Yes, thank you. A very, very warm welcome also from my side to our quarter one result investor presentation. If we want to look at it at a glance, then I'm pretty glad that we can report a very solid performance for the first quarter 2022. We have a strong revenue growth from EUR 489 million in quarter one 2021 to EUR 615 million in the quarter one of this year. We see also that our EBIT developed with EUR 88 million, which is slightly below quarter one 2021. and we have a net result after minorities and hybrid bonds of EUR 23 million versus EUR 28 million in quarter one 2021. The earnings per share are EUR 0.87, where they were EUR 1.06 in last year's first quarter.
On the key developments, I think, the first quarter of 2022 was really a milestone for Lenzing. We have two major highlights. There is on one hand side, the successful startup and ramp up of the Lyocell plant in Thailand. It is the world's largest Lyocell plant with a capacity of 100,000 tons. In the same quarter, we are happy to report the successful startup of our dissolved wood pulp mill in Brazil with a capacity of 500,000 tons. Again, the world's largest of its kind. Those projects were on schedule and on budget, or even in the case of Thailand, slightly below. We have, as some of you know, some changes in the management board.
I took over on the first of April as CEO, and I'm very glad and happy to report that Christian Skilich decided to extend his contract early for another three years. When we come to the outlook and guidance, I think we have to balance on the one hand the very positive market environment, which is still driven by a high demand for sustainable fibers and sustainable fiber solutions. At the same time, a high level of uncertainty when it comes to raw material costs, energy costs, logistics costs, as well as disturbances in the supply chain.
If you take on top into account that from this quarter onwards, so quarter two onwards, we expect first results and EBITDA contribution from our two new plants, we are very positively looking into 2022 and expect an EBITDA significantly above 2021 levels. That also brings me to the 2024 target. Here we can more or less confirm them.
We have an EBITDA still of EUR 800 million, a ROCE adjusted for plants under construction greater than 10. A financial leverage below 2.5x . Our specialty share for our fiber revenue greater than 75% and also greater than 75% our backward integration rate and our CO2 emission reduction of more than 40% for the year 2024.
If we then come in detail to the highlights, there is, as we said, our new board, where we have next to me our Chief Financial Officer. You will hear him in a minute, Thomas Obendrauf. We have our Chief Commercial Officer, Fibers, Robert van de Kerkhof, and our Chief Pulp Officer, Christian Skilich. It is pretty logical as we are moving down from five to four board members that a couple of responsibilities were newly assigned, and that happened and it was a very smooth process. I think we mentioned it before, Thomas Obendrauf will not renew his contract, which expires in June 2022. The search for the replacement is very well underway. We wish, of course, Thomas, all the best for his future.
A great contribution so far to the company. Christian Skilich, I mentioned before, he had an early extension of his contract for three more years. Cord Prinzhorn is taking over from Peter Edelmann the role as the Chairman of the Supervisory Board. Peter Edelmann decided on his own that he would not continue his role, which is pretty important to us and underpins how serious we are when it comes to sustainability. The AGM decided on April 26th that the long-term incentive of the management board is also linked to the ESG criteria. Which brings me to one of our milestones, and let me start with Brazil. We had in the month of March the successful startup of the new dissolving wood pulp mill in Brazil.
It is fully on schedule and in budget. As we said, it is the largest of its kind. We had an industrial CapEx of, what? $1.38 billion, and we are staying in that budget. With this mill, we're gonna get into absolute cost leadership when it comes to pulp. The successful startup happened, and we need now to ramp up quality and output, and that will take us up until end of 2022.
For the information, here we have the so-called LDC, the LD Celulose. This is a joint venture between Dexco and Lenzing, in which Lenzing holds 51% and the joint venture is fully consolidated by Lenzing. We are really proud of the team. A huge compliment. I think it is not a normal achievement under these circumstances. Great job done. Which brings me to the next great job, and that is Thailand. Maybe, Thomas, you can talk a little bit about the Lyocell plant.
Thank you, Stephan. Hello, and welcome also from my side. It's my pleasure to update you on the second major milestone. In a nutshell, the ramp-up phase of the new 100 kt lyocell plant is successfully ongoing. We delivered the project on schedule and at budget after two and a half years of construction, and that actually despite challenges arising from the global pandemic. I think the circumstances were extremely difficult.
However, I think we did an excellent job in delivering that project. The new plant will of course help us serving the growing demand for sustainably produced fibers, and will significantly contribute to overachieve Lenzing's specialty share target of 50% by 2023. The plant as such is being operated CO2 neutral and is therefore an important milestone towards a carbon-free future. Overall, we are very proud of this achievement. With that, actually, I hand back to Stephan.
