Ladies and gentlemen, welcome to the Analyst Conference Call. I'm Maria, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and One on your telephone. Webcast viewers may submit their questions in writing via the relevant field. For operator assistance, please press Star and Zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Stephan Sielaff, CEO. Please go ahead.
Yeah, thanks a lot, and a very warm welcome also from my side to the presentation of the Lenzing results for the first half of 2024. With me, as usual, is our CFO, Nico Reiner. So as a first start, let's go through the agenda for today. We will start, as you know it from former calls, with the executive summary, followed by a market update. Nico will guide you through the financials afterwards, and I will share an update on our Holistic Performance Program, as well as the outlook. And as usual, at the end, we are looking forward to your questions in our Q&A session. Let's start with an overview of the key developments. And to sum it up, generic markets relevant to Lenzing have not really recovered.
But we, as Lenzing, see further increasing positive impacts from our Holistic Performance Program, both on the top line as well as on the bottom line. In a bit more detail, when we look at the generic markets, in particular, fibers relevant for us, we see only little signs of recovery, and especially prices for generic fibers continue to remain under pressure. On the other side, when we look at our performance program, we see a steadily improving progress across cost and top line. In both dimensions, we are significantly ahead of plan. As we have already communicated, Rohit Aggarwal was appointed as Chief Fiber Officer. He will assume the responsibility for the fiber division in the course of this quarter and after onboarding, taking over the position as CEO.
Now, let's look quickly at our financial results with a continued increase in sales and earnings, mainly driven by our performance program. The revenue increased by 5% versus first half of 2023 to EUR 1.3 billion. EBITDA significantly increased by EUR 28 million compared to EUR 137 million in first half of 2023 to EUR 164 million. The net results reached -EUR 71 million, which compares to -EUR 104 million in the first half of 2023. Free cash flow was at +EUR 54 million in the second quarter, and thereby positive for the fourth time in a row. So we have four quarters in a row with positive free cash flow, leading to a further decrease of our net financial debt.
Overall, our financials continue to show positive development despite the lack of market recovery and more needs to come and will come. We are not yet satisfied with the absolute result. However, we are very satisfied with the trend of development of our operating performance. Looking at the outlook, we continue to take the future in our hands by exploiting the full potential of the performance program and will further drive both top and bottom line. We still have a cautious outlook on the generic fiber market development. However, we continue to see for ourselves a good and healthy order book in the beginning of quarter three, too. All in all, we are well on track with the performance program, and the second half of this year is expected to be positively impacted by it.
With half year one in our books and our view on the next quarter, we clearly confirm our expectation for EBITDA for 2024 to be higher than the EBITDA on the previous year. Let's come to the changes in the management board. As just mentioned, Rohit Aggarwal has been appointed as a new member of the management board of the Lenzing Group. Rohit Aggarwal is a business economist and has an outstanding experience in all relevant markets for Lenzing. He will assume responsibilities for the fiber division during this quarter, so quarter three, 2024. I will not renew my management board contract and will leave the company latest end of March 2025. After onboarding, Rohit is designated to take over the position of CEO of Lenzing Group. Let's continue with a market update.
Our supply markets are key ingredients and energy and the markets of our customers, one example of textile, apparel, and some developments of nonwoven. As I mentioned, we saw no or very little positive development on the market perspective, maybe with one exception, and that is the balanced inventory level on apparel. So if we now look, you see on the left-hand side, the textile market, on the right-hand side, the nonwoven market. Let's start by looking how the clothing retail sales have developed in half year one of 2024 compared to last year on an inflation-adjusted basis. Global apparel demand was slightly negative in the first half of 2024 versus 2023 by -1%. While the U.S.
was slightly up by +2% year-on-year, China dropped with -1%, and Europe saw a decrease in demand in the first half of -6% year-on-year. So why is that? Well, there's on one hand side, low consumer confidence and inflationary pressure, which led to consumer trading down. However, consumers are also tending to be more selective in what they buy and buying in vogue apparel and food items. We also saw an impact from weather. Unusually cold and wet weather delayed the start of the spring and summer season in several regions, in particular in Europe. Weather, therefore, had a significant impact on apparel retail sales in the first half of the year. That is also what we were hearing from the one or other brand and retailer in their earnings calls.
