From the Sector

The European Chemicals Agency (ECHA) has found that substances causing cancer, genetic mutations or harming reproduction are present in childcare products, such as car seats, bibs and baby changing mats. Its investigation will help the European Commission to prepare an EU-wide restriction to limit these chemicals, with the aim of safeguarding children.

ECHA’s investigation, drawing on information from 48 different sources, shows that substances which are carcinogenic, mutagenic or toxic for reproduction (CMR) may be present in childcare products (articles). Metals like cobalt and lead, along with phthalates like DEHP, are the most common CMR substances found in childcare products.

CMRs were most often found in items like car seats, bibs, products related to toiletries, and bedding and mattresses. Children may be exposed to these hazardous substances during use, for example through skin or oral contact, and are particularly vulnerable to the harm caused by chemical substances because of their small size, developing physiology and behaviour.

ECHA’s report provides elements to support the European Commission in the preparation of a potential future restriction. These include information on how childcare articles are defined, what the restriction could cover, potential derogations, recommended concentration limits and timeframes for implementation. The report also includes views from ECHA’s Enforcement Forum on how feasible it would be to enforce such a restriction.

The report will now be sent to the European Commission, who will use it to prepare a draft restriction proposal under REACH Article 68(2). This procedure allows the Commission to prepare a restriction proposal without involvement of ECHA’s scientific committees.

Background
The purpose of ECHA’s investigation is to support the European Commission in preparing a restriction under the REACH Regulation to protect children from exposure to CMR substances in childcare articles. It focused on substances that have a harmonised classification under the Classification, Labelling and Packaging (CLP) Regulation as a CMR in category 1A (known human carcinogen, mutagen or reproductive toxicant) or 1B (presumed human carcinogen, mutagen or reproductive toxicant).

During the investigation, ECHA organised two public calls for evidence and a consultation on the draft report. The Agency contacted 233 different stakeholders to inform about the work and considered their feedback.

The textile machinery orders index, as processed by the Economics Department of ACIMIT, the Association of Italian Textile Machinery Manufacturers, dropped fully 20% during the third quarter of 2023, compared to the same period for July to September 2022. In absolute terms, the index stood at 84.2 points (basis: 2015=100).

This result is due to a reduction in new orders recorded by manufacturers both on the domestic market and abroad. The decrease in orders in Italy came in at 45%, whereas the drop was just 13% on foreign markets. The absolutevalue of the index abroad stood at 80.5 points, and 119.4 points in Italy. During the year’s third quarter, new orders reached 3.7 months of assured production.

ACIMIT President Marco Salvadè commented on the data, stating that, “The order index for the period from July to September 2023 confirms a contraction in collected orders that was already evident in previous quarters. What worries us above all is the situation with our domestic market, where the declining trend has persisted for seven consecutive terms. Due to this situation, which does not only concern the textile machinery industry, urgent measures are needed from Italian Government to strengthen the competitiveness of Italian manufacturers.”

As far as foreign markets are concerned, the orders index confirms an overall weakened global demand for textile machinery. Indeed, for the first half of 2023, Italian exports slowed in a variety of essential benchmark markets, such as Turkey, China and the United States.

“The global economic scenario remains negative, as consumers are facing a reduced purchasing power, with investments in the textile sector consequently also slowing down,” concludes Salvadè. “In less than a month, ITMA ASIA + CITME will be held from 19 to 23 November in Shanghai, primed as one of the world’s major trade fairs for the textile machinery industry, with the participation of roughly 60 Italian textile machinery manufacturers. We can expect some significant indications on the industry’s state from this event, which will be staged in one of the strategic markets for textile machinery demand.”

• Revenue of EUR 1.87 bn and EBITDA of EUR 219.1 mn in the first three quarters of 2023
• Positive free cash flow of EUR 27.3 mn in the third quarter
• Implementation of performance program focusing on positive free cash flow, strengthened sales and margin growth and sustainable cost excellence
• Modernization and conversion of Indonesian site successfully completed – EU Ecolabel received

The anticipated recovery in markets relevant for the Lenzing Group has to date failed to materialize. The continued sharp increase in raw material and energy costs on the one hand and very subdued demand on the other had a negative impact on Lenzing’s business trends as well as on industry as a whole during the reporting period.