Thank you, Thomas. Let me talk a little bit about the market update and the environment. Here on that slide, you see the global apparel retail sales, and we compare it to the pre-COVID crisis times. As you can see, we are slightly above the pre-pandemic level, but it is a very volatile market, and it has large regional differences. To give you an example, in April, we see in the U.S. almost 20% higher demand than we had in 2019, whilst Europe has a mixed picture, U.K., France going also pretty well, but Germany lagging. Of course, a major influence is in China.
In China, we see at the moment in March a decline of -15% versus the pre-COVID times. This is largely driven, of course, by the COVID lockdown. We see especially in Europe, of course, a high uncertainty coming from the Ukraine crisis and the inflation. European consumer confidence level is on a record low. When we then come to the individual fiber price development in China, I would like to start with the graph which is on the top, which is Cotton. You see that it keeps on rising. There's a flaw, of course, as we explained in former calls, a little bit of speculation in the Cotton price.
Certainly, the last spike you can see in quarter one is also driven by the Russian invasion in Ukraine because there is a fear and a fight for food crops. Ukraine was a very important exporter also for wheat and soy, and therefore there is a concern about the global competition for acres. Surely, the cost of fertilizers went up.
That has driven the cotton price. When we then go to polyester, then we see that polyester is also impacted in terms of the war and the oil price. However, the price stays relatively flat. That comes mainly because of the reduced demand in China, driven by the lockdown in China. The dissolving hardwood pulp is going up.
There are various reasons for it. There's on one hand side, the strong demand for paper pulp, and the paper pulp prices are rising, as well as the natural disaster in South Africa amplified the cost as well as some supply chain hiccups. That brings me finally to viscose. Here we are seeing that we are moving up the prices in quarter one as well, but we also see the high prices on the raw material side, as I mentioned, pulp to name one.
If we then look on the next slide into how does that translate in profit and loss in viscose, then you can see that whilst the losses, so the light green surfaces on the left-hand slide are smaller than they were before, it's still loss-making. Despite the fact that actually the prices for viscose, which is the green line, is going up, you see that the cost increase was even steeper.
That also we can see in the viscose conversion margin. We see that the level is around about EUR 800- EUR 900. We see, yes, the prices went up, but certainly the pulp prices are on top. Yeah, we see there is a difference versus the first quarter in 2021. When we then look into how our specialties develop, and then I see here we see that the specialties are going up in this quarter.
Actually, we benefit slightly from the cotton prices. We have to say that our price, we are driving that also having in mind the generic lyocell prices. Here we are achieving at the moment very nice premiums versus generic lyocell, as there are still technical issues to supply the market. That would bring us now to the financials of the first quarter, and I would hand over to Thomas again.
Thank you, Stephan. Let me continue with group revenues. Revenues came in actually in Q1 with EUR 615 million compared to EUR 489 million the year before. The increase mostly driven by higher fiber prices and to a smaller extent, also impacted by higher revenues from our pulp division, and they're driven by higher prices for the co-products.
With regard to the fiber revenue by applications, as you can see here on this slide, we are usually around this 70:30 split. In Q1 2022, actually, it was 68%-32%, so basically in the same ballpark area. With regard to specialty shares of fiber sales, Q1 came in with 73%. That's basically the same number as in the year before. Moving on to earnings, and let me start with EBIT.
EBIT came in with EUR 88 million, compared to EUR 95 million the year before. As of course, revenues were up, significantly, costs were as well. So the consequence, of course, we saw, EBITDA margin going down from 19% to 14%. We see the same development, of course, for EBIT. EBIT came in with EUR 44 million compared to EUR 55 million, the year before.
Again, they are the same development as for EBITDA. And last but not least, on group net profit, we ended the quarter with EUR 23 million compared to EUR 28 million the year before. Earnings per share, at EUR 0.87 compared to EUR 1. 06, the year before. Moving on to cash flow, gross cash flow, actually, at the level of EUR 86 million.
That, I think is pretty much on the same level as the quarters before. Also for the operating cash flow, close to EUR 80 million. What you have to keep in mind there is that we restarted our factoring program, which added EUR 47 million in that regard. Free Cash Flow, of course, still negative with slightly more than EUR 100 million. The reason for that is of course the CapEx we spent, especially for the project in Brazil. CapEx in Q1 amounted to EUR 183 million, so that is already slightly down compared to Q4 of last year. With regards to trading working capital, actually now an increase to EUR 444 million.