On the positive side, when we look at the inventory level in the apparel industry, and you may remember our elucidations about the perfect storm, where we had very high inventory level, we see much more balanced levels than last year. Surely, we see a trend towards more sustainable fashion, and many brands are getting under pressure to fulfill their sustainability goals. However, uncertainty for this year's second half remains high. On one hand side, there is the geopolitical events and the momentum behind those events, which are increasing, and there are, for sure, still quite some disruptions in the supply chain. Now, looking on the right-hand side, the nonwoven market, we see a much more stable consumer demand, especially for hygiene products in developed markets.
Looking particularly at the fiber mix in wipes and hygiene applications, we see a clear trend towards cellulosic fibers, which is further increasing, accelerated by new regulatory changes, such as the U.K. plastic ban in wipes. So if we look at our fiber sales volume overall, for instance, in half year one, we see that we are well on the way, and we have beaten the market and the competition in some places. So our growth was, for example, significantly more than the production volume of Chinese, Indonesian, or Japanese chemical fiber industry. And when we look at the published Q1 figures of our competition, we can also see that our sales volume growth left the one other competition behind us. Now, let's move to prices.
Before we start to go into the individual segments, please remember, when we are showing these slides, that we are here looking at generic market prices in China, not Lenzing fiber slash pulp prices. Those products, our products, the Lenzing products, are mainly traded at a premium. To give you an idea, meanwhile, and we are proud about that achievement, more than 92% of our fibers are traded with a premium. Now, looking in detail here at viscose, we saw that, in the beginning of Q2, viscose prices were declining. May brought then some unexpected viscose mill outages in China, and that, together with high pulp prices, helped for a slight upturn, slight recovery. We are still, despite this slight recovery, on low levels of viscose prices at 13,350 RMB per ton.
This trend of slight recovery continued into Q3. When we now look at cotton, international cotton prices remained volatile in quarter two. The prices dropped in line with futures after positive expectation on the coming harvest and some speculative effects. While on the first glance, the $0.85 per pound looks pretty low if you compare it to the average price for in the period of 2012 to 2019, which is pre-pandemic, that is more or less in line with that average. Dissolving pulp prices remained stable throughout the quarter, balancing supply shortages on one hand and the limited buying power of some Chinese viscose mills on the other hand. Now, let's look at our input costs.
Here you see a graph where the arrows give you an indication of the development in Q2 versus Q1, and the bars themselves show how much the individual, individual input costs are elevated versus 2020. We see that energy and chemical costs showed a mixed picture in the second quarter compared to the first quarter. However, what is unchanged, if you compare those costs to the previous years, most prices are still elevated. For example, natural gas prices in Europe were still more than three times as high as in Q2 2024 compared to 2020, and coal prices in China were still higher by 49%, and in Indonesia, even by 65% compared to 2020.
Prices for caustic soda decreased in Europe in the second quarter, while they were increasing in China and Southeast Asia in the second quarter of this year. Compared to 2020, those market prices were still 19%-69% higher in Q2 2024. So to sum it up, we still see no sustainable recovery on the fiber market, as we have seen in the slide before, especially on the prices remaining under pressure. And at the same token, we see input costs still on elevated levels compared to 2020. And with this update on the market environment, I want to hand over to Nico to see what we have done and how we delivered our financial results. Nico?
Thank you, Stephan, and a warm welcome from my side as well. Let's start with the development of our fiber sales volumes. As Stephan mentioned, the markets, especially textile markets, did not help us on the demand side. However, the measures taken in our Holistic Performance Program is driving sales volumes. They increased by 21% in first half year 2024, compared to the first half year of 2023. As mentioned, this is a very solid growth compared to what we have seen in the market. We saw a clear outperformance of our sustainable fiber specialties. The share of our specialties of our fiber sales increased by 14 percentage points, up to 92%, with only little volumes remaining as standard viscose. I would like to especially highlight the development of our Lenzing ECOVERO fiber sales.
