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Lenzing Expansion into Carbon Fibre Production

25 March 2007

Lenzing Plastics, a subsidiary of Lenzing AG, and its German partner companies, SGL Carbon AG in Wiesbaden und Kelheim Fibres GmbH in Kelheim, have finalised a joint venture, European Precursor GmbH, which is to produce primary materials for carbon fibres at the Kelheim site.

Another joint venture with the Lenzing Group for the production of carbon fibres, yet to be finalised, is being planned.

""Expanding into the new business field of carbon fibres opens additional and attractive growth potential for our business unit Plastics"" is the reason given by Thomas Fahnemann, chairman of the Lenzing management board, for this strategic decision.

""Already today, the global production capacity in operation is unable to meet current demand. Especially the high-quality carbon fibre sector lacks capacity, which we will create in the next years. The partner we have won, SGL Carbon, is moreover the global leader in carbon fibre production, whose expertise in the market, as well as in production and sales makes it the ideal complement to the fiber expertise of Lenzing and Kelheim Fibres"" says Thomas Fahnemann. Kelheim Fibres produces high-strength acrylic fibre specialties marketed under the brand names Dolan and Dolanit. The existing facilities for the production of specialty polymers will be brought into the joint venture. European Precursor GmbH will start operations in the course of 2007. In the medium term up to fifty million euros are expected to be invested into the capacity expansion for the production of primary materials and fibres. These activities in the new business field carbon fibres are intended to generate a significant sales contribution in the double-digit million euro range for Lenzing's business unit Plastics. The expansion into the carbon fibre business is the second strategic growth step of Lenzing Plastics in recent months, after the takeover of the German plastics producer Hahl Group.