That is, of course, also in line with higher revenues, but also, with a higher inventory level, which is of course, a consequence again, of the uncertainty we see from a logistics perspective. Trading working capital in percent of annualized revenues is now at the level of 18%, when we adjust for the factoring program. Moving on to balance sheet, let me start there with net financial debt. Actually reported net financial debt came in with close to EUR 1.1 billion. If we adjust for the portion that is being guaranteed by our Brazilian joint venture partner for the dissolving wood pulp mill in Brazil, then we come close to EUR 700 million.
With regards to equity, actually adjusted equity came in on the very strong side with more than EUR 2.2 billion. Adjusted equity ratio unchanged, close to 40%. With regards to our liquidity cushion, we still have EUR 1.5 billion left. Actually we are also in that regard, definitely, on the safe side. Overall, also from my perspective, a very solid start into fiscal year 2022. With that, I hand back to Stephan for the outlook.
Yeah. Thank you, Thomas. Yeah, indeed, very solid when you look at what kind of environment we have in terms of price increases and that we were able to pass on nearly everything, is a truly strong performance. That brings me to the outlook. We see on one hand side a very strong demand for our sustainably produced fibers, which our fibers are.
The TENCEL brand and all their products are demanded by the market, and we see that for textile but also for the medical or hygiene applications. In both segments we see the strong demand. On the flip side we see, of course, the cost developments for energy and raw materials and the supply chain disturbances which are not helpful for the EBITDA development and make it a bit tougher.
However, I think we need to see on the positive side that now the two new production sites, Thailand and Brazil, will start contributing with EBITDA to the overall group results. That brings me immediately also to the focus points. Of course, the highest priority when it comes to focus points is now to commercialize these new capacities.
We celebrated the successful startup, now it's about to commercialize them. I think we have shown that we were able to defend to a large extent at least the absolute term margin of our products, and this is strongly linked for our strong brand. The focus on TENCEL, on VEOCEL, on ECOVERO, i.e. on our branding will remain, that will support our position.
Of course, in these days, continuous improvement, cost management and operational excellence remain a top priority for us. I have to say that what I've seen so far from quarter one results as well as from the pipeline, I'm very encouraged by the team and by the culture we see now in Lenzing. With that, I would finish the presentation and open the floor for your 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 touch-tone 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 Isha Sharma from Stifel. Please go ahead.
Hi. Good afternoon. Thank you for the presentation. I have three questions, please. The first one is on the lockdown situation in China. As far as I understand, most of the downstream mills are located in the south provinces of Guangdong and Fujian, and therefore not really impacted directly in terms of production. Is that the correct assumption?
Also, but you did mention some negative impact on demand. I was wondering if you could quantify it a little bit for us. How much was it in Q1, and what is your expectation in Q2 if we assume the lockdowns to continue through the quarter? That would be the first one. The second question is on dissolving wood pulp market.
There were expectations that the price normalizes once more capacities come on stream, which were expected in 2021 and also for 2022. Have the market dynamics changed given the flood situation in South Africa? What would be your expectations in terms of demand, supply and pricing this year, please? The last question is if you could please help us with your expectation on the utilization rates of both your plants, which have both started production, which is really extraordinary in chemical industry, I have to say. If you could give us the utilization rates for our models, that would be great for Q2 and then beyond that. Thank you.
Okay. Thank you, Isha. I would like to try to answer your question. Let's start with the lockdown in China. As we have shown in the presentation, we see the first impact of course in the retail sales and then we see the one or other mill is also impacted, not so much by the lockdown, but they get problems from a logistic point of view. I'm not sure whether you're aware, but at the moment, we have a capacity of trucks in China, which is down by 30%-40%. The supply to those mills is also a problem. Overall, the demand in China for sustainable fibers is pretty healthy.
It's pretty good, and therefore, we see less of an impact than others. When I come to the impact of South Africa, yes, that has an impact. We are at the moment studying. It is for us only impacting one segment and we are studying how we mitigate it. We have still inventory on pulp, but of course, having such a problem in one of the key supply markets, we need to think about mitigation plans and we are in the middle of doing this. So far we didn't have to reduce any output of one of our sites. On the dissolved wood pulp price market, I think of course a situation like South Africa doesn't help the prices.
That would be my estimate. The third question was about the utilization rate here. I'd like you to understand we are in the middle of a ramp-up curve. We, as I said, are ramping up our factory in Brazil, and by the end of the year, it should be there. In Thailand, we are very positive in terms of output, but it is still a ramp-up curve also in the quality we get. We are very pleased. We are actually. When I look at the quality of products we get per ton produced, then I'm very positive because it's actually better than planned.