They increased by more than 50% since first half year, 2023. Let's look at our revenues. They increased in the first half of the year compared to the same period last year by 5% to EUR 1.3 billion. The revenue from the fiber division increased by 9.3% to slightly over EUR 1 billion, but pulp revenues decreased by 21% to EUR 291 million in the first half of 2024. To remind you, the level of pulp revenue depends to a large extent on the share of pulp we use for our own production. With the increase in fiber sales volumes, we also needed more pulp for the fiber production, which explains the drop in pulp revenues. Pulp revenues accounted for 22% of our revenue in the second quarter.
EBITDA significantly increased by EUR 28 million to EUR 164 million in the first half of the year. This figure includes positive impact from the valuation of the biological assets of EUR 11 million, which is much less than in the same period of the previous year. We show here also the development of our EBITDA, excluding the positive impact from biological asset valuation and the sale of CO2 certificate, where you see steadily improving numbers reaching EUR 153 million in first half year, 2024, or EUR 59 million more than in the first half year, 2023. Let's move to the next slide.... Looking at EBIT, it reached positive EUR 19 million, with depreciation and amortization being at around EUR 145 million.
To remind you, the strongly negative EBIT in the fourth quarter, 2023, was heavily affected by the impairment of EUR 465 million. Without the impairment, EBIT would have been at -EUR 1 million. Financial result was at -EUR 41 million in first half year, 2024, and income taxes were at EUR 43 million, impacted by FX development for LDC in the second quarter, 2024, which in sum, led to a higher net loss in Q2 versus Q1, 2024. As a result, for net profit after minorities and hybrid bond, we reported a net loss of EUR 71 million in the first half of 2024, which compares to -EUR 104 million in the first half of 2023.
This is an improvement of EUR 33 million, but our ambition, of course, is to become positive here significantly as well. Let's move to the next slide. Looking now at cash flow. Lenzing increased its operating cash flow to EUR 82 million in the second quarter, 2024, which compares to net EUR 18 million in the second quarter, 2023. With regards to CapEx, Lenzing is putting a clear focus on maintenance and license to operate projects as part of its performance program, and CapEx significantly decreased to EUR 28 million. This compares to EUR 52 million in the second quarter, 2023. As a result, free cash flow increased by EUR 87 million compared to the second quarter, 2023, to EUR 54 million. Free cash flow has been positive now for four quarters in a row.
This development shows clearly a positive impact from the measures defined in our performance program. Trade working capital continued to decrease in the second quarter and was down a solid EUR 115 million from the levels in Q2 2023. Let's move to the balance sheet. On the left side of the slide, we show the development of net financial debt. Net financial debt significantly decreased by EUR 525 million or 27% compared to the second quarter 2023, and was at EUR 1.4 billion at the end of the second quarter this year. On the right side, you see the development of our liquidity cushion.
It increased by EUR 448 million or 77% compared to the second quarter, 2023, and reached EUR 1.03 billion at the end of the second quarter, 2024, which is a result of our clear focus on free cash flow generation. I hand back now to Stephan, who will share an update on Lenzing's Holistic Performance Program.
Thank you, Nico. As mentioned, the relevant markets for us still show no or only little signs of a sustainable recovery, with especially prices continuing to remain under pressure. Therefore, it was, and is even more important that we took and take swift actions in the last year, and are implementing the Holistic Performance Program with the overarching goal of significantly increase our long-term resilience in crisis and create agility in the face of market changes. The program initiatives are preliminary, aimed at generating free cash flow and improving our EBITDA through strengthening, on one hand side, our sales as well as the margin. It contains of three pillars: profitable top-line growth with defined sales initiatives, cost excellence in everything we do, and free cash flow generation. The overall impact of the program should result in a significant positive free cash flow.
So now let's look at a little bit more in detail on the global program, and we want to share with you here some examples of the program. More than 550 new fiber sales leads have been identified in all regions, in textile and nonwoven, to strengthen our top-line growth. As an example, in lyocell, we have new developments for curtains and upholstery at Europe brand. And all in all, in half year 1, 2024, Lenzing reached record sales volumes in lyocell, in modal, as well as in ECOVERO fibers. And in nonwoven, we have, for example, further diversified into new and growing and more profitable segments. So we have, for example, developed our VEOCEL fibers based on lyocell technology with a dry technology component, which is newly launched in fem care product with global brands.
