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EU DECISION IS NO OBSTACLE TO LENZING´S SUCCESSFUL COURSE OF BUSINESS

The EU Commission has prohibited CVC´s acquisition of the majority of Lenzing AG stock because of non-compatibility with existing EU competition laws. Lenzing AG´s Managing Board regrets the decision.

Jochen Werz, Spokesman of the Board of Management, emphasizes that "we regret the decision taken by the EU. However, this decision does not provide us with any problems – not even in the long run – because no transaction will materialize. The Lenzing Group has just had an outstanding business year, and the current year also shows that we are in a first-rate position. We have achieved our goal, namely to generate high profits in good years, as well as to produce a satisfactory result when less favorable market conditions prevail. We will apply all our energy to continue along our chosen course."

To date, Lenzing AG has not yet received the full text of the EU decision. After a thorough analysis of the reasons underlying the decision and discussing the issue with the various company bodies, Lenzing AG will comment on the substance, in coordination with Bank Austria, which is the majority shareholder of our company.

No Impact on the Business Developments

Since Bank Austria sold its stock majority to the CVC Group with the relevant antitrust reservations, quite deliberately no steps have been taken to date in the direction of merging the two companies. "Business as usual" has been the order of the day. The day-to-day business operations of Lenzing AG are therefore not affected by the EU decision. Moreover, the decision will not have any impact on our production sites and the employees of the Lenzing Group.

Earlier Restructuring Measures Now Bear Fruit

New strategic orientation and structural improvements, together with an optimization of the product mix, as well as cost-reduction programs of recent years are impressively reflected in the business results. Although cyclical conditions vary from region to region and raw-material prices have gone up massively in the course of 2001, the Lenzing Group succeeded in gaining market shares and in expanding its unique position as full-range supplier for the fiber sector. An essential step in the direction of securing sustainable earnings for the Lenzing Group was – above all – reducing our dependence on the fiber textile cycle by putting major emphasis on increasing nonwovens products.

Despite difficult market conditions during the first semester 2001, the Lenzing Group continued to develop positively after finishing fiscal 2000 with excellent results. During the first semester 2001 consolidated sales went up by 7.2% (from EUR 311.8 mill. to EUR 334.3 mill.), as compared to the first six months of 2000. The operating result (EBIT) amounted to EUR 24.4 mill., which is an increase of 13% over the same period last year. The result before taxes and minority share (EBT) rose from EUR 21.2 mill. to EUR 23.0 mill.

Positive Outlook for 2001

After some overheating of the fiber market last year, the demand for fibers is cooling off this year. At present, there are no prospects of a cyclical upswing regarding the worldwide economic situation. As a result, the fiber industry faces difficult overall conditions. The result of the first semester cannot be extrapolated to the second semester. Viewed from today´s perspective, the results for the year will again be very good. However, they will be below the record level achieved in 2000.