Revenue in the first three quarters of 2023 decreased by 5.3 percent year-on-year to EUR 1.87 bn. This reduction was primarily due to lower fiber revenues, while pulp revenues were up. The earnings trend was mainly influenced by the market environment. As a consequence, earnings before interest, tax, depreciation and amortization (EBITDA) in the reporting period decreased by 16.7 percent year-on-year to EUR 219.1 mn. The net result after tax amounted to minus EUR 96.7 mn (compared with EUR 74.9 mn in the first three quarters of 2022), while earnings per share amounted to minus EUR 4.90 (compared with EUR 2.16 in the first three quarters of 2022).

Outlook
According to the IMF, a full return of the global economy to pre-pandemic growth rates appears increasingly out of reach in the coming quarters. In addition to the consequences of the pandemic and the ongoing war in Ukraine, growth is also being influenced by restrictive monetary policy and extreme weather events. The consequences of the renewed military confrontation in the Middle East are not yet foreseeable. Overall, the IMF warns of greater risks to global financial stability, and expects the growth rate to decrease to 3 percent this year and to 2.9 percent next year.

The currency environment is expected to remain volatile in the regions of relevance to Lenzing.

The general market environment is continuing to weigh on the consumer climate and on sentiment in the industries relevant to Lenzing.

In the trend-setting market for cotton, the current 2023/24 crop season is emerging as a further 1.7 mn tonnes of inventory build-up, following 1.8 mn tonnes of inventory build-up in the previous season.

Earnings visibility remains severely limited overall.

Lenzing is fully on track with the implementation of the reorganization and cost reduction program and on this basis is implementing a comprehensive performance program focused on positive free cash flow, strengthened sales and margin growth as well as sustainable cost excellence. The overarching goal is to position Lenzing even more strongly and to further increase its crisis resilience.

In structural terms, Lenzing continues to anticipate growth in demand for environmentally responsible fibers for the textile and clothing industry as well as the hygiene and medical sectors. As a consequence, Lenzing is very well positioned with its “Better Growth” strategy and plans to continue driving growth with specialty fibers as well as its sustainability goals, including the trans-formation from a linear to a circular economy model.

The successful implementation of the key projects in Thailand and Brazil as well as the investment projects in China and Indonesia will further strengthen Lenzing’s positioning in this respect.

Taking the aforementioned factors into consideration, the Lenzing Group continues to expect that EBITDA for the 2023 financial year will lie in a range between EUR 270 mn and EUR 330 mn.

Carbios  has been granted the building permit and operating authorization for the world’s first PET[1] biorecycling plant, allowing construction to start. The plant will be built in Longlaville in the Grand-Est Region on a 13.7-hectare site adjacent to the existing PET production plant of Indorama Ventures, its strategic partner.

This state-of-the-art facility, scheduled for commissioning in 2025, will play a crucial role in the fight against plastic pollution by providing an industrial-scale enzymatic recycling solution for PET waste. Carbios’ technology enables PET circularity and offers an alternative raw material to virgin fossil-based monomers, allowing PET producers, chemical companies, waste management firms, public entities, and brands to have an effective solution to meet regulatory requirements and fulfill their sustainability commitments. The plant will have a processing capacity of 50,000 tons of post-consumer PET waste per year (mostly waste that is non-recyclable mechanically, equivalent to 2 billion colored PET bottles or 2.5 billion PET food trays) and will generate 150 direct and indirect jobs in the region.
 
The plant will be built on a 13.7-hectare site acquired by Carbios on Indorama Ventures’ existing PET plant site without suspensive conditions. The land area gives the possibility to double the facility’s capacity.
 
A plant designed to minimize its carbon footprint
The plant is designed to maximize circularity, with high-quality output products, and minimize its environmental footprint, especially with regards to energy consumption. Optimizations are underway to further increase the recycling of water required for the process.