To become more cost efficient, we are making significant operational improvements and are further strengthening our process expertise. To reduce our processual costs, around 400 initiatives have been identified already, and the good news is, every day, new initiatives are launched and recorded in our initiative database. Just to give you one example, we are above plan to significantly reduce our heavy fuel oil consumption in Brazil, with the potential to save up to EUR 5 million on an annualized basis. We are, as I said before, continuously adding new initiatives to the pipeline, and we are currently focusing mainly on energy cost optimization ideas, as well as a balanced, yet improved maintenance cost basis. In addition, we are streamlining our overhead structure and reducing global personnel costs by reducing up to 500 full-time positions.
We will continue to optimize our direct spending, including raw materials and other production materials, energy and wood, as well as our indirect spending, for example, logistics costs. Of around 200 initiatives, in direct and indirect spend, I would just highlight one example. We did a comprehensive logistics tender, which led to significant price reductions for logistics. To increase our free cash flow over and above the measures we just explained on top line and cost excellence, around 80 initiative buckets have been defined, and trade working capital could be reduced, as also shown by Nico, around EUR 130 million since the start of the project in Q3 2023. As you can see from the selected examples mentioned, the scope of the initiatives is very wide, but very concrete, very tangible.
And thanks to the great commitment of the teams and the great talent within Lenzing, we are executing excellently on these initiatives. And what does this do to the, our results? Let's see at the next page. Let's have now a closer look at the cost excellence pillar and the impact to the performance program. Overall, as we communicated before, we are aiming for a cost reduction of at least EUR 100 million in 2025, and we expect to achieve more than 50% of that already in 2024. And as you can see on the right-hand side, we are well ahead of the plan with regards to our savings. And when I say that, we are only recording, and you see that here in the slide, on the right-hand side, the realized savings with a P&L impact. There are various reasons for outperforming half year one plan.
First and foremost, we see a strong commitment and contribution from all our Lenzing employees. In some areas, such as energy costs or purchasing, we could speed up the implementation efforts and hence outperform our plan in half year one. We can clearly be satisfied with our success so far, but, and the but is important, there are still major improvement areas ahead of us, and they are needed to continue our journey of improvement. So let's turn to the outlook. And as usual, we start with some outlook from our customers, and here we start with nonwovens. In nonwovens, some brands are positive with the outlook for the second half of 2024, as you can see, for example, with a quote from Essity, which expects to be fully back in Q4 2024.
A number of brands in the textile market are also rather positive for the remainder of the year, as you can see in the quote from Levi Strauss, which talks about acceleration in sales and profitability in the second half of 2024. Even with more positive comments about inventory, some brands and retailers remain, however, cautious about the outlook for the second half of the year. H&M Group, for example, highlights external factors that will impact the second half more negatively than the group initially expected. Burberry, for instance, is experiencing slowdowns in their current trading in line with the overall market development as seen previously. So to sum it up, we see a mixed picture, where still a number of brands being relatively optimistic already for the second half of the year, while others are remaining cautious for the second half, but more optimistic for the longer term.
But let us switch now to our own expectations for the quarters to come. I can clearly say that we started 2024 better than originally expected, with improved operational performance in Q2 2024, compared to Q1 2024. And that is mainly driven by the impact from our own Holistic Performance Program. Now, this is a good basis. I, we cannot predict when and to what extent a full market recovery will occur. But so far, we assume a stable demand in pulp and have a cautious outlook on the generic fiber market development in the second half of 2024. But one thing, one thing is certain, we are not relying on tailwinds from the market, as we have proven to you in the first half of 2024. We continue to take the future of Lenzing in our own hands.
As a result, we expect ongoing improvement of positive top line impact, which is also reflected in a good and healthy order book in the beginning of Q3. On the cost side, we expect further positive impact of the cost excellence in the course of 2024 and 2025. We see, we therefore clearly confirm our expectation for the EBITDA in 2024 to be higher than in the previous years. When we look even further in the future, how do we increase our performance further? Well, through three directions. We will master the crisis through our cost excellence. We will strengthen our core by improving the quality of our margins, and we will be shaping the future by increasing our innovation and sustainability leadership. As a result, we will emerge stronger from the crisis and will be fit for the future.
