Another extract from the Lenzing annual reports...
The demand for Lenzing Lyocell fibers developed very positively during fiscal 2003; the intensive marketing activities proved successful. Production lines worked to full capacity, handling orders both in the textile area and for nonwovens. Lenzing Lyocell has succeeded in opening up new, promising growth markets concerning home textiles. Thanks to its outstanding properties as a particularly pure fiber made of wood, a natural raw material, there is a strong demand for Lyocell in this market segment.
Against this background of a lively demand, completing the expansion program at the Heiligenkreuz site during fiscal 2003 came just in time. A total amount of EUR 36 mill. was invested into building a second production line. The new facilities were successfully taken into operation at the beginning of 2004, which doubled the production capacity at Heiligenkreuz to 40,000 tons per year. The bigger production quantity is also the basis for sustainable improvement of the earnings situation regarding Lyocell, since this makes it possible to achieve the corresponding reductions in specific production costs.
In the course of expanding capacities, the staff level was raised to 180 employees at the Heiligenkreuz site. Furthermore, the energy supply center of the Heiligenkreuz industrial park was bought in 2003, in order to secure energy supplies at favorable prices.
In September 2003 a deflagration occurred on the first production line, which caused a fire and considerable material damage. The incident was due to the faulty operation of an ancillary unit. The incident did not occur during normal operations, but when the existing production line was started up after a scheduled standstill, required in the course of the construction work on the second production line. The material damage and the costs of the temporary production standstill were covered by insurance policies.
The first months of 2004 were characterized by the start-up of the second production line at Heiligenkreuz. Since demand for Lenzing Lyocell fibers continues to be positive and expanded production capacities are available, one can expect a corresponding improvement in sales and earnings in comparison to 2003.
Lenzing AG operates a Lyocell pilot plant at the Lenzing site. This has helped to develop quality assurance steps for the big production volumes of the large-scale plant at Heiligenkreuz. Moreover, the production processes were improved, which will make it possible to use different pulp qualities.