From the Sector

adidas published its financial guidance for 2023. While the company continues to review future options for the utilization of its Yeezy inventory, this guidance already accounts for the significant adverse impact from not selling the existing stock. This would lower revenues by around € 1.2 billion and operating profit by around € 500 million this year. Against this background, adidas expects currency-neutral sales to decline at a high-single-digit rate in 2023. The company’s underlying operating profit is projected to be around the break-even level.

Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the write-off of the existing Yeezy inventory and would lower the company’s operating profit by an additional € 500 million this year. In addition, adidas expects one-off costs of up to € 200 million in 2023. These costs are part of a strategic review the company is currently conducting aimed at reigniting profitable growth as of 2024.

If all these effects were to materialize, the company would expect to report an operating loss of € 700 million in 2023.

In 2022, based on preliminary unaudited numbers, adidas revenues increased 1% in currencyneutral terms. In reported terms, sales were up 6% to € 22,511 million during the 12-months period (2021: € 21,234 million). The company’s gross margin reached a level of 47.3% (2021: 50.7%) in 2022. adidas generated an operating profit of € 669 million last year (2021: € 1,986 million), reflecting an operating margin of 3.0% (2021: 9.4%). Net income from continuing operations was € 254 million in 2022 (2021: € 1,492 million).

INDA, the Association of the Nonwoven Fabrics Industry, has named Mark Snider to the position of Chief Market and Industry Analyst. Snider brings more than 30 years of nonwovens & engineered materials expertise with a strong background in market and industry analysis at both the macroeconomic, industry and segment level.

Before starting his consulting firm sixteen years ago, he supported three divisions as Technical Marketing Manager for Nordson Corporation, and as European and Latin American Regional Manager for J&M Laboratories.

Snider’s industry knowledge, and extensive network combined with his research and analytical skills will provide decision-making data, reports, and presentation to INDA members and the industry.

Snider will expand upon INDA’s membership outreach and research initiated by MaryJo Lilly, INDA’s Market Intelligence Leader, to realize INDA’s new vision for industry intelligence. Lilly will continue to assess strategic market research initiatives and special projects.

With the Earth population reaching 8 billion in November 2022, the need to address the issue of textile waste becomes more critical.

According to earth.org, 92 million tons of textile waste is produced every year, a number that is expected to soar to 134 million tons by the end of the decade. Around 85% of all textiles discarded in the US are said to end up in landfills, leading to land and water pollution impacting first and foremost local communities.

Archroma, a company who creates colors for fashion, decided to look at the issue creatively: what if it could create colors from waste fashion?
The company had already developed a way to turn waste from the herbal and food industry into its range of EarthColors® featured by brands such as G-Star, Patagonia, Esprit, Tom Taylor, Pangaia, UGG, and Primark. Now they are is introducing a new innovation: the FiberColors* technology.

With this technology, Archroma upcycles textile waste into colors. The colors are synthesized from a minimum content of 50% waste-based raw material.
R&D experts have developed a way to use cotton and/or polyamide and their blends (with a >95% purity) to substitute the major part of the petroleum-based raw material usually used to make dyestuff.

The resulting FiberColors* range, which is patent-pending and therefore exclusive to Archroma, includes five dyes covering a palette of timeless shades: Diresul® Fiber-Teak (brown shades), Diresul® Fiber-Ochre (olive shades), Diresul® Fiber-Maroon (bordeaux shades), Diresul® Fiber-Slate (blue grey shades) and Diresul® Fiber-Graphite (dark grey shades).

The dyes are especially suited for cellulose fibers such as cotton, viscose, linen and kapok, and can be used in continuous, exhaust, denim and garment dyeing and printing processes.

For the third time, nova-Institute awards the “Cellulose Fibre Innovation of the Year” award in the frame of the “Cellulose Fibres Conference 2023” (8-9 March 2023). The conference advisory board nominated six remarkable products, including cellulose fibres from textile waste, banana production waste and bacterial pulp, a novel technology for producing lyocell yarns and a hygiene product. The innovations will be put to the vote of the conference audience on the first day of the event, with the awards ceremony taking place in the evening. The innovation award “Cellulose Fibre Innovation of the Year 2023” is sponsored by GIG Karasek (AT).

