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Austria's Lenzing expects demand in China for its textile fibres to stay strong and help lift full-year results above last year's level, the company said on Tuesday. The world's biggest maker of cellulose fibre said it had almost doubled its earnings before interest and tax to 60.5 million euros ($69.30 million) in the first six months of 2015, thanks to healthy demand in the second quarter, more savings and a weaker euro.
It also expected to improve full-year operating results compared to 2014 and reduce its net financial debt further.
"China is and will be a very important market for us," Chief Financial Officer Robert van de Kerkhof told journalists at a news conference. "We expect demand in China to stay strong."
The company generates about one third of its sales in the world's second largest economy. About half of what it sells in China ends up in products earmarked for export, and Kerkhof did not expect to see a slowdown there either.
Lenzing's specialised fibres such as Tencel and Modal -- often mixed with cotton -- are used in bed linen for clients like furniture giant Ikea as well as clothes for international fashion brands like Zara and in face wipes sold across Asia.
First-half results also benefited from prices for viscose in China rising at the end of the second quarter as several plants had shut there, providing relief to a global market swamped by cheap Chinese and Indian viscose.
Kerkhof said he expected a weaker Chinese yuan to change the dynamics between competitors in the sector.
In a shock move two weeks ago, China devalued its currency and allowed it to gradually slid, which some saw as Beijing lending a helping hand to its exporters.
"China could ramp up the competition on Turkey," he said. "That is something we will follow very closely."
Lenzing shares jumped more than 11 percent on Tuesday, making it by far the biggest gainer in the main Austrian stock index, which was up 4 percent on the day.
However, for Lenzing shares much of it was making up for lost ground following a recent sell off in global stock markets, with the stock still down almost 3 percent from last Tuesday's close.

Copyright Reuters, 2015

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