will deliver an EBITDA well above the level of 2021. However, it must be clearly stated that this can only be achieved if the general conditions do not deteriorate any further. Now why are we so positive? Yes, of course, on one hand side, we see also the uncertainties. We see the increased costs in energy and raw materials. We see the disturbances in supply chain and the challenging market environments. However, we also see three important components which drive the EBITDA up.
There's on one hand side, the fact that we still see a structural increase in demand for our sustainable fibers. There is, as a second component, as we elucidated, on a couple of occasions during that presentation, we will see first earning contribution from both Thailand as well as in, Brazil in the second half of 2022. And thirdly, I'm very pleased with the progress we do in the area of operational excellence and branding. Branding, supporting us on the pricing of our premium products and operational excellence, making sure that we have a very competitive cost balance anyway. We would then come to the strategy which we, already announced via press releases. What did we do in the first half year of 2022?
We looked at our very successful strategy and thought about how can we make it even fitter for the future. There are two major themes, as I mentioned before, which we're gonna enhance, accelerate. There's on one hand side, the growth for sustainable premium fibers, and there is on the other hand side, our journey towards circularity. We want to become the champions of circularity. Of course, we're gonna increase also our efforts when it comes to energy autarky or a better sustainability footprint when it comes to energy, as well as we, as I said before, gonna continue supporting our brands who are performing perfectly. Not only TENCEL™, where we celebrated, as Robert elucidated, the thirtieth birthday, but also ECOVERO and VEOCEL are very strong brands, and they are doing a good service to Lenzing.
Now, when we look at the strategy and we look at the financial results coming out of that strategy, we see on one hand side a more balanced risk profile. We are aiming to be below 2.5x EBITDA, net financial debt over EBITDA, both in the year 2024 as well as in the year 2027. At the same token, we will see a profitable growth. On EBITDA level, we are targeting more than EUR 800 million in the year 2024 and more than EUR 1 billion in the year 2027. On ROCE, we are targeting more than 10% in the year 2024 and more than 12% in the year 2027. Is this ambitious? Sure. Is it achievable? Sure as well. Which brings me to the next slide and our dividend policy.
Based on this sharpening of our corporate strategy and the successful implementation of the activities in the past, namely the implementation of the strategic project in Thailand and Brazil, we expect a very good and very profitable future for Lenzing, always under the assumption of normal market and economic environments. We therefore decided to pay a stable and attractive dividend in the years to come. With this, our shareholders will benefit from both growth and dividends. Ladies and gentlemen, should only some of the risks we all see these days not or only partially manifest themselves, Lenzing can and will face a very, very bright and sustainable future. I personally look very much forward to accompany Lenzing on its journey to become the champion of circularity. Thank you very much for your attention. With that, I would hand back to the operator for the Q&A session.
Ladies and gentlemen, at this time, we'll begin the question and answer session. Please note the questions are only possible via telephone. Anyone who wishes to ask a question may press * followed by 1 on their touch-tone telephone. If you wish to withdraw your question, you may press * followed by 2. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press * followed by 1 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. Thanks for taking my one question at this point. Can you talk about your order book visibility at present? Has that visibility changed in any significant way compared to the past? That would be interesting for me because you know, with the changed top-down environment, order book is obviously quite important. Thank you.
I think you are talking mainly about the textile and nonwoven order book, and therefore I would ask-
Yes, yes.
-Robert, to take this question.
No, thank you very much. Indeed, it's a very good question. With the limited visibility, we see our order books for nonwovens solidly filled. I think that market has continued due to COVID as well as the recent, let's say, turmoil to be a very solid business. Nonwovens, no problem. On the textile side, we see solid demand for our premium fibers, but for the standard viscose fibers, we see at this moment, like the Chinese competitors do, a weakness in the market. The order book, of course, is also more challenging, let me put it like this, due to the ongoing logistics situation where containers are being delayed. We need to make sure that, for instance, with our regional warehouses, that the warehouses.
The materials in the warehouse before we actually can invoice an order, confirm the order. That ongoing logistic challenge is also limiting the visibility for the orders. Overall, for our premium fibers, healthy order books.