Here are the six nominees
Vybrana – The new generation banana fibre – GenCrest Bioproducts (India)
Vybrana is a Gencrest’s Sustainable Cellulosic Fibre upcycled from agrowaste. Raw fibres are extracted from the Banana Pseudo stem at the end of the plant lifecycle. The biomass waste is then treated by the Gencrest patented Fiberzyme technology. Here, cocktail enzyme formulations remove the high lignin content and other impurities and help fibre fibrillation. The company's proprietary cottonisation process provides fine, spinnable cellulose staple fibres suitable for blending with other staple fibres and can be spun on any conventional spinning systems giving yarns sustainable apparel. Vybrana is produced without the use of heavy chemicals and minimized water consumption and in a waste-free process where balance biomass is converted to bio stimulants Agrosatva and Bio Fertilizers & organic manure.

HeiQ AeoniQ™ – technology for more sustainability of textiles – HeiQ (Austria)
HeiQ AeoniQ™ is the disruptive technology and key initiative from HeiQ with the potential to change the sustainability of textiles. It is the first climate-positive continuous cellulose filament yarn, made in a proprietary manufacturing process and the first to reproduce the properties of polyester and nylon yarns in a cellulosic, biodegradable, and endlessly recyclable fibre.
HeiQ AeoniQ™ can be manufactured from different cellulosic raw materials such as pre- and post-consumer textile waste, biotech cellulose, and non-valorized agricultural waste, such as ground coffee waste or banana peels. It naturally degrades after only 12 weeks in the soil. Each ton of HeiQ AeoniQ™ saves 5 tons of CO2 emissions. The first garments made with this innovative cellulosic filament fiber were commercially launched in January 2023.

TENCEL™ LUXE – lyocell filament yarn – Lenzing (Austria)
TENCEL™ LUXE is LENZING’s new versatile lyocell yarn that offers an urgently needed sustainable filament solution for the textile and fashion industry. A possible botanical alternative for silk, long-staple cotton, and petrol-based synthetic filaments, is derived from wood grown in renewable, sustainably managed forests, and produced in an environmentally sound, closed-loop process that recycles water and reuses more than 99 % of organic solvent. Certified by The Vegan Society, it is suitable for a wide range of applications and fabric developments, from finer high fashion propositions to denim constructions, seamless and activewear innovations, and even agricultural and technical solutions.

Nullarbor™ – Nanollose & Birla Cellulose (Australia/India)
In 2020, Nanollose & Birla Cellulose started a journey to develop and commercialize tree-free lyocell from bacterial cellulose, called Nullarbor™. The name derives from the Latin “nulla arbor” which means “no trees”. Initial lab research at both ends led to a joint patent application with the patent “production of high-tenacity lyocell fibres made from bacterial cellulose”.
Nullarbor is significantly stronger than lyocell made from wood-based pulp; even adding small amounts of bacterial cellulose to wood pulp increases the fibre toughness. In 2022, the first pilot batch of 260kg was produced with 20 % bacterial pulp share. Several high-quality fabrics and garments were produced with this fibre. The collaboration between Nanollose & Birla Cellulose now focuses on increasing the production scale and amount of bacterial pulp in the fibre.

Circulose® – makes fashion circular – Renewcell (Sweden)
Circulose® made by Renewcell is a branded dissolving pulp made from 100 % textile waste, like worn-out clothes and production scraps. It provides a unique material for fashion that is 100 % recycled, recyclable, biodegradable, and of virgin-equivalent quality. It is used by fibre producers to make staple fibre or filaments like viscose, lyocell, modal, acetate or other types of man-made cellulosic fibres. In 2022, Renewcell, opened the world’s first textile-to-textile chemical recycling plant in Sundsvall, Sweden – Renewcell 1. The plant will eventually reach 120,000 tons of annual capacity.