I would like to thank you for your attention, and now both Nico and I are looking forward to your questions. And with that, my dear operator, I look forward for you to moderate the Q&A.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, please press Star and Two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Webcast viewers may submit their questions in writing via the relative field. Anyone with a question may press Star and One at this time. The first question is from Christian Faitz of Kepler Cheuvreux. Please go ahead.
Yes, thank you, and good afternoon, everybody. Two questions, please. First of all, Stephan, I note your remarks on your own premium pricing versus the mass market, but can you please be a bit more specific where your price points for your specialty products are? Because when I look at mass market prices, at least, lyocell is trading below standard viscose at this point in time. That is question number one. And then question number two, can you please elucidate a bit more how you see free cash flow evolving into year-end? Thank you very much.
Thank you, Christian. So, the first question I will give to Stephan Sielaff, with regards to our premium prices. Stephan, please.
Yeah, thanks a lot for the question, Christian. As you rightly point out, the price premium we achieve really depends on the fiber type and on the demand. And that varies between the three fiber types we are trading. That means lyocell, viscose, here with ECOVERO and Modal. We can clearly see that in all three fibers, we see better price premium over standard versus our own expectation, because if you look at our price development versus the CCF, which is publicly available, you can see that our development is better.
Having said so, I would say the spread you mentioned on lyocell is stronger, and it is a bit more difficult to achieve a price premium there than, for example, in Modal. But I know, and you will understand, that I'm, of course, not disclosing details on price premiums on individual fibers, and thanks for your understanding there.
Thank you.
Now, the second question with regards to free cash flow, I will hand over to Nico Reiner.
Yeah, thank you. So, if you think about free cash flow, clearly, first of all, to state is we are not guiding on free cash flow, but we have given ourselves a clear target that we want to be free cash flow positive quarter by quarter and also within a year. So the development you have seen in quarter one and quarter two, this has been really strong and very positive, coming first of all, from the operating cash flow, but also from the lower CapEx, which we have seen. Going forward, I would state that we will keep the positive trend, and we have a clear ambition to have overall a clearly positive free cash flow also for the fiscal year 2024. I think that's a clear guidance.
Overall, you need to be also realistic when looking at working capital, for example, as we have done here, a lot of release on the volumes. So at times there is a bottoming out. So the expectation, for example, on the working capital side, should be a little bit more on a realistic basis, more steadily going out there. So these are one or two key elements which I can give you as some thoughts in relation to the free cash flow.
Okay, great. Thanks very much.
The next question is from Isha Sharma of Stifel.
Hi, good afternoon. I have two questions, please. First of all, could you quantify the savings that you have realized so far in the year, and what do you expect for the second half? And then, in regard with pulp, the underlying EBITDA margin in the second half is around 31%. Is it a good run rate that we can expect for the division going forward? I was expecting a bit of higher margin, given the attractive economics of your Brazilian JV.
Thank you, Isha. Now, the first question, with regards to the savings that we had in the first half and what we would expect for the second half, I would give to Stephan, please.
Yeah. Thanks, Isha, and good to talk to you again, and thanks for your questions. Yeah, well, as we stated, we are targeting well above EUR 100 million, and we want to achieve more than 50% of that this year. And we are overachieving our targets significantly, as shown in the graph. But I'm sure you will fully understand that we cannot disclose details on the savings, but you can do your own math. If you look at the graph, you see we are well ahead of plan, right? And to your second question, are we satisfied with the EBITDA margin? No, no, we are clearly not. What I'm saying is the trend of our operational performance is right. We are getting better quarter by quarter.
Are we satisfied to where we are? Not at all. Therefore, we keep on pushing, and we keep on pushing both sides, the top line, and as well as the bottom line on our cost excellence. Clearly, in the end, targeting, of course, also a higher percentage of EBITDA.
Yeah, thanks for that. Just a follow-up: So I was specifically asking on the margin for pulp. Do you think there is also an upside there?
Well, we are so far on the pulp side as well as on the fiber side, not disclosing any individual numbers. When you look at where, how we see the market, and we are commented on the market pulp market, then you can make your own conclusion how we see the development of the EBITDA margin of pulp. Having said so, maybe that didn't come across clear enough. The VCP program is targeting all elements, so cost savings are also very warm welcomes in the pulp area, as well as in the fiber area.