Thank you very much, Robert.
The next question comes from the line of Isha Sharma from Stifel. Please go ahead.
Hi, good afternoon. Thank you for the presentation, especially the details on the energy side. Two questions from me, please. How do you define significantly above when it comes to your guidance? Any range there would be very helpful, or maybe you can help us if you are comfortable with the current consensus, given the low consumer confidence. Just related to that as well, we have some reference of your trough earnings in previous recessions, specifically in the fiber segment. Is there any reason to believe that fibers division could do well, given or assuming that we actually go into recession in the coming quarters? Thank you.
No, thanks a lot for the question. I think, as you know us pretty well and taking the very limited visibility we have in this market, we don't give a range at this point in time. Therefore, we have to stay with, significantly or well above, last year levels. The second part of the question, could you repeat that, please?
I'm just trying to understand if we have a reference for previous recessions when it comes to your fiber earnings. Is there a reason to believe that trough earnings could be better compared to in the past?
Look, I mean, let me take this question, first of all. I mean, when you go back then actually looking at previous recessions, actually, I think what you have to keep in mind now is that the footprint of Lenzing has changed significantly. Not just that now we are going live with a huge pulp plant in Brazil that will for sure, or the expectation is that it will help us stabilizing, of course, the Lenzing results. However, the other thing actually on the fiber side, I think what you have to keep in mind is that we now have a much bigger focus now on specialty fibers.
At the end of the day, over the last couple of years, actually, we were only growing basically in Lyocell, and to a smaller extent in modal as well. The point I just want to make is Lenzing now is probably different compared to previous years, especially when you go back to, let's say, a major recession as the one in the year 2011, 2012. Actually, that was a completely different ballgame, I would say.
That's very helpful. Thank you. Maybe, Thomas, while I have you, is it fair to believe that sequentially from Q1 to Q2, the margin at fiber has improved a bit while that and dissolving in the Pulp Division has come down? Since you guys don't give the numbers to us, we have to make our own calculations.
On the segment reporting, we will have to stay with the set of numbers that we delivered. The segment reporting, actually, we will only, of course, provide for the half year and the full year numbers. As I elucidated during my presentation, pulp is not far off from the second half last year. Pulp and also the environment in pulp did not change that much. Of course, pulp prices still went up a bit. However, also, pulp is also impacted by other things like, okay, fine, cost of chemicals also has an impact on pulp as well.
Actually, we will stick to the data that we disclose in our financials. Maybe just one hint in that regard, actually, as the other basket actually is relatively high, we will fine-tune the segment reporting. However, we will only go live with the new segment reporting starting from January 2023 onwards.
Thank you very much.
With the intention, of course, to allocate as much cost as possible to the divisions. Other should go down. I mean, the negative number of others should go down and of course, fiber and pulp being impacted accordingly.
Understood. Thank you.
The next question comes from the line of Markus Mayer from Baader. Please go ahead.
Good afternoon, gentlemen. I have several questions, and therefore I think it makes sense to ask them one by one. Firstly, on what you have said on Heiligenkreuz on the potential gas supply impact, and Russia would cut gas supply. In the case that there would be a cut, could you quantify the effect in a kind of a worst-case scenario, the few millions a year, or what would be the earnings impact in this case? The next question I will ask afterwards.
Okay. Thanks a lot for your question. As I elucidated before, indeed, Heiligenkreuz is depending on gas. In my discussions which I have with the representatives from the government in Austria, they are pretty confident with the current stock levels of gas that we should come over the winter. Nevertheless, in a worst case, we would have to slow down the plant or even to shut it down. Put it in perspective, it is only 8% of the total global fiber capacity.
Okay. Thank you. Second question is, given the cash burn situation of your Chinese competitors in standard viscose, which is now again lasting for more than two years, do you see any market changes visible besides the reduced utilization? And is there also an impact on the U.S. ban for products out of the Xinjiang area?
Thank you for the question. Really good one, and I would hand it on to Robert, who is our absolute market expert.
