May 30, 2014 / 9:31 AM / 4 years ago

Lenzing will not close whole plants -CEO in paper

VIENNA, May 30 (Reuters) - Austrian viscose producer Lenzing will not close whole plants as it deepens cost cuts to combat a collapse in prices, its chief executive was quoted saying by a newspaper.

“We will not shut down any sites but we will adjust our product portfolio,” Peter Untersperger said in an interview published by the Oberoesterreichische Nachrichten on Friday.

He said it might not be necessary to continue producing commodity viscose at the company’s headquarters in Lenzing, Austria, alongside the higher-margin Modal rayon and Tencel it supplies to customers such as H&M and Uniqlo.

Lenzing, which announced a plan late last year to cut up to 160 million euros ($218 million) of costs by 2016, including axing 600 jobs, said on Wednesday this would not be sufficient and that everything was under review with “no taboos”.

The Austrian company is the world’s biggest producer of cellulose fibres such as viscose and rayon, but competes with a host of smaller rivals in China, the world’s biggest textile market, where price competition is fierce.

Viscose prices have fallen by about a third in the past two years as producers in China, which accounts for two-thirds of global output, have added capacity amid sluggish demand from the textile industry.

A Lenzing spokesman said further job cuts were not ruled out and that the company had engaged external consultants to advise it on where more cuts could be made.

Currently, 150,000 tonnes of the company’s capacity at the Lenzing site, its biggest, are used for viscose, including non-woven products such as wipes for medical and hygienic uses.

A further 100,000 tonnes are used for Modal and the company is ramping up 60,000 tonnes of capacity this year for Tencel.

Lenzing’s other main production sites are in Purwakarta, Indonesia and Nanjing, China. ($1 = 0.7345 Euros) (Reporting by Georgina Prodhan; Editing by David Holmes)

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