From the Sector

The associations published a joint European textiles industry statement on the energy package claiming incisive actions with no further delay.
Here is the statement in full:

Last month, when gas wholesale prices reached the record level of 340€/MWh – triggering also sky-high electricity prices – the European textiles industry called on the European Union to adopt a wholesale price cap for gas, the revision of the merit-order principle in the electricity market, support for SMEs and a single European strategy. On 14 September 2022, on the occasion of the State of the Union address by President Von der Leyen, the Commission announced initiatives aimed at tackling the dramatic energy crisis that the Europe is facing.

We, the European associations representing the whole textiles’ ecosystem,  welcome these proposals by the Commission to change the TTF benchmark parameters and decouple the TTF from the electricity market and the revision of the merit-order principle for the electricity market, which is no longer serving the purpose it was designed for.

We also welcome the proposal to amend the state-aid framework that, in our view, should include the textiles finishing, the textiles services and the nonwoven sectors as well as a simplification of the application requirements. Furthermore, we call for a uniform implementation across the EU.

However, we acknowledge that the Commission proposal lacks in ambition and – if confirmed – it will come at the cost of losing European industrial capacity and European jobs. Ultimately, Europe will remain without its integrated textiles ecosystem, as we know it today, and no mean to translate into reality the EU textiles strategy, for more sustainable and circular textiles products.

An ambitious and meaningful European price cap on the wholesale price of natural gas is absolutely necessary. Europe is running out of time to save its own industry. It is now time to act swiftly, decisively in unity and solidarity at European level. We understand a very high price cap has been so far discussed among Ministries and that is not reassuring for companies across Europe: if any cap is, as expected, above 100/MWh, these businesses will collapse.

Already in March 2022, with EU gas wholesale prices at 200€/MWh, the business case for keeping textiles production was no longer there. To date, natural gas wholesale prices have reached the level of 340€/MWh, more than 15 times higher compared to 2021! Currently, many businesses have suspended their production processes to avoid the loss of tens of thousands of euros every day. We hope this will not become the new normal and – to reduce the likelihood of such a scenario – we call on the Commission, the EU Council and the Parliament to swiftly adopt decisive, impactful and concrete actions to tackle the energy crisis and ensure the survival of the European industry.

Given the dire international competition in which the EU textiles industry operates, it is not possible to just pass on the increased costs to consumers. Yet, with these sky-high prices, our companies cannot afford to absorb those costs. The EU textiles companies are mainly SMEs that do not have the financial structure to absorb such a shock.  In contrast with such reality in Europe, the wholesale price of gas in the US and China is 10€/MWh, whereas in Turkey the price is 25€/MWh. If the EU does not act, our international competitors will easily replace us in the market, resulting in the de-industrialisation of Europe and a worsened reliance on foreign imports of essential products.

Specific segments of the textile industry are particularly vulnerable:

• The man-made fibres (MMF) industry for instance is an energy intensive sector and a major consumer of natural gas and electricity in the manufacturing of its fibres. Not only is it being affected by higher energy process, it is also experiencing shortages and sharply rising costs of its raw materials.
• For the nonwovens segment, production processes – which use both fibres and filaments extruded in situ – are also highly dependent on gas and electricity. Polymers melting and extrusion, fibres carding, web-forming, web-bonding and drying are energy-intensive techniques. Nonwoven materials can be found in many applications crucial to citizens like in healthcare (face masks) or automotive (batteries).
• It also is to be noted that for some segments the use of gas has no technological substitute: for example, the dyeing and finishing production units make very intense use of gas. These production units are mainly composed by boilers and driers, which only work on gas and there is no alternative technology.
• The textile services sector is also struggling: with the critical nature of the service they provide, they require a considerable amount of energy to keep services, particularly hospitals and care homes stocked with lifesaving material as well as clothing and bed linens for the patients themselves. Losing these businesses would cause a lack of clothing for healthcare professionals, including protective sanitary gowns for surgeons, nurses and doctors, uniforms including other forms of personal protective equipment.