No, indeed, thank you. With the current viscose financial performance, you can imagine there are fairly limited new viscose projects. This tends to be very optimistic for the future because as I mentioned earlier, at this moment, we see despite a very difficult market environment a fairly well-balanced operating rate of the viscose mills in China, as well as fairly low inventory levels. The viscose markets continue to grow both in nonwovens as well as in the textile side. With the current financial performance, very limited new projects are being submitted. That makes me optimistic for the overall market in years to come. Regarding the Xinjiang province, for sure, this is causing a lot of difficulties to the cotton industry.
This is partially also one of the reasons why the cotton prices will remain higher than what we've seen before, because there's definitely a tremendous effort required for the cotton industry to prove that their cotton is not coming from Xinjiang province when it's then being destined for American consumers. This is, of course, bringing the overall transparency of the value chains much more to the foreground of the whole textile industry. Historically, value chain management was quite confidential. Lenzing has been very early on a very transparent value chain player with investments like with the TextileGenesis, digital traceability as well as with our whole brand story.
Value chain transparency is definitely also in favor of Lenzing.
Third question would be, I saw that also Timberland started recently to use Lenzing fibers, and therefore I would be curious if there are other well-known brands you have recently gained as customers, if you can point to this kind of question.
Of course. , I think our most, let's say, famous, in fact, launching partner for footwear was Allbirds. In fact, as I speak, I'm wearing Allbirds because I'm on vacation right now, so extremely comfortable to wear. But also, what we have recently shown during the Techtextil in Germany is a very nice cooperation with Adidas, which actually also uses the brand TENCEL™™ on its footwear, of its latest model, for men's shoes for the time being. It really clearly shows that with Timberland, with Adidas, you know, market leaders like Allbirds are being followed, and you see our fibers increasingly in footwear.
Okay. Very good. The last question would be this chart on your targets that is very helpful as a reminder, but can you help us to understand will you reach your 2024 targets with the readily announced or basically started projects? What is in this regard also a reason the CapEx guidance for 2023 as I guess CapEx will start to come down after the third quarter?
Okay. Let me come back to one of your questions before. If you really want to buy our products, I can highly recommend the page tencel.com, where you'll find all the guides where to buy our products. Coming to your question, we of course are confident that we're gonna deliver the EUR 800 million, always assuming healthy market conditions of course. Yes, we have plans in place on how to get there. Regarding the CapEx guidance, I would hand over to Thomas.
On the CapEx guidance, I think we at the beginning of the year, I think when we released the year-end financials for 2021 and then later for Q1, I think we guided around EUR 550 million. At this point in time, I would increase the CapEx guidance for 2022 now to a level of around EUR 600 million. I mean, what are the projects that are currently ongoing? Let me start with Thailand. The Thai project is basically completed and going forward now for the second half of 2022, I would not expect any significant CapEx for the Thai project. Second project, of course, is the one in Brazil, that of course contributed significantly to the CapEx in the first two quarters already.
I would expect one more quarter with significant CapEx out of Brazil. By end of Q3, I would assume we are basically done with Brazil or maybe there would be a minor spill over into Q4. However, that should only be minor. Of course it all depends then on final acceptance of the different islands. Besides that, actually we have two more projects going on. One is in Indonesia and the other one in China where we committed in total a CapEx of around EUR 200 million. Those two projects are well on their way. Basically with these projects, actually, those are the ones we announced.
Those are the ones that are in progress. Of course, there is for Lenzing, as is, of course, also some maintenance CapEx to be assumed, now that our depreciation level is of course also increasing. However, for the sites, we have a couple of sites that are 20, 30 years old. Actually, of course, we will have to spend quite some CapEx there as well to maintain the sites.
Okay. Thank you so much for your input.
Roughly 600 for 2020.
Again, 600 for 2022. What was the number for 2023?
I did not. You didn't ask so far.
If you have it already, then also for 2024, of course, if you have it too.
No, for 2023, I think it's not the right time to talk about it yet. I mean, of course, what you have to keep in mind is Thailand is already finished. Brazil project will be finished in any case in the second half of 2022. There will be only then spillovers for Indonesia, and minor ones for China. On top of that, of course, we will have the usual maintenance CapEx. So, yeah.
