From the Sector

Lower volumes due to geopolitical developments and the sharp rise in inflation impacted the result in the first half of 2022. In a slightly declining market, Autoneum increased revenue in local currencies by 0.5%. At CHF 888.7 million, revenue in Swiss francs reached the previous year's level. Despite the challenging environment, Autoneum achieved a positive operating result of CHF 6.4 million (EBIT margin: 0.7%). The net result decreased to CHF –12.8 million. On the other hand, Autoneum was able to generate a solid free cash flow of CHF 45.2 million. A high demand for sustainable products for electric vehicles confirms that Autoneum is well positioned for this growing market of the future.

Current geopolitical developments substantially affected business performance in the first half of 2022. They are accompanied by accelerating inflation and significant price increases in the commodities markets, which the war in Ukraine has further exacerbated. These developments are also delaying market recovery in the automotive industry. Autoneum does everything it can to minimize the impact on the Group. Despite the present challenges, we will continue to implement our strategy, focusing on innovative and sustainable technologies for growing markets of the future.

• Revenue development influenced by the war in Ukraine and supply chain bottlenecks*
• Low production volumes and high inflation impact profitability*
• Solid free cash flow enables further reduction in net debt*
• Business Groups*
• Well positioned for e-mobility and sustainability*
• Expanding the product portfolio for electric vehicles*
• Autoneum joins the Science Based Targets initiative*

Outlook
According to global market forecasts¹, automobile production will pick up again in the second half of the year with growth of 8.8% compared with the first half-year 2022. For full-year 2022, global automobile production is projected to reach 80.8 million vehicles, which is equivalent to a 4.7% increase on 2021. Based on the market forecasts, Autoneum expects to improve the operating result for the second half of the year. This will be supported by ongoing customer negotiations with a view to fair sharing of costs, the accompanying contribution of vehicle manufacturers to shouldering the sharp increases in material, energy and transport costs and the foreseeable normalization of production after the easing of lockdown measures in China. On this basis, Autoneum expects substantially enhanced results for full-year 2022, as well as an improvement in the EBIT margin to 2.0% to 3.0%. Free cash flow is expected to be in the mid to high double-digit million range for the full year 2022.

*For more information see attached document

¹Source: IHS “Light Vehicle Production Forecasts” – July 15, 2022

Minimum dividend of EUR 4.50 per share as of the 2023 financial year

Having concluded its strategy update, the Managing Board of Lenzing AG decided to revise its dividend policy today. This demonstrates Lenzing’s confidence in its ambitious growth plans and its ability to consistently providing attractive dividends to shareholders.

As of the 2023 financial year (with payment scheduled for 2024), Lenzing plans to pay an annual dividend of at least EUR 4.50 per share (adjusted for inflation for the years thereafter). The revised dividend policy is subject to the approval of the Supervisory Board.

The payment of the dividend in any year will be subject to the specific dividend proposals of the Managing Board and the Supervisory Board. These proposals may deviate from the new dividend policy if appropriate under the then prevailing circumstances and will be subject to the approval of the Annual General Meeting.

• Turkish circular knitting market offers prospects in turbulent times

After a four-year, Covid-related break the German circular knitting machine manufacturer Mayer & Cie. is exhibiting with its Turkish representative Mayer Mümessillik (MMÜ) once more at the important International Textile Machinery Exhibition (ITM) in Istanbul. At Booth 713 in Hall 8, Mayer & Cie. will present three machines: the D4-2.2 X interlock machine, the OV 3.2 QCe for double jersey structures and the MV 4 3.2 II for single jersey fabrics. For the Mayer & Cie. and MMÜ team the focus will be on in-person contacts with customers, suppliers and partners. Despite the tense international situation both the manufacturer and its representative are positive about the medium-term outlook for the Turkish market.

Turkey is a market with prospects
“The challenges that the global economy faces are at present enormously wide-ranging, of course,” says Mayer & Cie.’s Turkey specialist Stefan Bühler. “The Russian invasion of the Ukraine, supply chain outages, shortages of raw materials and skyrocketing energy prices all create uncertainty.” And then there is galloping inflation in Turkey and elections in 2023. Yet despite, and in part because of, this state of affairs Bühler and Kahraman Güveri, CEO of Mayer & Cie.’s Turkish representative MMÜ, hold a positive view of the market outlook for the years ahead. Large orders, especially for standard products, are on the increase, Kahraman Güveri explains. That leads to new investments, new companies and a growing demand for refurbished machines that then need to be replaced by new machines elsewhere. And former commission merchants are now enterprises in their own right.