Sparkle sustainable sanitary pads – Sparkle Innovations (United States)
Globally, around 300 billion period products are discarded every year, resulting in millions of tons of non-biodegradable waste. Since most conventional sanitary pads contain up to 90 % plastics, they do not biodegrade for around 600 years. Sparkle has designed sustainable, plastic-free, biodegradable and compostable Sparkle sanitary pads. From product to packaging, they are made up of around 90 % cellulose-based materials with top sheet, absorbent core, release paper, wrapping paper and packaging made of cellulose-based fibres. Whether Sparkle pads end up in a compost pit, are incinerated or end up in a landfill, they are a more sustainable alternative compared to conventional pads that contain large amounts of plastics, complex petro-chemical based ingredients and artificial fragrances. When tested according to ISO 14855-1 by a leading independent lab in Europe, Sparkle pads reached over 90 % absolute biodegradation within 90 days in commercial composting conditions.

• In Spring 2022, adidas announced its partnership with Impact Hub and Blavity.org to launch a new program called Cultivate & B.L.O.O.M. (Building Legacies Out of Movements), an accelerator program for social entrepreneurs of color.
• Through knowledge sharing and funding, the program cultivates a thriving ecosystem for changemakers to accelerate impact and deliver initiatives at the intersection of sport, equity and creativity for Black and Latinx communities.

In Spring 2022, adidas announced its newest program, Cultivate & B.L.O.O.M., designed to equip entrepreneurs of color with tools and resources to enable them to accelerate growth and maximize impact. As part of adidas’ United Against Racism commitments and celebration of boundary-breaking Black women, Cultivate & B.L.O.O.M. is further closing the opportunity gap that exists for Black and Latinx social entrepreneurs by elevating, co-creating with and funding entrepreneurs creating change in their communities.

Through an intentional selection process, eight Black women social entrepreneurs were identified to participate in the first-ever Cultivate & B.L.O.O.M. cohort. The first cohort kicked off in July 2022 and will graduate in March 2023.

Throughout their nine months in the program, entrepreneurs have access to a tailored portfolio of resources and opportunities from within and outside of the adidas ecosystems that will serve to accelerate their impact. These resources include funding, access to industry experts, mentorship, workshops, fireside chats and visibility into adidas’ networks.

After graduating from the program, participants become a partner in the “Innovation Network”, a network of social impact partners that seek to drive forward change within their communities and organizations. This portfolio of partners will enable adidas to continue strengthening the diversity of our partnership network, increase our reach within key markets and deepen our relationships over time.

• Potential loss of competitiveness, caused by the EU’s inaction of the energy crisis, and Chinese and US subsidies to domestic industry

Following yesterday’s European Council summit and its conclusions on the measures to tackle the energy crisis, the European textiles industry is extremely concerned about the fast loss of competitiveness of Europe and demands urgent action to save the industry.

The chain of factors determining this sharp decline in competitiveness is twofold. First, the energy cost in Europe is more than 6 times higher than in the US, China, and neighbouring countries. This factor alone has almost erased the business case for producing in the EU. At present, many textiles and clothing companies are producing at net loss or have shut down production. The industrial conditions have worsened in such a way that there is no business case to invest in Europe or buy products produced or processed in the EU. It is only the sense of responsibility of the entrepreneurs towards the European society that is keeping the plants and production running.

Secondly, while the EU is passive and extremely slow in articulating a credible and effective response to the energy crisis, the main international competitors and trade partners (China, India and the US respectively) have developed comprehensive state-aid frameworks for their domestic industry despite not being affected by this crisis at all. The latest example is the 369-billion-dollar scheme of the Inflation Reduction Act rolled out by the Biden administration.

Recent trade data  already indicate a loss of global competitiveness: imports to the EU have grown tremendously in 2022 (+35% year-to-date). It is also evident that the surge in imports goes in parallel with the surge of natural gas price. It is expected that energy prices will remain high and volatile, opening the door for imports to gain substantial market shares in the EU.