Okay.
That guidance, I guess we'll only see within a couple of months from now.
Okay, understood. Thank you. At least I tried.
Welcome.
The next question comes from the line of Sebastian Bray from Berenberg. Please go ahead.
Hello, good afternoon. Thank you for taking my questions. My first one is on the financial expenses or income line. Why was this so positive in H1 relative to the previous year?
Very good question. Actually, we do have quite some intercompany loans that are denominated in US dollar, where actually then any FX change that then ends up or remains actually in the profit and loss statement and is not disappearing through consolidation. Because actually the parent company that gave those intercompany loans is holding that loan in U.S. dollar. As the U.S. dollar actually appreciated quite a bit throughout the first six months of 2022, actually that of course has a positive impact on financial income.
That is helpful. Thank you. My second one is on start-up costs. Have these been weighted during the year into H1 such that an important sequential driver of the increase in EBITDA that we will see in H2, if the guidance is correct, is the falling away of start-up costs, and is a reasonable figure for this around EUR 20 million for H1? Thank you.
Actually, I think the start-up costs, I think we have not disclosed as such. That is, of course, let's say a lot of accounting details. However, rest assured that everything we capitalized so far is fully in line with IFRS. Anyway, also just to mention that, of course, there's always a half-year review being done by our auditor, so everything should be fully in line with IFRS. Actually, with regards to capitalizing start-up costs, we have defined for each site that is currently in the ramp-up phase, a level where we say, okay, from that level onwards, actually we see it as operational, and from then onwards, of course, the capitalization needs to stop.
Actually we are already very close to that point or maybe even behind it for the Thai project. While for Brazil there is maybe probably one other month still ahead of us where we will still continue capitalizing a ramp-up cost or start-up cost. However, latest by end of September, that should all be history.
That is helpful. Thank you. Follow up on raw material costs. Does the guidance you set assume a normalization in EURopean caustic soda prices, in particular for H2, given that these are at close to record highs?
We are still assuming a similar levels like at the back end of Q2, maybe even a slight increase, but very much dependent on the region.
That's helpful. Thank you. A final question. It's more strategic in nature. Where did the idea for setting a fixed dividend minimum independent of the company's earnings come from? I don't think that this has been done during Lenzing's history as a listed company. Given the tensions that Stephan alluded to at the start of the call or the uncertainties, where is the logic in unanchoring dividend expectations from the company's earnings? To elaborate on this, what does this have any read across to the level of CapEx that Lenzing can deploy for the next few years?
I appreciate you are unable to guide on this number at the moment, but if I look at your net debt targets and the cash out for dividend implied is about EUR 400 million a year for the foreseeable future, a figure that leaves you feeling nervous or you think could be broadly in the right area?
Sorry, you mean EUR 400 million as CapEx?
Of CapEx. That's right.
Look, I mean, maybe let me take this part of the question with regards to the CapEx. Of course, I think what you have to model is that there will be. I mean, sorry, let me go back one step. In the last 2 years or 2.5 years, actually, we had significantly our CapEx was significant. However, this was driven by the project in Brazil and in Thailand. Of course, I mean, the CapEx will then depend on any potential new projects that might be up for decision. However, next to that, actually what you have to include is of course a meaningful number for maintenance CapEx.
For that, I would rather recommend you go back maybe 1 or 2 years and look at the depreciation we had there, because now already, as you can see from our profit and loss statement, actually depreciation is already picking up because we already started actually depreciating basically in Thailand. I guess we will start depreciation for the project in Brazil either in Q3 or let's say beginning of Q4. I mean, depending of course, on the progress we are making there. With regards to the level of maintenance CapEx, actually, you have to keep in mind a couple of our sites are really 20, 30, or 40 years old.
At least in the long run, actually the level we had in depreciation, if you go back, I don't know, two, three years or so, that will be probably a meaningful number of maintenance CapEx that you probably have to include in your models, at least in the long run. On top of that, of course, any new project and, just as an indication, we just recently finished our Thai project. Of course, that number would have to be adjusted for whatever inflation and market situation.