“Apart from that, Turkey benefits from its proximity to Europe, transport routes are manageable,” says Stefan Bühler. “This location advantage attracts brand manufacturers who together with their orders bring new approaches, new designs and new technologies into the country.” And Turkey’s already very highly developed textiles sector benefits too. That, says Kahraman Güveri, is why one can be confident for the next few years, “at least for as long as nothing unforeseen happens”.

Established machines with that something special: OV 3.2 QCe for double jersey structures
The portfolio of machines that Mayer & Cie. is exhibiting at the ITM is tried, trusted and popular. The OV 3.2 QCe is a specialist for interlock fabrics and double jersey structures that it knits in both filament and synthetic fibre yarns. With a conversion kit the OV 3.2 QCe also qualifies as a producer of 8-lock structures, spacer fabrics and fine gauges. The machine is available in a choice of three frames: from open-width and industrial to giant frame. Stefan Bühler, regional sales manager for Turkey, has this to say: “Not for nothing has the OV 3. 2 QCe been one of our most popular machines for years. It is mainly used for sportswear and for leisure- and outerwear.” In Istanbul the OV 3.2 QCe on show will be a 30-inch, E40-gauge model.

D4-2.2 X for fine rib and interlock fabrics
The double-jersey D4-2.2 X is an obvious choice for knitting fine rib fabrics of up to E28 gauge. Spacer and interlock fabrics are also part of the machine’s established repertoire. And it can produce elastomeric plating in both cylinder and dial cam. No matter which of these tasks is assigned to the D4-2.2 X, it performs it with impressive productivity.

MV 4 3.2 II for flexibility in the single jersey sector
In the single jersey sector, the long-established German firm delivers a literally fine solution. The MV 4 3.2 II on show at the ITM knits to an E38 gauge. The machine can also be supplied for gauges from E14 to E60. It is, in addition, highly flexible, with a repertoire that ranges from piqué and double piqué to one-thread fleece and smooth single jersey.

• IVL commits to being an industry leader in sustainability under ‘Vision 2030’

Indorama Ventures Public Company Limited (IVL), a global sustainable chemical producer, today reported a record FY2021 performance as the economic recovery drove demand across the company’s global footprint. 

Mr Aloke Lohia, Indorama Ventures Group CEO, said: “In 2021 we proved the resilience of our global footprint and our integrated portfolio across the polyester value chain. The past two years were an unprecedented period of disruption in which our business model’s robustness and our teams’ agility were tested. Having reset our business plan for the ‘new normal’ era, I have never been more confident in our model, our strategy, and our teams."

2021 Summary

In 2021, IVL delivered Core EBITDA of US$1,743 million (up 55% YoY) on production volumes of 14.72 MMT (up 7% YoY). Consolidated Revenue increased 38% YoY to US$14,629 million as consumer confidence rebounded and the company’s resilient model benefited from rising inflation, energy price hikes and supply chain shocks.

Macroeconomic tailwinds supported IVL’s performance, including government stimulus packages. In premium western markets, higher freight rates improved the company’s local import parity pricing advantage. In the fourth quarter, the introduction of China’s dual control policy widened polyester margins. 

IVL’s largest Combined PET segment posted a 39% increase in Core EBITDA to US$1,103 million in the context of strong demand and low inventories. The resetting of PET contracts in 2022 is expected to capture higher freight rates and the consequent beneficial impact on import parity. The segment is expected to enjoy improved margins in 2022.

Integrated Oxides & Derivatives (IOD) recorded a Core EBITDA of US$377 million, up 228% from a year earlier. With higher oil prices expected to continue into 2022, the segment will continue to benefit from shale gas economics, improving MEG spreads, and upside from Lake Charles (IVOL) ethylene cracker, which resumed operations in late 2021. The Oxiteno acquisition, expected to close in H1 2022, will bring complementary products, green energy innovation, and geographical diversification to the IOD segment.

Fibers segment delivered a 37% increase in Core EBITDA of US$268 million as volumes rose 11%. Margins widened due to tighter markets and a favorable product mix, with setbacks coming from energy and commodity price increases, while the ongoing semiconductor shortage impacted the Mobility vertical.