World Natural Fibre Production in 2022 is estimated at 32.6 million tonnes, down 1.1 million tonnes from the estimate one month ago. Production reached 33.3 million tonnes in 2021 and 31.6 million in 2020.

A drought in Texas where over half of cotton produced in the United States is grown, and flooding in Pakistan, the fifth largest cotton producer, account for the decline (www.ICAC.org).

• Nearby cotton futures on the Intercontinental Exchange rose 14% from the end of July and finished August at $2.60 per kilogram.
• The Eastern Market Indicator of wool prices in Australia, fell 1% from mid-July to mid-August to US$9.27 per kilogram.
• Prices of jute fibre in India quoted by the Jute Balers Association (JBA) at the end of August converted to US$ fell 4% from a month earlier to 79 cents per kilogram.
• Prices of silk in China equalled US$ 28.7 per kilogram at the end of August, compared with US$29.5 per kilogram in July 2022, a change of 3%.
• Coconut coir fibre in India held at US cents 21 per kilogram in August.

World production of jute and allied fibres is estimated unchanged at 3.2 million tonnes in 2022 compared with 2021. High market prices in 2021 motivated farmers to expand planted area in both Bangladesh and India, but dry weather during June and July will limit yields per hectare. Normal monsoon rains resumed in South Asia during August, too late for the 2022 jute crop (https://www.wgc.de/en/).

Production of coir fibre rose by an average of 18,000 tonnes per year during the past decade, and production was at a record high of 1.12 million tonnes in 2021. Production is expected to remain high in 2022.

Flax has also been trending upward, rising by an average of 27,000 tonnes per year, and production in 2022 is estimated to remain above one million tonnes.

World wool production is forecast up by 5% in 2022 to 1.09 million tonnes (clean), the highest since 2018. Wetter weather in the Southern Hemisphere, following eight years of drought, is allowing farmers to rebuild herds (https://www.wool.com/market-intelligence/).

Natural fibres are heavily-traded commodities, and supply chain disruptions are causing significant economic losses as freight costs remain high and deliveries are delayed.

About 40% of world cotton production moves as fibre in international trade each season. Over half of world jute production moves as fibre or product, and around 55% of world wool production is exported as raw wool. Abaca, flax, and sisal are also heavily traded.

Most natural fibre exports traverse back-haul ocean freight routes from the Western Hemisphere to East Asia and the Middle East, from South Asia to East Asia and Europe, from Africa to East Asia and the Middle East, and from Australia and South Africa to China. Such routes are relatively underserved in the best of times, and reduced sailings since the start of Covid are restricting trade volumes.

As of the end of August, Freightos (https://fbx.freightos.com/) quoted the cost of moving a 40’ container from the United States West Coast to East Asia at $793, compared with $1,020 in March 2022. Nevertheless, average freight costs on back -haul routes used by natural fibres remain approximately triple their pre-covid levels. In addition to ocean freight costs, inland transportation is also affected by high fuel prices and a lack of containers. As one example, charges for inland handling of export containers in Bangladesh, the largest exporter of raw jute, increased by 48 per cent during August.

• Partnership with green power producer Enery and Energie Steiermark realizes construction of a photovoltaic plant with 5.5 MWpeak capacity
• Strategic investments in renewables boost energy independence and reduce carbon footprint

The Lenzing Group has signed an electricity supply contract with green power producer Enery and Energie Steiermark to finance a photovoltaic plant in the Deutschlandsberg region (Styria). The electricity generated will supply the fiber and pulp plant at the Lenzing site after commissioning from the fourth quarter of 2023. The electricity supply contract is limited to 20 years.

The plant’s output will amount to 5.5 MWpeak. This corresponds to the average annual electricity demand of more than 1,700 households. Several photovoltaic systems are already being installed at the Lenzing site, including the largest ground-mounted plant in the province of Upper Austria, whose commissioning is imminent.