That's great. Thank you so much. We'll go back in the queue. I have a couple of more. Thank you.
The next question is from the line of Markus Mayer from Baader Bank. Please go ahead.
Good afternoon, gentlemen. Three questions from my side as well. Given the now successful ramp-up of the two new plants, can you give us an indication when you expect the dissolving wood pulp plant positively to impact your earnings in 2022? Is this something already happening in Q3 or more in Q4? And also how much the new Thailand plant is already loaded, and also if the Thailand plant is already positively contributing to the earnings of Lenzing.
So that would be my kind of first question. Sorry for this. Second question is, in addition, as now the two large CapEx projects are nearly finalized, for when should we expect the announcement of a new world-scale, especially viscose fiber plant? Is this something you have already on agenda or is this something more out for the next years?
My last question would be, the premium of specialties versus standards seems to be not yet where it has been in 2019 or beginning of 2020. Do you expect to install these old premiums shortly or is this something that the structure has changed, that you might not achieve this over the next years? That would be my third question. Thank you.
Okay. Let me take your first question on the ramp-up and the contribution from both the new projects that were just finalized. Actually, as Stephan elucidated before, both plants are of course now in a ramp-up phase, and at the beginning of a ramp-up phase, actually, costs will rather increase, of course, and results will decrease. Only then later on, we will reach the turning point when quality is on the level we expect and output also on that level. Actually for the mill in Brazil, my expectation would be that we see positive contributions from Q3 onwards. For Thailand, of course, it is a more complex ramp-up than for a dissolving wood pulp mill.
We would expect a positive contribution probably rather at the end of Q3 or maybe in Q4. It is probably you need to understand that, let's say, ramping up a pulp mill is, let's say, I mean, of course, Christian will not like me for that. However, ramping up a pulp mill is probably easier than ramping up a state-of-the-art lyocell plant. Therefore, also timing-wise and quality-wise, there are some differences. I hope this answers your first question. On your second question, actually, you asked on a viscose plant. However, Lenzing does not have any plans on viscose. Maybe are you referring maybe to our investments in China and Indonesia.
Yes, to China and Indonesia, but also that you further enhance your capacities in specialty fibers.
Okay. Specialty fibers.
Sorry. Sorry for this.
Yes, China and Indonesia, the two projects are on schedule. They will not deliver major impact in 2022. The China one at the very back end of 2022, but the Indonesian one will go live in Q2 2023. Now, in terms of when do we announce the next project? Well, let's do the homework first. As I said, focus on commercialization, and then sure, we have plans and ideas, but first I want to sell out our plants and then we do the next step. Then the. Is it. Does this answer your
Yeah.
Second question?
Yeah. Thank you.
Okay. We had a third one that was on the premium, right?
Exactly. Premium specialties versus standard fibers.
I would say when I look at what we get as a specialty premium on our ECOVERO viscose versus standard viscose in the market, I think we are seeing very nice premium. I would say that it is at least in the highest areas and range we've seen before. Also when you see the premium we have with our TENCEL Classic versus generic lyocell, that is also very high in these days.
My question was m aybe it's just a product mix effect, but when I look at your page 12 of the presentation, then just the gap in between the two price lines looks like that it is larger or was larger in 2019 and beginning of 2020 than it is right now. Therefore, it looks like that the gap of Lenzing specialties is not yet as it really was one to two years ago or basically two to two and half years ago. And that was my question. Maybe that's also something to do with a product mix effect and a volume effect.
Yeah. This is for sure. There is a mix effect in it. I would wait for the development in the next quarters.
Okay. Sounds good. Thank you.
Thank you.
As a reminder, if you would like to ask a question, please press star followed by one. The next question is from Teresa Schinwald from Raiffeisen Bank International . Please go ahead.
Yeah, thank you. Good afternoon. Three questions. No sub questions. The first one's referring again to the ECOVERO and premium viscose. Back in the days, we, at least I was assuming a 15%-20% premium versus standard viscose. Prices have increased everywhere. Would it be fair to assume that the premium versus standard viscose has increased in the past few months?
Rather in the 20%-25% area? The second one is regarding your energy procurement policy. Is it about to change for those plants that are not self-sufficient or have access to biomass? Because buying at spot prices hasn't been the best of choices in recent weeks. The last one is more a general one. If you could please provide EBITDA data for the two segments on a quarterly basis. Thank you.
Let me start you with ECOVERO, and I would ask for a little bit of understanding. We will not share detailed numbers there on that level of granularity you ask for. Rest assured that ECOVERO at the moment has a very nice premium versus standard viscose. When it comes to energy, as you rightfully say, we have different sites with different setups, some self-sufficient, some less.
