Austrian fibres producer Lenzing reported a 59% drop in first-quarter net profit on Wednesday and dropped its dividend as the sector grapples with oversupply.

Net profit fell to 17.7 million euros ($19.2 million) on revenue down 17% to 466.3 million euros for the three months to March 31, it said.

Prices for standard viscose fell to an all-time low due to oversupply, said the company, which produces cellulose fibres derived from sustainable wood and pulp.

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It also said it would withdraw its dividend proposal of one euro per share due to the coronavirus crisis.

"The COVID-19 crisis has a severe impact on the entire textile and apparel industry and has further increased the pressure on prices and volumes,” CEO Stefan Doboczky said.

The company withdrew its 2020 outlook in March.

Lenzing formed a joint venture to produce protective masks for the European market in April with Austria’s Palmers Textil AG.

The JV, Hygiene Austria LP GmbH, has started to produce so-called mouth-nose protective masks and surgical protective masks and plans to produce more than 25 million masks per month, Lenzing said.

Construction of new plants in Brazil and Thailand is progressing according to plan, it said.