Linz Textil Holding AG, which also includes the Vossen company, achieved an increase in profits in the first half of 2024 despite significantly lower sales, as can be seen from the current shareholder letter. Earnings before taxes (EBIT) increased by 28.5 percent to 1.3 million euros. The bottom line was a period result of 859,514 euros – 17.1 percent more than in the same period last year. Sales revenues fell by 19.3 percent to 33.5 million euros.
This decline is mainly due to the structural adjustments made in the “Textile Semi-Finished Products” segment last year, according to the report published by the listed textile company on Tuesday. The closure of the Landeck spinning mill at the end of March 2023 noticeably reduced sales potential. In addition, given the challenging market environment, the remaining operating sites in this segment were also unable to record any noticeable increase in sales.
According to the letter to shareholders, the increase in EBIT is due to a significantly positive development in the earnings situation in the “Real Estate” segment. In the two textile segments, the earnings situation declined slightly or was stable in view of the challenging market environment.
Cash flow from operating activities fell massively from around 8.5 to 4.9. According to the company, the equity ratio was around 87 percent as of June 30, 2024, which is “still a solid value.” The Linz Textil Group, as a “highly diversified provider of textile solutions, works with solid and sustainable business models based on a strong equity base.” For this reason, the Management Board also expects a “positive result” for the Linz Textil Group for the 2024 financial year.
Economic environment weak
At the end of June, Linz Textil’s workforce fell by twelve people to 415 employees compared to the same date last year. The decline was “mainly due to adjustments made to a more cautious capacity utilization.” The economic environment is still weak.
The current downward cycle has been keeping the industry on tenterhooks since the fourth quarter of 2022. “Although the 2024 financial year started optimistically compared to the previous quarters, it would be premature to speak of a real turnaround,” the letter to shareholders states. On the positive side, it should be noted that the reduction in inventories along the entire textile chain, from retail to fiber suppliers, is continuing. “This should inevitably lead to re-ordering and new orders.” So far, however, purchasing managers have been too cautious.
However, the viscose spinning mill in Croatia is significantly higher than the previous year in terms of both order backlog and quantity. The company was able to score points here primarily through market proximity and delivery flexibility, but also through innovation, particularly in the area of recycled fibers. According to the information, the technical weaving mill is “solidly busy” after switching to a three-shift operation at the beginning of the year. “Here too, the bottom seems to have been reached, at least for the time being.”
Terry cloth manufacturer Vossen continues to have a stable top line. “However, the recently significantly high collective bargaining agreements of recent years pose considerable challenges for the finished textile product,” says management in the half-year report. The strategy of expanding sales channels both in stationary retail and online is therefore being consistently pursued in order to counteract cost pressure.
A stabilization of the global markets and a revival of demand are expected for the second half of 2024. Despite the uncertain geopolitical situation and the ongoing economic challenges in some regions, management expects moderate growth in the textile sector.