Located near the borders with Belgium, Germany, and Luxembourg, the plant’s location is strategic for nearby waste supply. Moreover, Carbios’ biorecycling technology can process complex waste that conventional technologies cannot recycle and produce food-grade products, enhancing the plant’s flexibility for waste supply. Carbios and Indorama Ventures will collaborate to ensure the feedstock supply of the Longlaville plant, located in a geographical area where the supply potential could reach 400,000 tons in 2023, and up to 500,000 tons in 2030 with improved selective collection.

Carbios has already secured an initial supply source by winning part of the CITEO tender for the biorecycling of multilayer food trays. The consortium composed of Carbios, Wellman (a subsidiary of Indorama Ventures), and Valorplast has been selected to handle 30% of the tonnage proposed by CITEO. Carbios will handle the portion of the flow consisting of multilayer food trays at its Longlaville plant starting in 2025.
 
Plant funding secured
In July 2023, Carbios successfully completed its capital increase for approximately €141 million, the largest capital increase on Euronext Growth since 2015. This amount is mainly intended to finance the construction of this plant, for which the total investment is estimated at around €230 million. The portion of the investment not funded by the proceeds from the July 2023 capital increase is expected to be covered by Indorama Ventures, which plans to mobilize approximately €110 million for this project, French state subsidies of €30 million, and €12.5 million from the Grand-Est Region, as well as a portion of Carbios Group’s available cash, which amounted to €78 million as of 30 June 2023.

adidas announced preliminary results for the third quarter of 2023. In Q3, currency-neutral revenues increased 1% versus the prior year level. In euro terms, the company’s revenues declined 6% to € 5.999 billion (2022: € 6.408 billion). The company’s gross margin improved 0.2 percentage points to 49.3% in Q3 (2022: 49.1%). Operating profit reached € 409 million during the quarter (2022: € 564 million), reflecting an operating margin of 6.8% (2022: 8.8%). While the company’s performance in the quarter was again positively impacted by the sale of parts of its remaining Yeezy inventory, the underlying adidas business also developed better than expected.

Consequently, the company has updated its full year guidance: adidas now expects currency-neutral revenues to decline at a low-single-digit rate in 2023 (previously: decline at a mid-single-digit rate). At the same time, the company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is now anticipated to reach a level of around €100 million in 2023 (previously: around break-even level).

Including the positive impact from the two Yeezy drops in Q2 and Q3, the potential write-off of the remaining Yeezy inventory of now around € 300 million (previously: € 400 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), adidas now expects to report an operating loss of around € 100 million in 2023 (previously: loss of € 450 million).

The new Orthopac RXVMC-20 automatic straightening system for forward control of knitwear with strong distortions can remove distortions in textile webs even faster and more precisely.

"With the new straightening concept, special attention was paid to the straightening mechanics and their interaction with the analysis electronics of the scanner system," explains Head of Sales Thomas Höpfl. Two individually controlled and driven straightening modules with a total of four bow and three skew rollers ensure that the correction of bow and skew distortions takes place in small steps. The control concept is also new. A scanner group at the infeed of the straightening machine detects distortions even before they reach the correction rollers. This way, the rollers are brought directly into position and the fabric is corrected from the very first centimetre. A scanner group at the outlet also detects possible residual distortion, which is corrected at the second straightening module. This enables an even more precise and faster response when it comes to reacting to rapidly changing distortions.

The Orthopac RXVMC therefore shows its full strength when straightening knitwear and distortion-sensitive fabrics. Knitted fabrics are special in terms of distortion dynamics. It is difficult for operators when changing the fabric rolls to join the relatively short fabric webs with weft and loop-straight seams. Before and after unavoidable insufficient seams, the distortion (e.g. right before to left before) changes abruptly. Conventionally, the distortion change is only detected by scanning at the output of the straightener.
 
The RXVMC concept enables a shortened reaction time to jumping distortion, (especially in the case of seams) due to the improved scanning concept with scanning at the outlet and inlet. This reduces knitted fabric outside the straightening tolerance up to 50 percent after each seam. Fewer fabric pieces have to be reprocessed. It guarantees higher quality goods and thus less waste.