The chart indicates the development of the Title Transfer Facility (TTF) until September 2022 since Eurostat data for Q4 2022 has not been published yet. Euratex is aware that the market situation has eased somewhat since in the past months, but the crisis remains because gas prices are still extremely high in comparison to last year. This suggests that the current loss of competitiveness of the EU manufacturing will not be recovered even with lower energy prices, unless measures are taken to correct the unlevel playing field on which the EU industry has to operate in the international markets. Only with an ambitious and comprehensive relaunch plan at EU level, Europe will be able to restore its credibility as a global manufacturing powerhouse and investments.

If the status quo is maintained, not only the EU will not be able to recover its competitive position on the global business stage, but it will also fail its plans to reach zero-net emissions and achieve circularity. It is evident that these ambitions - that the industry is passionately supporting - need massive capital investments. However, in the current scenario an investments diversion can only be expected to markets where governments are actively supporting those investments and energy costs are much lower – regardless of their fossil- or non-fossil origin.

The European textiles industry – the whole value chain, from fibres, nonwoven, to fabrics, clothing manufacturers - are facing unprecedented pressure deriving from the current geopolitical situation, the new macroeconomic conditions and unfair competition from third states. The situation is going to worsen if no emergency action is taken, especially because a recession is expected in the coming months.

The main structural component of the EU manufacturing are SMEs: these are economic actors that are particularly exposed to the current crisis as they do not have the financial leverage to absorb the impact of energy prices for much longer. Urgent EU action is needed to ensure their survival.

EURATEX calls on the EU political leaders in the Commission, in the European Council and in the national capitals to:

1. Raise the ambition and adopt a comprehensive approach at EU level: energy, state-aid and trade policy must be brought together in a single strategy with concrete emergency solutions and with a clear SME dimension;
    
2. Let all hesitations aside and adopt a meaningful price cap on natural gas wholesales, that should be ideally no higher than 80 euro/MWh. In parallel, it should also be ensured that electricity prices are brought to a sustainable price level;
    
3. Change the European posture on state-aid, even temporarily. An ambitious plan of investments and state-aid in green technologies to support the industrial transition should be rolled out.

Such a plan, however, should not be conceived as a retaliation against our most necessary and like-minded trade partners. Access to finance and markets must be safeguarded for all those actors who are capable and willing to invest in Europe, on the basis of reciprocity. In   these challenging times for geopolitical stability, ensuring strong trade ties with our traditional allies and partners is of utmost importance. The roll-out of an investment and state aid plan should not interfere, but rather support, the dialogue with the US (and other partners) and the deepening of our trade and investment partnership. Such a dialogue should be accelerated in the context of the TTC as well as at WTO level.

The plan of the European Commission to propose a price cap on wholesale gas price at 275€/MWh would be a bitter disappointment for the European textiles and clothing manufacturers, said EURATEX.

November 22nd, EURATEX stated in a letter to EC President, Ursula von der Leyen, that any price cap above the level of 80€euro/MWh would not help the EU industry – the textile sector in particular – to survive the current crisis. Indeed as early as July 2021, the wholesale gas price in the EU was below 30€/MWh. Now, the EU industry is facing gas and energy prices that have exceeded any coping capacity: from the record-high 320€/MWh last August, the price has reached to 127€/MWh today. Still, it is more than 300% than the business as usual prices.

The very existence of the European industry is at stake and with it the European sustainability agenda – and Europe’s capacity to implement it. Furthermore, Europe will lose its strategic autonomy, which guarantees essential goods and services are made available on the European Internal Market. If we continue on this path, the EU will soon become totally dependent on foreign imports with no leverage to implement its sustainability agenda, let alone lead the transition to a circular economy on the international stage.

At present, the EU industry is facing a dire international competition with the industry in China, India and the US working at energy prices of around 10$/MWh. In addition, these competitors are benefitting of sky-high subsidies from their own governments: the rollout of the US $369bln industrial subsidy scheme is just the latest example.

EURATEX Director General, Dirk Vantyghem, believes that “while the EU Industry is under immense, unprecedented pressure, a price cap at 275€/MWh would be meaningless: the European industry will be permanently pushed out on the market. The industry is at the heart of the European way of life and the fundament of our social market economy. The EU must save its industry to save Europe. The moment to act is now.”