Okay. Let me try to answer your question on dividends. I think first of all, as we elucidated, hopefully we see a very profitable future for Lenzing. I don't see a limitation by paying the dividends and still doing our CapEx project, because we're gonna be soon at a level, as we described, of EUR 800 million and above. For CapEx projects, you not only need money, you also need hands and heads. You need the technical experts actually to bring that on the ground. At the same time, I think it's not entirely true that it's completely decoupled. We said this is a minimum dividend.
However, in case that we have really deteriorating circumstances, we still have the option not to do it because the overall dividend payment is a decision of the general assembly. Therefore there is still this disclaimer there that in case that the market comes into a real turbulence, that we of course then reflect on this policy. Overall, we believe it is a smart positioning, looking also at the time we are in to offer a value paper which delivers both an attractive and stable dividend and the benefit of a growing company.
That's helpful. Thank you for taking my questions.
Pleasure.
The last question comes from the line of Gregor Koppensteiner from Raiffeisen Bank International. Please go ahead.
Thank you. Good afternoon. I'll also ask them one by one. Let me first come back to the share of specialty fibers versus standard fibers. You've mentioned a recovery in standard viscose prices being behind that, but we already have recovered viscose prices in the first quarter. I'm wondering if there were any currency effects also involved, given that a lot of the specialty fiber production is in EURope.
For sure there is also a foreign exchange impact out of that. Actually the numbers are fairly close. Actually, what we disclosed here is just, I think we, in the presentation, we showed 71% compared to 73% the year before. The real number was, I don't know, last year was 72.6 or 7, if I'm not mistaken. This year's number is slightly above 71. Actually the gap is very small. It's a very small gap. It just looks.
Sorry?
I was rather looking at the second quarter effect because you started the year with 73%. It was rather below 70% in the second quarter.
I mean, the chart we showed was referring to the half year. The first six months of 2022.
Okay. Let me continue with more standard questions, especially with regards to the outlook on consumer and demand, and the usual questions on what's the capacity expansions you're observing on the market with competitors. Can you give us your view on that?
Sure. I think Robert elucidated already, and I would hand over to him. , of course, first of all, we are delighted to see our capacity extension, Thailand now being fully upstream. We see some activities, but in the area of viscose slowing down in terms of adding capacity. Robert, please keep on adding.
I ndeed. What we've seen in the past is that we've seen limited viscose, standard viscose capacity coming online. Now we do see an increase in this ECOVERO. Two major competitors are also now launching some products similar to our ECOVERO. That's where you see that companies are making investments in their viscose assets and making them more environmentally friendly. Of course, this was driven by the change in market studies a couple of years ago. This is overall helping the price level of viscose for the premium viscose producers. Not much new capacity has been added. What we do see is that some Lyocell capacity has come online from our Chinese competitor.
They're struggling so far still with overall quality acceptance. The market for them is very difficult to get in at this moment because the quality, and specifically when you're talking about the consistency, is not yet at the levels that we are talking about. Some of these lyocell volumes are currently going into some of the domestic China applications as well as what we call cotton enhanced. We do not see them really yet at the more premium brands and retailers in the Western world where Lenzing is selling its TENCEL™ branded fibers into. This is of course also this competitive investment is overall helping you know the increase in demand for lyocell. We've seen this coming.
We're very well prepared, and this is why Lenzing continues to invest in premiumizing our fibers, you know, with our crosslinked fibers, with our ECOVERO, and then overall with the brand strategy that we have.
Okay, thank you very much.
Maybe, meanwhile, we checked on your first part of the question, the specialty share in specific quarter two is around 70%-ish. Not much different to the half year, actually.
There are no more questions at this time. I hand back to Stephan Sielaff for closing remarks.
Thank you very much for your questions and for the interest into Lenzing. Overall, I think as I stated at the beginning, we saw a lot of light, however, also some shadow in the first half year. We are still confident when it comes to our guidance that we're gonna deliver an EBITDA well above the year 2021, and we are delighted about the progress of our major projects in Brazil and in Thailand. Therefore, thanks a lot for your interest and all the best to you. Stay healthy and talk to you soon.