We are looking into hedging some energy costs, and we are looking into getting more independent also on the energy resource. We have, as you may know, we are doing a couple of photovoltaic projects, which we now have the approval. So we are working on all three fronts. Right. EBITDA per segment, Thomas.
Yeah. Let me take the third question on EBITDA, per segment on a quarterly basis. Actually, our plan is actually to disclose this information, for the half year report and of course, for the full year report. I will take up your question. I will discuss with investor relations and accounting as well. However, so far, actually, our plan would be to stick to disclosing this information only, with the half year and the full year.
It will at least be highly appreciated on a quarterly basis.
Well, I.
Thank you. Thank you for asking.
I fully understand your question, of course. Yeah.
Have you finished your question?
Yes, I'm done. Thank you.
Okay. Thank you. The next question is a follow-up one from the line of Isha Sharma from Stifel. Please go ahead.
Hi. Thank you for giving me the opportunity again. Just two more questions from my side. One is on the cost. If I look at the cost of sales, they have come down sequentially in absolute terms from Q4 to Q1. Is this driven by lower dissolving wood pulp prices as they appear in your P&L? What should we expect in Q2? Because there's a lag effect.
Just trying to understand when it appears in your P&L. The second question would be in case of a Russian gas embargo. I understand that of course Lenzing is kind of a biorefinery, so there you're not affected. The lyocell plant in Europe will be, right? The other two plants of lyocell, but which are outside of Europe, will not be impacted. Just trying to understand, have you looked at what kind of impact there might be for you, in case of a lower energy availability? Thank you.
Okay. Let me take your first question on the development of cost of sales. Yes, you are of course correct. Our cost of sales compared to Q4 2021 are down a bit in absolute numbers. However, that is in line with lower sales volume in Q1 compared to Q4 2021. If you would go down to more details, I mean, the cost level as such still has increased in Q1 compared to last quarter. 2021 by couple of percentage points. However, the decrease, as said before, is in cost of sales, driven by lower sales volume.
Okay. Let me take your energy question. I think we need to answer that side by side, right? We have, as you may know, a site in Heiligenkreuz in Austria. This site is highly dependent on gas, and as soon as an embargo would lead to a restriction of gas, then we would either have to lower the output or in case we wouldn't get any gas at all, we would have to stop. The other side, as you rightfully say, in Lenzing, the vast majority, we are doing ourselves. It's our biorefinery concept.
However, we need a little bit of gas as well for certain processes. If an embargo would lead to a zero supply also of the Lenzing site, we would struggle to continue the operation. At the moment, I don't see and foresee any impact of these measures in Purwakarta in Indonesia, in Nanjing of course not, and in Mobile and in the U.K., the impact is probably also limited. That would be, if that's helpful, how we see the situation.
That's very helpful. Thank you to the both of you. Thank you. We have a follow-up question from the line of Markus Mayer from Baader Bank. Please go ahead.
Yeah, thank you. Also on the volume development in Q1, can you split up the top line growth development or give at least indication what was the price effect and what was the volume effect in Q1? That would be helpful. Secondly, also then, the development in the second quarter, April and May, you said, lockdowns in China are already affecting or have already affected March a little bit. I guess this is also the case for April. Maybe some more color on April and May development would be helpful.
Let me take your first question on details on volumes and prices. I mean, as you know from our course, we are very reluctant in sharing any information in that regard. The only thing we do is actually that in the annual report, of course, you find the total volume being sold by Lenzing Group. The reason for not sharing those details is simply we do not want to leak any information to the market on the price points, especially for our specialty fibers like Lyocell or Modal. Therefore, please understand that we will not be sharing that information.
Okay.
The second question, if you could repeat, please.
Yeah. That was basically how the second quarter has started. I guess you see the development of China getting worse basically than in the end of the first quarter. At the same time, I wanted to know if the developments in Europe or in North America are developing better.
I would say we had a good start of the quarter. Of course, we are impacted a little bit also from the congestion in the Shanghai Harbor. Also in April, we don't see yet for our fibers any reduced demand. Demand stays strong in Asia, in North America and in Europe.
Okay. Perfect. Thank you.
If you would like to ask the question, please press star followed by one. There are no more questions at this time. I hand back to Stephan Sielaff for closing remarks.
Yeah. Thank you very much. Yeah, I wish all of you a great rest of the day. Stay healthy, and talk to you soon in one of our next calls. Thank you. Thank you so much for your interest and hopefully talk to you very soon. Bye-bye.