Inbox: Analysts – Investors will ask the Lenzing management for statements about the FFP2 affair


Emailed from / found at: Erste Group Research (BSN note: scrolling text in the original of the sender, title (always) and images (often) by from the photo archive)

From Erste Group’s Equity Weekly: At Hygiene Austria LP GmbH, the JV of Lenzing and Palmers for the production of FFP2 and MNS masks in Austria, house searches were carried out by several authorities this week. It was about the suspicion that FFP2 masks produced in China were repackaged in Austria and sold as “Made in Austria” products. The repackaging should also have been carried out by people without social security registration.

After the allegations were initially rejected by Lenzing as unfounded, the company later confirmed that it had commissioned a Chinese contract manufacturer to produce FFP2 masks based on its own sample to cover peak demand. Lenzing announced that it would take over management control of Hygiene Austria with immediate effect and appoint Stephan Sielaff (Lenzing’s Fibers & Technology Board) as additional managing director of the JV. In addition, an external forensic team was commissioned by Lenzing to provide clarity. In the meantime, large Austrian trading companies have taken the Hygiene Austria FFP2 masks out of sales, while the Federal Procurement Agency put its contracts with Hygiene Austria on hold.

Outlook. The mask business has so far been profitable for Lenzing, but the contribution to the group result is manageable. For the Lenzing share, the damage caused by the FFP2 mask affair to the reputation of the Austrian company and to its positioning in the field of sustainability (ESG) is of far greater importance. The share price reacted this week with correspondingly heavy discounts and, from our point of view, discounted part of the “sustainability bonus” from which the share has benefited in the recent past. Now it is time to wait for the results of the investigations. We assume that the share price will remain under pressure. The 2020 result will be published next week. The numbers themselves are likely to play a subordinate role; investors will require statements about this affair from the Lenzing management.

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Inbox Analysts Investors Lenzing management statements FFP2 affair


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