Marked increase in first quarter sales

May 15, 2006

Raw material prices exerting pressure

The Lenzing Group started business year 2006 with a marked increase in sales due to significantly higher production at all sites of the cellulose fiber core business. Consolidated sales went up by 11.8% to EUR 261.2 mill. for the first quarter of 2006 (compared to EUR 233.8 mill. for the reference period of 2005). EBIT correspondingly declined to EUR 22.8 mill. (reference period 2005: EUR 27.4 mill.) with the relative decline of 16.6% highlighting the best-ever quarterly performance of the 2005 reference period in company history. Net income for the first quarter was EUR 14.1 mill (reference period 2005: EUR 20.5 mill.).

The EBIT margin for the first quarter of 2006 was at 8.8% (reference period 2005: 11.7% and all of 2005: 8.7%). The corresponding EBITDA margin was 14.8% (reference period 2005: 18.4% and all of 2005: 15%).

The equity ratio improved to 49.0% (31 December 2005: 48.0%). Net debt at the end of the first quarter of 2006 was reduced to EUR 141.3 mill, down from EUR 169.0 mill. as at 31 December 2005.

Favorable trend for viscose

Textile fiber demand stabilized, stopping last year’s downward trend. The first quarter saw new fiber production records at several Lenzing sites. All plants ran at full capacity. Themarket received new products and fiber applications positively, making them contributors to the rising business volume.

The economic activity of Business Unit Nonwoven Fibers was characterized by very good quantity demand. Price levels, however, are still unsatisfactory. Sectors Plastics and Technik achieved good results. Sector Paper was finally able to implement at least partial price increases. The results situation, however, is still unsatisfactory.

Outlook

The positive market environment is expected to continue into the second quarter of 2006. The reduction of capacities in the European textile industry, caused by the heavy import pressure of Asian textiles at the start of 2005, has come to a preliminary end. Asian demand will remain strong. The market presence in Asia is to be further consolidated by a new sales office in Mumbai/India, to be opened in the first half of 2006. Production at the Lenzing viscose fiber production plant at Nanjing/China will start at the beginning of 2007.

Lenzing will counter the heavy cost pressure exerted by energy and raw material prices by price adaptations and an ambitious cost reduction program. The Group is confident to achieve another good result for 2006 by the implementation of all these measures.

Key company group figures for the first quarter of 2006 (IFRS) in EUR mill. 1-3/2006 – 1-3/2005

Sales 261.2 – 233.8
EBITDA 38.6 – 42.9
EBIT 22.8 – 27.4
EBT 19.6 – 27.3
Net income 14.1 – 20.5

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