The Enforcement Forum of ECHA agreed that the next REACH enforcement project will investigate how companies fulfil the registration, authorisation and restriction obligations for products and chemicals they import from outside the EU. The project will be done in 2023-2025 and will require close cooperation between REACH enforcement and national customs authorities in the Member States.
In its November meeting, the Enforcement Forum, responsible for harmonising the enforcement of EU chemicals legislation, agreed to focus its next project on the control of imports of substances, mixtures and articles.

This subject was triggered by high levels of non-compliance in imported goods detected in previous Forum projects, including a recent pilot project. The pilot found that 23 % of inspected products were non-compliant with requirements set by EU law and further controls are necessary.

Control of imports at the point of entry is the most effective means of checking that non-compliant substances, mixtures and articles do not enter the European market. The project will also work on further developing and strengthening existing cooperation between REACH inspectors and customs. By strengthening the control of imports, the project will also contribute to the goals of the EU’s Chemicals Strategy for Sustainability.

The Forum also agreed to publish its future advice on enforceability of new restriction proposals under REACH.

Opportunities for expanding the future role of the Forum, strengthening the control of imports and other areas were on the agenda in an open session where 41 representatives from stakeholder organisations and four candidate countries joined. Among other topics, the open session also addressed the enforceability of REACH restrictions, for example, in textiles or on the use of lead gunshot in wetlands as well as analytical methods relevant for the control of REACH duties.

The Forum’s Biocidal Products Regulation Subgroup (BPRS) re-elected Helmut de Vos (BE) for a second term as a Vice-Chair.

Ascend Performance Materials has purchased a majority stake in California-based Circular Polymers, a recycler of post-consumer, high-performance polymers including polyamide 6 and 66, polypropylene and polyester (PET). The deal provides Ascend with a consistent supply of high-quality PCR materials for its ReDefyne™ sustainable polyamides, launched at K 2022.

Circular Polymers, which as part of the deal is renamed Circular Polymers by Ascend, reclaims and processes post-consumer carpet via a unique technology and has redirected approximately 85 million pounds of waste from landfills into new goods since 2018.

“We are focused on helping our customers reach their sustainability goals and Circular Polymers by Ascend provides materials that offer strong performance with a considerably smaller environmental footprint, compared to other technologies like pyrolysis,” said Phil McDivitt, president and CEO of Ascend. “Since we launched ReDefyne, the demand for our circular products has been significant across all segments of our business, including automotive, consumer, electronics and high-performance fibers and textiles.”

Ascend has a sustainability strategy based on three pillars: empowering people, innovating solutions and operating without compromise. Ascend has committed to reducing its greenhouse gas emissions by 80% by 2030 and recently announced two new efforts to reduce the carbon footprint of its products.

The first Cradle to Cradle Certified^® clothing collection is on the market one year after the collaboration platform for Swiss textile labels was launched. The Circular Clothing cooperative has succeeded, in close cooperation with European suppliers, in gaining access to circular materials and equipment and using this for the Black Denim Collection by the ethical fashion label “the Blue suit”. An important step for the cooperative, which receives funding from the Migros Pioneer Fund, is the development of an online assessment tool which can be used to help check the readiness of textile labels to operate in a circular manner.

The black denim was developed by a renowned manufacturer in Italy. Since no toxic chemicals are used in the production process, this denim is safe for biological cycles and Cradle to Cradle Certified^® Gold. Cradle to Cradle Certified^® Gold certified material by the Swiss company OceanSafe was used for the lining of the jacket. Special innovative design elements and production processes, such as the printed lining, also meet the stringent Cradle to Cradle Certified^® Gold requirements. Currently, 1% of the material of the Black Denim Collection is Cradle to Cradle Certified® Bronze. In the next few months, this percent and thus also the whole garments should reach the gold level.

The Cradle to Cradle^® certification is based on the following five principles: Material Health, Product Circularity, Clean Air & Climate Protection, Water & Soil Stewardship, and Social Fairness. Depending on the extent to which all of these criteria are met by the manufacturing process, there are various levels of certification from bronze to silver, gold and platinum.