In 2019, Lenzing became the first fiber manufacturer to set a target to reduce its carbon emissions by 50 percent by 2030 and to be climate neutral by 2050. This carbon reduction target has been confirmed by the Science Based Targets Initiative. Lenzing is also currently investing in reducing carbon emissions at other sites worldwide. Only recently, the Lenzing Group announced that its Indonesian site will also be relying on green energy in the future.

As every year, in 2022 the Discover Natural Fibers Initiative (DNFI) called on individuals, universities, textile researchers and companies to submit their products, projects, processes and ideas in the field of Natural Fibres from the following categories:

• Innovative products, components or applications
• Innovative processes and procedures
• Innovative research and science

The DNFI Innovation in Natural Fibres Award aims to promote the development of new products/components and applications using natural fibres as well as new processes for manufacturing of environmental friendly products. Universities, institutes, industry and individuals working in the area of scientific research are invited to participate. “Sustainability” should be just one important aspect of each submission considered by the judges.

The DNFI Innovation in Natural Fibres Award aims to recognise the innovations as well as the people and institutions responsible for them with the goal of raising public awareness of the achievements of the natural fibre sector as a whole.

Get the details online.

India’s world famous Blue City, Jodhpur, has been repainted and refreshed by AkzoNobel as part of a major “Let’s Colour” project involving 250 homes.

More than 5,600 liters of Dulux paint has been used to revitalize the iconic area of Rajasthan, which is known the world over as a leading tourist destination. As well as painting exterior walls in a distinctive shade of vibrant blue, the roofs of more than 100 houses have been coated with Dulux Weathershield Protect, which can help to reduce temperatures by up to 5˚C.

In addition, 20 colorful murals have been created along the ancient streets leading up to Mehrangarh Fort, which towers over the city. All the work, which took around four months to complete, was carried out by AkzoNobel Paint Academy painters, local artists and residents, and AkzoNobel volunteers, who combined their creative talents.

The color blue has been an integral part of Jodhpur’s identity for centuries. And reigniting the city’s timeless appeal – making it more liveable and enjoyable – was key to the whole project. So in addition to painting more than 250,000 square feet of walls, community walkways and staircases have also been given a rainbow makeover using Dulux FloorPlus paint.   

AkzoNobel’s global “Let's Colour” initiative was launched in 2009. To date, more than 2,300 projects have taken place, with over 1.3 million liters of paint being donated all over the world.

• Gradual transformation of production capacities to LENZING™ ECOVERO™ and VEOCEL™ branded specialty viscose

The Lenzing Group, provider of wood-based specialty fibers, is expanding its global clean electricity portfolio and transitioning its production site in Purwakarta to green electricity. The Indonesian subsidiary PT. South Pacific Viscose (SPV) has been using electricity generated solely from renewable sources since July this year, which will reduce its specific carbon emissions by 75,000 tonnes annually.

In 2019, Lenzing became the first fiber producer to set a target of halving its carbon emissions by 2030 and becoming climate neutral by 2050. This carbon reduction target has been recognized by the Science Based Targets Initiative. In Purwakarta, Lenzing is currently investing in the reduction of carbon emissions, as well as air and water emissions. Thanks to its EUR 100 million investment in this area, Lenzing is gradually transitioning its existing capacities for standard viscose to LENZING™ ECOVERO™ and VEOCEL™ branded specialty viscose.

“Demand for our wood-based, biodegradable specialty fibers is constantly rising. We see enormous growth potential, especially in Asia. The switch to green, renewable electricity marks a huge step forward in converting our Indonesian site into a specialty fiber supplier. This makes us better positioned to meet the growing demand for sustainably produced fibers,” comments Robert van de Kerkhof, Chief Commercial Officer for Fiber at Lenzing.

The company aims to generate more than 75 percent of its fiber revenue from the wood-based, biodegradable specialty fibers business under the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands by 2024. With the launch of the lyocell plant in Thailand in March 2022 and the investments in existing production sites in Indonesia and China, the share of specialty fibers in Lenzing’s fiber revenue is set to exceed the 75 percent target by a significant margin as early as 2023.

