From the Sector

• Construction of a new air purification and sulfur recovery plant
• Further improvement of the exhaust emission values at the Lenzing site
• Important step in achieving the CO2 targets of the Lenzing Group

Lenzing – The Lenzing Group is a global leader in the climate-friendly and sustainable production of wood-based textile fibers. Lenzing announced its climate targets in August of this year. By 2030, the company aims to reduce its specific CO2 emissions per ton of manufactured pulp and fibers by 50 percent. By the year 2050, the Lenzing Group will no longer generate any net CO2 emissions.

Lenzing‘s Management Board has now resolved to invest EUR 40 mn to expand the production of the raw material sulfuric acid at the Lenzing site. This comprises an important milestone on the path towards climate neutrality. In the future, a new air purification and sulfur recovery plant will not only optimize the company’s self-sufficiency for this raw material and enhance process reliability but improve environmental protection within the context of a clear forward-looking strategy.

Improved exhaust emission performance

The new plant represents an important contribution towards implementing the sustainability strategy of the Lenzing Group, and also helps to ensure an even higher level of environmental compatibility of all production operations at the Lenzing site. The application of state-of-the-art technologies will further improve exhaust emission values. Furthermore, the new facility will help further reduce the use of fossil fuels by generating steam which will, in turn, be converted into electricity. In this way, it will also support the energy self-sufficiency of the company’s operations in Lenzing.

Improved CO2 scorecard

As a result, the production plant in Lenzing will reduce its annual CO2 emissions by 15,000 tons. This is an important step towards further advancing the company’s ambitious plans in the coming years and also strengthen Lenzing’s leadership role as a driver of ecologically sustainable industry. “On the basis of these investments, Lenzing is taking the next step in achieving its climate targets. At the same time, it will also reach a significantly higher level of autonomy with respect to a vital raw material”, states Stefan Doboczky, Chief Executive Officer of Lenzing.

JEC Asia is the major, most insightful composites event in Asia-Pacific for products, solutions, net-working, and advanced industry thinking - 3 full days of Business, Innovation & Knowledge

JEC ASIA KEY FIGURES

• 7,000+ professional visits
• 245+ exhibiting companies from 49 countries
• 3 conference sessions
• 40+ International speakers
• 450+ business meetings
• Startup Booster competition
• Innovation awards and planet
• In parallel to eMove360° Asia

Paris - For its 12th edition and third time in Seoul, JEC Asia 2019 will gather companies from the entire composites value chain in Asia Pacific to present their latest capabilities and innovations to the composites community and the strategic end-user’s market including: Mobility, Aeronautics, Building & Construction. This year more than 245 exhibiting companies are expected with thousands of professionals from 49
countries to network, exchange ideas, explore new opportunities and strengthen their business partnerships.

Addressing the impact of composites in Mobility 4.0

During the press conference held in Seoul on July 9th to introduce JEC Asia 2019 and eMove Asia 360° main features, a roundtable gathering speakers, experts and academics from prestigious Korean research centers specialized in carbon and composites — along with Hyundai Motor and KCTech composites experts, eMove360°’s CEO & Publisher and Korean Electric Vehicle Association representatives — exchanged their views on the impact of composites in today's and tomorrow's mobility in the world with a focus on the Korean market. Discussions centered around the challenges raised by Mobility 4.0 (electric connected and autonomous vehicles) and how composites can offer highly adapted solutions for the new challenges faced by this sector, particularly in the context of the rising electrification of vehicles.

Hence, the 2019 edition of JEC Asia will welcome for the first time the eMove360° ASIA exhibition and conferences focusing on Trends in electric & autonomous mobility, Battery & Powertrain and Charging & Energy.

Celebrating Innovation and Knowledge

JEC Asia 2019 will also host the 2nd leg of the JEC Startup Booster competition, the leading startup competition in the world of composites will enable companies to find and assess innovations with a potential impact on their respective industry. The 10 finalists selected in the region by a prestigious jury, will pitch their project to win a chance to showcase their work at JEC World 2020 in Paris. The JEC Innovation Awards is a long-established and worldwide program with 3 simple goals: identify, promote and reward the most innovative composite solutions in the world. Over the past 15 years, the JEC Innovation Program has involved 1,800 companies worldwide; 177 companies and 433 partners have been rewarded for the excellence of their composite innovations. The JEC Innovation Awards reward composites champions, based on criteria such as partner involvement in the value chain, technicality or commercial applications of innovations. The award ceremony will take place on the second day of JEC Asia, on November 14th, 2019.

JEC Asia 2019 will also feature a fulfilling conference program with experts from the industry giving their insights on the latest developments in high-performance composite technologies and applications.