Thank you.
The next question is from Sebastian Bray of Berenberg. Please go ahead.
Hello, good afternoon, and thank you for taking my questions. Could I start with cash flow, please? Firstly, on the payables, the majority of the working capital improvement from Q1 to Q2 appears to have been achieved by stretching out or increasing payables by about EUR 50 million or so. Is that likely to be continued in the sense that they drift higher, or are we looking at a roughly stable development from here? My second question on the cash flow was related to CapEx. If I take the run rate that Lenzing had in Q2, of a touch under EUR 30 million, this, in inflation-adjusted terms, is pretty close to what the company was doing in 2015, which is before it invested about EUR 1.5 billion of fully consolidated growth CapEx.
What is the long-term sustainable level of CapEx for the company, given that DNA seems to be at about EUR 280 million? And if you can't give me a number, what stops you from doing that? Thank you.
So, those two questions, first one with regards to the expected development of payables, first, maybe this one for Nico Reiner.
Yeah, thank you. So on the payable side, in regards to free cash flow, yes, we had a positive development, as you described it, on the payables. We are permanently pushing also on the payable side to positive trends to get here free cash flow generated. On the other side, as you mentioned it indirectly already in your speech, there are also certain limits going into this direction, going forward. So there has been positive developments, yes, but going forward, I think it is also rational to think about that, that there are limits to this development, and so that would be my comment on your thoughts.
Second question in regards to the CapEx. Yes, we are completely focusing at this point of time on maintenance CapEx and license to operate, and you can see the development also with the numbers you mentioned also. Clearly guiding here, we do not guide on CapEx overall, so I can't give you a number, but I think we are in a situation where we turn every single euros which we spend intensively before we are going to spend it. Coming from that approach, to have even probably lower numbers would be difficult. I would think if you take the numbers what you have and make your own predictions, you could get to the area what we are looking for.
That's helpful. Thank you. The last one was just on the tax charge. What happened in Brazil to make the tax charge much bigger than was expected? It doesn't look like it's cash effective. Is this something that affects H2? Because it looks like on an underlying basis, Lenzing pays virtually no tax at the moment because the net income is not there. What happened in Brazil in Q2, and could it happen again?
Yes, very happy to answer this question. So basically, if you look into the Brazil situation, you do have usually all your tax obligations in local currency, which is the Brazilian real. And if you make now the conclusion that the Brazilian real significantly dropped compared to hard currencies like the U.S. dollar and like the euro, the major impact was this FX effect, because you have to calculate then also, as our currency in our balance sheet is euro, the major loss of the Brazilian real is compared to the euro, and this is the key element of the development.
That, that's helpful. So assuming that we don't have any big exchange rate swings in H2, this is not something that is going to recur?
Look, I'm pretty honest about that one. If I would be able to predict FX effect, I would be very happy, but honestly talking, I cannot. So therefore, it is really a pure FX effect, and that's the rationale behind of it.
That's helpful. Final one, depreciation. Is just taking the H1 figure and multiplying it by two a good run rate for the whole year?
You do very good calculations.
Thank you.
The next question is from Sebastian Growe of BNP Paribas Exane.
Yeah, good afternoon. Thanks for taking my question. So there's three, I would ask them one at a time. The first one is around the Holistic Performance Program and related to sales. So considering the comments that you provided on the inventory levels and also on demand, would it be fair to assume that prices might have bottomed out here, and that pricing might actually become a tailwind in the second half of the year as a result of the mentioned shift to specialty fibers?
Yeah. Thank you very much, Sebastian, for the question. Now we can clearly see that we see a room for improvement for our pricing. I can disclose also that other than the CCF, we could improve our pricing in Q2 versus Q1. So prices are moving up. Also, the beginning of quarter three is trending in the right direction. Now, how do we achieve it? It is also at looking at playing with the right players, qualifying also our brands like TENCEL, ECOVERO.
To give you an idea, we reached already today our annual performance when it comes to qualification of our real sale brands with mega brands in the hygiene sector, and that will carry on into to the second half, and that will help us on a different pricing level to have different market segments where we can sell our fibers to. So we have a clear strategy, and that's why these sales leads are so important that we can now really develop our business into more profitable business. While the market recovery is not there, we can take our journey into our own hands through this program.