The world’s largest fashion brands and retailers must increase transparency to tackle the climate crisis and social inequality, according to the latest Fashion Transparency Index.

The seventh edition of the Fashion Transparency Index ranks 250 of the world’s largest fashion brands and retailers based on their public disclosure of human rights and environmental policies, practices, and impacts, across their operations and supply chains.

• Brands achieved an average score of just 24%, with nearly a third of brands scoring less than 10%
• The majority of brands (85%) do not disclose their annual production volumes despite mounting evidence of clothing waste around the world
• Most major brands and retailers (96%) do not publish the number of workers in their supply chain paid a living wage

The Index reveals insights into the most pressing issues facing the fashion industry, like:

• As new and proposed legislation focuses on greenwashing claims, almost half of major brands (45%) publish targets on sustainable materials yet only 37% provide information on what constitutes a sustainable material.
• Only 24% of major brands disclose how they minimise the impacts of microfibres despite textiles being the largest source of microplastics in the ocean.
• The vast majority of major brands and retailers (94%) do not disclose the number of workers in their supply chains who are paying recruitment fees. This paints an unclear picture of the risks of forced labour as workers may be getting into crippling debt to accept jobs paying poverty wages.
• While many brands use their channels to talk about social justice, they need to go beyond lip service. Just 8% of brands publish their actions on racial and ethnic equality in their supply chains.

Despite these results, Fashion Revolution is encouraged by increasing supply chain transparency among many major brands, primarily with first-tier manufacturers where the final stage of production occurs, e.g. cutting, sewing, finishing and packing. Nine brands have disclosed their first-tier manufacturers for the first time this year. It is encouraging to see significant progress across market segments including luxury, sportswear, footwear and accessories and across different geographies.

Fashion Revolution’s co-founder and Global Operations Director Carry Somers says: “In 2016, only 5 out of 40 major brands (12.5%) disclosed their suppliers. Seven years later, 121 out of 250 major brands (48%) disclose their suppliers. This clearly demonstrates how the Index incentivises transparency but it also shows that brands really are listening to the millions of people around the world who keep asking them #WhoMadeMyClothes? Our power is in our persistence.”

More key findings from the Fashion Transparency Index 2022:

Progress on transparency in the global fashion industry is still too slow among 250 of the world’s largest fashion brands and retailers, with brands achieving an overall average score of just 24%, up 1% from last year
For another year, the initiative has seen major brands and retailers publicly disclose the most information about their policies, commitments and processes on human rights and environmental topics and significantly less about the results, outcomes and impacts of their efforts.

Most (85%) major brands still do not disclose their annual production volumes despite mounting evidence of overproduction and clothing waste
Thousands of tonnes of clothing waste are found globally. However, brands have disclosed more information about the circular solutions they are developing (28%) than on the actual volumes of pre- (10%) and post-production waste they produce (8%). Brands have sat by as waste importing countries foot the bill, resulting in serious human rights and environmental implications.

Just 11% of brands publish a responsible purchasing code of conduct indicating that most are still reluctant to disclose how their purchasing practices could be affecting suppliers and workers
Greater transparency on how brands interact with their suppliers ought to be a first step towards eliminating harmful practices and promoting fair purchasing practices. The poor performance on transparency in this vital area is a missed opportunity for brands to demonstrate they are serious about addressing the root causes of harmful working conditions, including the instances where they themselves are the key driver.

Despite the urgency of the climate crisis, less than a third of major brands disclose a decarbonisation target covering their entire supply chain which is verified by the Science-Based Targets Initiative
Many brands and retailers rely heavily on garment producing countries that are vulnerable to the impacts of the climate crisis, yet our research shows that only 29% of major brands and retailers publish a decarbonisation target covering their operations and supply chain which is verified by the Science Based Targets Initiative.