Indorama Ventures Public Company Limited, a global sustainable chemical company, announced that it has recycled 100 billion post-consumer PET bottles since February 2011. This has diverted 2.1 million tons of waste from the environment and saved 2.9 million tons of carbon footprint from the product lifecycles. Demonstrating its commitment to support the establishment of a circular economy for PET, in the last ten years Indorama Ventures has spent more than $1 billion towards waste collection of used PET bottles.

The company has also committed a further $1.5 billion to expand its recycling business. To support increased recycling rates globally, Indorama Ventures has expanded its recycling facilities, infrastructure, and public education programs. The unique PET plastic used in soft drinks and water bottles is fully recyclable and is collected in practice and at scale. As a result, PET is the most recycled plastic in the world, and the company’s recycling achievements support that. Building on its position as the world’s largest producer of recycled resin used in plastic beverage bottles, Indorama Ventures is also seeking advanced technologies to deliver more recycling infrastructure globally and reduce lifecycle carbon emissions.

The company now has 20 recycling sites in Asia, the Americas, and Europe. Recent developments include doubling the capacity of a recycling site in Brazil; and the opening of PETValue, the largest bottle-to-bottle recycling facility in the Philippines, in partnership with Coca-Cola. Both part of a $300 million ‘Blue Loan’ Indorama Ventures received in 2020 from the International Finance Corporation (IFC), part of the World Bank, and Asian Development Bank. The loan has the objective of increasing recycling capacity and diverting plastic waste from landfills and oceans in Thailand, Indonesia, Philippines, India, and Brazil - countries seeking support in managing environmental waste. Indorama Ventures has also partnered with the Yunus Foundation, a leading non-profit organization promoting sustainable development with a global network, with the goal of educating one million consumers globally about recycling by 2030 with 200,000 reached so far.

Deakin University has signed a partnership agreement with Geelong-based company Xefco as part of its Recycling and Clean Energy Commercialisation Hub (REACH) to conduct new research to transform how our clothing, including jeans, get their colour.

Jeans are one of the most worn garments in the world, but they are also one of the least environmentally friendly, taking around 75 litres of water to dye just one pair.

Deakin’s work with Xefco is helping to explore if a waterless manufacturing process can replace the water intensive processes the clothing industry has used for hundreds of years. The new technology in development is called ‘Ausora’.

Associate Professor Alessandra Sutti, from Deakin’s Institute for Frontier Materials, said it was exciting to be on the commercialisation journey with Xefco, working with the company to discover what is possible and hopefully reduce the world’s fashion footprint.

“If successful, the Ausora technology, which colours fabrics without the need for large quantities of water, will put us a step closer to more efficient and sustainable clothing manufacturing,” Associate Professor Sutti said.

Xefco CEO Tom Hussey said the company’s new pilot plant, housed at Deakin in Geelong, will test different materials, including specialised fabrics such as waterproof items like outdoor jackets and jeans.

“This is the first stage of Xefco’s vision for the technology, with the REACH project focused on demonstrating the commercial viability of the technology at pilot scale and developing processes so it can be scaled up for commercial production,” Mr Hussey said.

“Together, Deakin and Xefco will push the limits of innovation and see what is possible.”
Xefco’s pilot plant is co-located with Deakin researchers at ManuFutures, the state-of-the-art advanced manufacturing hub at Deakin’s Waurn Ponds campus.

Founded in 2018 Xefco now employs 17 people and its products are already making a difference across the world. Its XReflex technology, which reduces consumption of insulation materials, is being used by some of the world’s leading apparel and fashion brands including The North Face.

Backed by a $50 million grant from the Australian Government’s inaugural Trailblazer Universities Program, with industry and university support taking the total project value to $380 million, REACH is facilitating the development of greener supply chains and accelerating business success as markets move from a throughput economy to a circular economy.

Die AZL Aachen GmbH, bekannter Innovationspartner für Industriekooperationen auf dem Gebiet der Leichtbautechnologieforschung, startet eines neuen Projekts mit dem Titel "Trends und Designfaktoren für Wasserstoffdruckbehälter". Das Projekt wird Fragestellungen der Industrie in Bezug auf die Wasserstoffspeicherung adressieren.