Mr D K Agarwal, CEO and CFO at Indorama Ventures, said: “The performance was a result of a number of important macroeconomic factors, such as heightened crude oil prices, supply disruptions, and resurgent consumer confidence as vaccinations were rolled out in the pandemic’s second full year. These factors led to improved margins and benefited us as a preferred regional supplier that can react quickly to fulfill our customer needs. Our transformation programs that we started three years ago are also delivering efficiency gains faster than planned. As the world emerges from the pandemic, our increased confidence in IVL’s resilient model sets a strong foundation for further growth through 2024.”

Freudenberg Performance Materials announces a general upward adjustment of their prices for nonwoven performance materials for flooring and filtration applications in EMEA. This revision, effective January 1, 2022, has become necessary because of sustained and unprecedented surge in cost for raw materials, packaging, freight, consumables and energy combined with disruptions in their inbound supply chain.

Prices across all categories have by far outpaced their expectations and are forecasted to remain on high levels throughout 2022. This historic price trend has placed significant pressure on Freudenberg Performance Materials, and they understand in a similar way on their customers.

At this stage their business can no longer absorb the effects of such high price levels. Freudenberg Performance Materials will therefore adjust our prices for all their Colback® and Lutradur branded nonwoven products for flooring and filtration application by double-digit increases depending on product types.

Freudenberg Performance Materials will continue to work on improving productivity to offset inflationary pressure to keep attractive price levels and to avoid further price adjustments. They will continue to monitor the market development and in case of sustained and unexpected downward trends they will adjust our prices accordingly.

Net result impacted by operating losses and high impairments in North America

In 2019, Autoneum grew organically by 2.5% and has thereby significantly outperformed the declining market. In Swiss francs, revenue rose slightly to CHF 2 297.4 million. However, as previously communicated, operational inefficiencies in North America and impairments on fixed assets in that region had a particularly strong impact on profitability and led to a net loss of CHF –77.7 million. The Board of Directors therefore proposes that no dividend bedistributed for the 2019 financial year. Based on the new turnaround program launched in North America at the beginning of this year, significant profitability increases are expected for 2020.

2019 was an extremely challenging year for the automobile industry. The continuing weakness of the global economy, ongoing trade disputes and the increasing regulation of mobility impacted vehicle demand negatively. But 2019 was also a year of change for Autoneum internally. An in-depth analysis carried out by the new Group Management in the fall showed a need to reevaluate the Group’s performance over the short- to medium-term. In Business Group North America, the operational and commercial problems have proven more extensive than originally assumed. As a result, the turnaround program launched in spring 2019 was replaced at the beginning of 2020 with a dedicated and far more comprehensive program for the North American sites.

Revenue growth despite a shrinking global market
As a result of weak demand, the number of light vehicles produced worldwide fell again sharply in 2019 compared to the previous year; whereby the decline of almost –6% was much steeper than in 2018. Thanks to numerous production ramp-ups and a favorable model portfolio, Autoneum generated organic revenue growth1 of 2.5%, despite the global market cooling. Revenue consolidated in Swiss francs rose by 0.7% from CHF 2 281.5 million to CHF 2 297.4 million.

Profitability2 impacted by operational inefficiencies and impairments
Operational inefficiencies in North America and impairments on fixed assets in this region were the main reason for the – first-ever – negative net result in 2019. In addition, the sharp drop in automobile production in Europe and China as well as associated lower utilization of production capacities in the affected Business Groups also burdened the Group’s profitability. EBITDA excluding IFRS 16 effects decreased to CHF 126.0 million (2018: CHF 197.2 million), which corresponds to an EBITDA margin of 5.5% (2018: 8.6%). One-time charges from impairments in the amount of CHF –68.0 million had a negative impact on EBIT, reducing it to CHF –32.9 million (2018: CHF 114.1 million). Without these one-time charges, EBIT amounted to CHF 35.0 million. The EBIT margin 1 Change in revenue in local currencies, adjusted for hyperinflation. 2 The figures for the 2019 financial year include IFRS 16 effects. Autoneum Management Ltd . Media Release . March 4, 2020 Page 2/5 excluding impairments was at 1.5% in 2019, and taking those into account the margin decreased to –1.4% (2018: 5.0%).