Only 11% of brands publish their supplier wastewater test results, despite the textile industry being a leading contributor to water pollution
The fashion industry is a major contributor to water pollution and one of the most water intensive industries on the planet. Only 11% of major brands publish their wastewater test result, and only 25% of brands disclose the process of conducting water-related risk assessments in their supply chain. Transparency on wastewater test results is key to ensuring that brands are held accountable for their potentially devastating impacts on local biodiversity, garment workers and their communities.

Most major brands and retailers (96%) do not publish the number of workers in their supply chain paid a living wage nor do they disclose if they isolate labour costs
Insufficient progress is being made by most brands towards ensuring that the workers in their supply chain are paid enough to cover their basic needs and put aside some discretionary income. Just 27% of brands disclose their approach to achieving living wages for supply chain workers and 96% do not publish the number of workers in their supply chain paid a living wage. In response, we have joined forces with allies across civil society to launch Good Clothes, Fair Pay. The campaign demands groundbreaking living wage legislation across the garment, textile and footwear sector.

The Discover Natural Fibres Initiative DNFI published their statistical World Natural Fibre Update this month. The world production of natural fibres is estimated at 33.7 million tonnes in 2022, a slight increase compared with a preliminary 33.3 million tonnes in 2021 and 31.6 million in 2020.

The DNFI Natural Fibre Composite Price dropped 2% in July 2022 to US 219 cents/kg, compared with US 223 cents the previous month. The DNFI Composite is an average of prices in major markets for cotton, wool, jute, silk, coir fibre, and sisal, converted to US$ per kilogram and weighted by shares of world production.

• The DNFI Composite was pulled downward primarily by a 9% decline in the Eastern Market Indicator of wool prices in Australia, which fell from US$ 10.27 per kilogram in June to US$9.38 in July.
• October cotton ICE futures (the nearby contract) finished July marginally lower, closing at 228 US cents per kilogram, compared with 229 at the end of June.
• Prices of jute fibre in India quoted by the Jute Balers Association (JBA) at the end of July were unchanged from a month earlier, but with depreciation of the Rupee versus the dollar, calculated prices fell from 84 cents to 82 cents per kilogram.
• Prices of silk in China equalled US$29.5 per kilogram in July 2022, coconut coir fibre in India held at US cents 21 per kilogram, and sisal in Brazil finished July at US cents 41 per kilogram.

Cotton prices were the highest in a decade during 2021/22, and world cotton production is estimated by the International Cotton Advisory Committee at 25.8 million tonnes during the 2022/23 season which began August 1, up from 25.4 million in the season just completed. Extreme drought in Texas, the largest producing state in the United States, is limiting the rise in world production that would otherwise be occurring.

World production of jute and allied fibres is estimated unchanged at 3.2 million tonnes in 2022 compared with 2021. High market prices in 2021 motivated farmers to expand planted area in both Bangladesh and India, but dry weather in jute-growing areas during June and July has undermined earlier optimistic hopes for yields. Rainfall was approximately half of normal in the city of Kolkata from early June to mid-July.

Production of coir fibre rose by an average of 18,000 tonnes per year during the past decade, and production was record high at 1.12 million tonnes in 2021. Production is expected to remain high in 2022.

Flax has also been trending upward, rising by an average of 27,000 tonnes per year, and production in 2022 is estimated to remain above one million tonnes.
World wool production is forecast up by 5% in 2022 to 1.09 million tonnes (clean), the highest since 2018. Wetter weather in the Southern Hemisphere, following eight years of drought, is allowing farmers to rebuild herds.

• Currency-neutral sales up 4%, despite more than € 300 million negative impact from macroeconomic constraints
• Markets representing more than 85% of the business grow 14% overall
• Gross margin down 1.5pp to 50.3% reflecting significantly higher supply chain costs
• Operating profit reaches € 392 million
• Net income from continuing operations amounts to € 360 million
• FY 2022 outlook reflects double-digit growth during the second half of the year

“Our Western markets continued to show strong momentum in the second quarter amid heightened macroeconomic uncertainty. With Asia-Pacific returning to growth, markets combined representing more than 85% of our business grew at a double-digit rate,” said adidas CEO Kasper Rorsted. “With sports back at center stage this summer, revenues in our strategic growth categories Football, Running and Outdoor all increased by double digits. However, the macroeconomic environment, particularly in China, remains challenging. The recovery in this market is – due to continued covid-19-related restrictions – slower than expected. And we have to take into account a potential slowdown in consumer spending in all other markets for the remainder of the year.”