JEC Asia 2019 conferences main themes will focus on:

• International Carbon Festival Conference organized with our partner, KCTech.
• Automotive composite golden triangle: low CAPEX, low cost but high volume
• Automotive hybrid solutions: take the best of each material
• Aeronautics: faster processes and new materials
• Business opportunities (Raw materials, Process, Application, Countries, Region)
Finally, JEC Asia offers the opportunity to visit Composites sites. This year professionals will live a full experience of South Korea composites Industry visiting: Hanyang University, Kookmin University with Hankuk Carbon, Win & Win Co or Korean Carbon with KCTech in Jeonju.

See you @JEC Asia 2019 and eMove360° Asia, November 13 to 15,  Seoul Coex Convention and Exhibition Center

• Decline in revenue due to volatile standard viscose prices and currencies
• Prices for key raw materials still high
• New production line in Heiligenkreuz in start-up phase
• Backward integration into dissolving wood pulp to be strengthened via joint venture in Brazil

Lenzing – The Lenzing Group generated solid results in a challenging market environment in the first half of 2018. The decline in revenue and earnings compared with the first half of the previous year, which was the best half-year in the company’s history, was based on a mix of volatile prices for standard viscose and price increases for key raw materials, coupled with currency effects. The Lenzing Group’s strategic orientation with a focus on specialty fibers had a positive impact in this environment and is increasingly bearing fruit. The corporate strategy sCore TEN is being implemented with great discipline in order to expand the company’s offering of specialty fibers and even more extensively support customers and business partners.

Revenue declined by 6.4 percent compared with the first half of the previous year to EUR 1,075.4 mn. This decrease is primarily attributable to less favorable currency exchange rates. EBITDA (earnings before interest, tax, depreciation and amortization) decreased by 28.1 percent to EUR 194.8 mn, especially due to price increases for key raw materials and higher energy prices. The EBITDA margin fell from 23.6 percent in the first half of 2017 to 18.1 percent in the first half of 2018. EBIT (earnings before interest and tax) declined by 37 percent to EUR 128.7 mn, leading to a lower EBIT margin of 12 percent (H1 2017: 17.8 percent). The net profit for the period dropped by 39.3 percent from EUR 150.3 mn in the previous year to EUR 91.3 mn. Earnings per share equaled EUR 3.44 (H1 2017: EUR 5.55).

“So far, the financial year 2018 proved to be as challenging as expected, and market headwinds were clearly noticeable. In this market environment, we are satisfied with the solid results we report. We are proud that with our corporate strategy sCore TEN and the focus on growth with specialty fibers we show big steps in the right direction. The recently announced joint venture with Duratex is another important step in executing this corporate strategy,” says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “We will continue to implement our strategy with great discipline and are convinced that this will steadily improve the long-term profitability of Lenzing,” Doboczky adds.

Largest dissolving wood pulp line worldwide

In June, the Lenzing Group and Duratex, the largest producer of industrialized wood panels of the southern hemisphere, announced that they had agreed on the terms and conditions to form a joint venture to investigate building the largest dissolving wood pulp plant (single line concept) in the state of Minas Gerais, (Brazil). This decision supports the self-supply with dissolving wood pulp and the growth in specialty fibers, defined in Lenzing’s sCore TEN strategy. The joint venture will investigate the construction of a 450,000 t dissolving wood pulp plant, which is expected to become the largest and most competitive single line dissolving wood pulp plant in the world. The final investment decision to build the dissolving wood pulp plant is subject to the outcome of the basic engineering studies and the approval by the respective supervisory boards.

Even stronger focus on sustainable products

As a pioneer in sustainable fiber solutions, the Lenzing Group is committed to higher standards in the textile and nonwoven sectors. More than EUR 100 mn will be invested in sustainable manufacturing technologies and production facilities by 2022 in order to realize this vision. In line with the Group’s specialty strategy, another two milestones were set in the first half of 2018: Lenzing announced an investment of up to EUR 30 mn in another pilot line for the production of TENCEL™ Luxe filaments at the Lenzing site. In addition, the company also introduced the environmentally friendly process for the production of LENZING™ ECOVERO™ branded viscose fibers at its Chinese site. Both decisions contribute to better meeting the strong demand for environmentally compatible products.

Expansion of capacities

CAPEX (investments in intangible assets and property, plant and equipment) rose by 60.8 percent year-on-year to EUR 117.2 mn in the first half of 2018. This is primarily attributable to the capacity expansions in Heiligenkreuz (Austria) and Mobile, Alabama (USA) and the expansion of the existing dissolving wood pulp plant in Lenzing. The company is pressing ahead with these projects as well as with planning work on the construction of the next state-of-the-art lyocell production facility in Prachinburi (Thailand).