AZL Aachen GmbH, a recognized innovator in lightweight technologies research and industry collaboration, announces the initiation of a new project titled "Trends and Design Factors for Hydrogen Pressure Vessels". The project aims to address industry needs surrounding hydrogen storage.

Hydrogen has gained significant attention as a key technological solution for decarbonization, with high pressure storage and transportation emerging as vital components. Its applications extend from stationary storage solutions to mobile pressure vessels employed in sectors such as transportation and energy systems.

The AZL team, renowned for its high reputation in providing market and technology insights as well as developing component and production concepts in the format of Joint Partner Projects seeks for companies along the whole composite value chain interested in further developing their application know how in this economically highly relevant field.

The project will provide an in depth exploration of market insights, regulatory standards, and intellectual property landscapes. Beyond this, there is a dedicated focus on staying updated with state of the art and advancements in design, materials, and man ufacturing techniques.

An integral component of the project involves the creation of reference designs by AZL´s engineering team. The reference designs will encompass a variety of pressure vessel configurations and will consider a diverse range of materials and production concep ts.

With the scheduled project start in October 2023, and a project timeline of approximately nine months, AZL encourages companies active across the composite value chain to participate. Companies interested in participating or seeking further information should reach out directly to the AZL expert team.

Autoneum's consolidated revenue increased by 24.1% from CHF 888.7 million to CHF 1 102.6 million in the first half of 2023. The Group grew significantly both organically, thanks to a market recovery in Europe and North America, and inorganically, through the acquisition of the traditional German company Borgers. All business units improved their profitability compared to the prior-year period. EBIT adjusted for special effects increased by CHF 33.0 million to CHF 45.0 million and the EBIT margin rose from 1.4% to 4.1% compared to the prior-year period. EBIT rose by CHF 78.5 million to CHF 84.9 million in the same period, with an increase in EBIT margin of 7.0 percentage points to 7.7%. Autoneum achieved a solid net result of CHF 57.8 million. Business Group North America nearly reached break-even point before special effects. As planned, the Borgers units, consolidated for the first time in the second quarter, made a positive contribution to the overall result from day one.

Economic conditions in the automotive supply industry improved in the first half of 2023 compared to the prior-year period. There was a slight easing of supply chains and a rise in production volumes among vehicle manufacturers already in the first quarter of 2023. This was especially true in markets that had previously been heavily impacted by supply chain bottlenecks.

Global automobile production climbed by 11.8%* compared with the prior-year period, although consumer demand was somewhat dampened by high vehicle prices in some markets. In this improved market environment and supported by the acquisition of the automotive business from Borgers, a long-standing German company, as of April 1, 2023, Autoneum increased its revenue and net result substantially in the first six months compared with the same period of the previous year.

• Positive revenue development supported by inorganic growth
• Significant improvement of operational profitability and solid net profit
• Equity ratio influenced by the acquisition of Borgers Automotive
• Creation of a capital band
• Business Groups
• Integration of Borgers automotive business
• Working on behalf of electromobility with sustainable noise absorption in underbody
• shields
• Change to the Group Executive Board
• SBTi recognizes Autoneum’s science-based targets

Outlook unchanged
According to the current S&P market forecasts, it is expected that global automobile production will climb by 5.7%* in 2023 compared with 2022. Autoneum anticipates that production volumes in the various regions will develop in line with the forecasts. Customer negotiations are ongoing and Autoneum expects that the increase in costs for raw materials, energy, transportation and staff will be completely offset in the second half of the year. Based on the forecast market development and the renegotiated customer agreements, Autoneum confirms the outlook that it published in March 2023. The Company expects total revenue of CHF 2.4 to 2.5 billion at unchanged exchange rates for the financial year 2023, an EBIT margin of 3.5% to 4.5% excluding one-time effects and a free cash flow in the higher double-digit millions, excluding acquisition-related net cash outflows.

For more information, see attached document.

*Source: S&P market forecast – August 15, 2023