Okay, sounds good. If we can move on to the EBITDA impact, and following the trajectory that we have seen so far in 2024, I think it tends to point to an annualized run rate of getting at least close to the EUR 100 million target or above EUR 100 million target. So would it be fair to assume here that there is headroom to that very savings target in an absolute consideration, or is the overachievement solely a timing effect?
Okay, well, look, I'm not 100% sure what you are trying to address with your question, but let me-
... Say again, we said it in quarter one, and I can repeat it in quarter two and confirm it. We saw a good start in quarter one. If you now see our half year results, we promised an EBITDA improvement, and we delivered an EBITDA improvement. And what I can tell you that yes, for sure, we want to continue to improve our EBITDA in the coming quarters further. And if you do the math, yeah, that will result into a higher EBITDA than last year.
But further guidance, we will not give at this stage, taking the uncertainties we see for the two reasons I mentioned before: the global geopolitics, which may have an impact or not, plus the supply chain disruption, which still have an impact when you look at the Red Sea crisis. Yeah?
The back of my question was really to better understand if sort of the overall progress and momentum that you see in the program is kind of really lifting off, so that things are simply turning out and playing out better than you would have expected them to play out. Or if there are other kind of aspects that, for instance, headcount rate measures are coming through earlier because people are leaving the company or what is really behind it? Yeah.
No, I think, look, our overachievement of the VCP program has basically both elements in it. There are certain measures which could be implemented earlier, so they are paying in earlier. And there are other measures where we overachieve our target, right? We had, for example, a target in an energy consumption reduction in Thailand. And when we now executed the project, the team was able to overachieve the original estimated savings. So the overachievement has both components, the acceleration of some of the initiatives, as well as better output of the initiatives. Now, what is good news, and therefore, that is good news for you as well, there's more to come, and we keep our foot on the pedal. We want to further increase the...
and accelerate the speed of implementation, and we want to increase also the number of initiatives we can implement. And therefore, I would expect further impact in both dimensions, acceleration, as well as overall impact of the program.
Okay, sounds good. Then the last question is around the long-term partnership between Suzano and B&C Group that has been announced. I acknowledge that the question might equally be asked to Suzano and or B&C, but I would like to get your thoughts around the agreement as such, and how you view the envisaged improvement that was put at revenue growth, profitability, and international competitiveness improvements, and whether you can share eventually what measures might be taken in this regard.
I think you partly gave the answer yourself, right? Where are we in this process? And therefore, we cannot answer on a lot of your detailed questions. We're still before closing, and it's a shareholder deal. Now, one thing for sure, I can say, it's good to have another long-term core shareholder who is ready to support the strategic and financial development of Lenzing. That is my view, my personal view, as well as the view of the board. So therefore, that I can say. Everything else you ask, that has to come after closing, and we are looking forward to have a second strong and long-term core partner on our side.
Okay, maybe just one very, very quick one, in this regard, in the closing. Do you have any sort of idea around the timeline here?
No, because it's a shareholder deal, and you, as you said, you need to address those questions to the shareholders, BNP and Suzano.
All right. Thank you so much.
Pleasure.
As a reminder, if you wish to register for a question, please press Star and One on your telephone. Mr. Sielaff, there are no more questions at this time. I'll turn the call back to you.
Yeah. Thanks a lot, and let me finish this call with our closing remarks. And first of all, thank you for joining the call, and thank you for the, for the good questions. To sum it up, the market recovery is still lacking, but we see, we at Lenzing, see continued and increasing positive impacts from our Holistic Performance Program on both top line and bottom line in the second quarter and going forward. The EBITDA further developed in the right direction, and the free cash flow has been positive now for four quarters in a row. Therefore, the first half year, 2024, was already better than expected. That does not mean we are satisfied. That does not mean we are lying back. Just the opposite.
We keep the foot on the pedal, and we continue the started progress and process of improving the health of Lenzing, making it stronger, fitter, agile, leaner, and with that, strengthening the resilience of Lenzing. Now, to give you more updates of the progress, we invite you for our next call on November seventh, with our Q3 results. Thanks a lot for your attention, and with this, I would close the call. Thank you very much.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.