New brand identity

With the new positioning of its master brand and its product brands, the Lenzing Group started a new phase of branding and brand communication in the first half of 2018. Lenzing decided to carry out a new brand strategy in order to sharpen its company and product profile as a sustainable innovation leader for customers and partners along the value chain as well as for consumers. The most important pillar of this new brand strategy is a brand architecture with a focus on fewer brands and a strong message to consumers. With the TENCEL™ brand as an umbrella brand for all specialty products in the textile segment and the VEOCEL™ brand as the umbrella brand for all specialty fibers in the nonwoven segment as well as the new master brand, which was presented in March, Lenzing showcases its strengths in a targeted manner.

Outlook

The International Monetary Fund expects a further acceleration in global economic growth to 3.9 percent for 2018. However, growing protectionist tendencies in the political arena represent a source of uncertainty. Export-oriented companies in the Eurozone are faced with additional challenges from the currency environment.

Developments on the fiber markets should remain positive, but with continuing volatility. The rising demand for cotton should support prices despite the increase in production. Polyester fiber prices have stabilized after the increase in previous years.

The wood-based cellulosic fiber segment, which is relevant for Lenzing, should see further strong demand. After years of moderate capacity expansion in the viscose sector, significant additional volumes will enter the market in 2018 and 2019. As a result, standard viscose prices will remain under pressure. The Lenzing Group is very well positioned in this market environment with its corporate strategy sCore TEN and will continue its consistent focus on growth with specialty fibers.

The Lenzing Group still sees challenging market conditions for the second half of 2018. In addition to the price pressure on standard viscose, the prices of some key raw materials such as caustic soda are still at a very high level and exchange rates continue to be volatile. Our specialty fibers are expected to continue their very positive development. In this context, the Lenzing Group is satisfied with the earnings development to date, but underlines its estimate that the results for the year 2018 will be lower than the outstanding results in the last two years.

The automotive market is undergoing a period of great change. Global demand for light vehicles is increasing, but at slower rates than seen in previous years, and this is resulting in ever greater competition between carmakers. At the same time, the technological capabilities that can be offered are advancing rapidly. Areas such as autonomous driving, connectivity, interior comfort and the customization of vehicles in line with personal taste are becoming key ways that manufacturers can differentiate themselves and win market share. Indeed, automotive supplier Lear, recently unveiled a new biometric ‘smart’ seat, that tracks a driver’s health indicators.

These trends are having a knock-on effect for suppliers. For original equipment manufacturers (OEMs), being able to satisfy diverse consumer preferences is now considered more of a success factor than getting a vehicle to production faster than the competition. Across the automotive supply chain — and especially for those involved in the production of car seats and interiors — a growing emphasis on interior styling and luxury components has created new challenges that are further compounded by increasing cost pressures.

Although news coverage about the automotive industry tends to focus on such innovations as ‘driverless’ cars and ‘intelligent’ vehicles, one of the most farreaching changes occurring is this trend towards personalization: how automotive manufacturers are managing to make mass-produced items unique. Not only are manufacturers increasing the number of models they are offering but also the options available to a consumer per model. The Vauxhall Adam is a case in point: consumers can have more than 1 million different combinations when they order the car.

To cope with these challenges, suppliers will need to re-evaluate and improve their production processes. Within this context, the integration of smart solutions and services, and the replacement of production tools that are incompatible with connected factory concepts, will be vital. The combination of Software as a Service (SaaS) with the cloud is already opening up new horizons for innovation. Factories remain at the heart of the value chain. But Industry 4.0 is revolutionizing mass production, allowing more and more large-scale, personalized — and profitable — manufacturing, with greater quality and no added costs or delays.

As customer expectations reach new levels, it is especially important that suppliers in the automotive cutting value chain ramp up their transformation, adopting the technologies and services shaping Industry 4.0. For years, OEMs and suppliers alike have used foam and frames to develop patterns for producing seat covers in material or leather. The automotive industry was among the first to use sophisticated 3D computer-aided design (CAD) programs for the design and development of vehicles. But it has taken time for this technology to be used extensively for seat covers. Although 80% of fabric seating and interiors are currently cut digitally, only 10% of leather seats are cut using this method. The majority of suppliers of automotive leather seating still rely heavily on manual cutting equipment, such as die and roller presses.

To gain the agility and flexibility to remain relevant and competitive in a market that is dictating more change, variants, and faster reaction times, close cooperation between OEMs and suppliers is necessary. For if even one aspect of the process fails to provide sufficient flexibility, speed to market and consistent quality, then the entire chain will be impacted.

In such a complicated and fast-moving market, only the most adaptable and innovative companies will succeed. The solutions that form part of the Industry 4.0 framework will help give suppliers the capacity to adapt and thrive in this new environment. For more Information please find the complete White Paper attached.