Currency-neutral revenues increase 4% despite macroeconomic constraints
In the second quarter, currency-neutral revenues increased 4% as adidas continued to see strong momentum in Western markets. This growth was achieved despite continued challenges on both supply and demand. Supply chain constraints as a result of last year’s lockdowns in Vietnam reduced top-line growth by around € 200 million in Q2 2022. In addition, the company’s decision to suspend its operations in Russia reduced revenues by more than € 100 million during the quarter. Continued covid-19-related lockdowns in Greater China also weighed on the top-line development in Q2. From a channel perspective, the top-line increase was to a similar extent driven by the company’s own direct-to-consumer (DTC) activities as well as increases in wholesale. Within DTC, e-commerce, which now represents more than 20% of the company’s total business, showed double-digit growth reflecting strong product sell-through. From a category perspective, revenue development was strongest in the company’s strategic growth categories Football, Running and Outdoor, which all grew at strong double-digit rates. In euro terms, revenues grew 10% to € 5.596 billion in the second quarter (2021: € 5.077 billion).

Strong demand in Western markets
Revenue growth in the second quarter was driven by Western markets despite last year’s lockdowns in Vietnam still reducing sales, particularly in EMEA and North America, by
€ 200 million in total. In addition, the top-line development in EMEA was also impacted by the loss of revenue in Russia/CIS of more than € 100 million. Nevertheless, currency-neutral sales grew 7% in the region. Revenues in North America increased 21% during the quarter driven by growth of more than 20% in both DTC and wholesale. Revenues in Latin America increased 37%, while Asia-Pacific returned to growth. Currency-neutral revenues increased 3% in this market despite still being impacted by limited tourism activity in the region. In contrast, the company continued to face a challenging market environment in Greater China, mainly related to the continued broad-based covid-19-related restrictions. As a result, currency-neutral revenues in the market declined 35% during the three-months period, in line with previous expectations. Excluding Greater China, currency-neutral revenues in the company’s other markets combined grew 14% in Q2.

Operating profit of € 392 million reflects operating margin of 7.0%
The company’s gross margin declined 1.5 percentage points to 50.3% (2021: 51.8%). Significantly higher supply chain costs and a less favorable market mix due to the significant sales decline in Greater China weighed on the gross margin development. This could only be partly offset by a higher share of full price sales, first price increases and the benefits from currency fluctuations. Other operating expenses were up 19% to € 2.501 billion (2021: € 2.107 billion). As a percentage of sales, other operating expenses increased 3.2 percentage points to 44.7% (2021: 41.5%). Marketing and point-of-sale expenses grew 8% to € 663 million (2021: € 616 million). The company continued to prioritize investments into the launch of new products such as adidas’ new Sportswear collection, the next iteration of its successful Supernova running franchise and first drops related to the Gucci collaboration as well as campaigns around major events like ‘Run for the Oceans.’ As a percentage of sales, marketing and point-of-sale expenses were down 0.3 percentage points to 11.8% (2021: 12.1%). Operating overhead expenses increased by 23% to a level of € 1.838 billion (2021:
€ 1.492 billion). This increase was driven by adidas’ continuous investments into DTC, its digital capabilities and the company’s logistics infrastructure as well as by unfavorable currency fluctuations. As a percentage of sales, operating overhead expenses increased 3.5 percentage points to 32.8% (2021: 29.4%). The company’s operating profit reached a level of € 392 million (2021: € 543 million), resulting in an operating margin of 7.0% (2021: 10.7%).

Net income from continuing operations reaches € 360 million
The company’s net income from continuing operations slightly declined to € 360 million (2021: € 387 million). This result was supported by a one-time tax benefit of more than € 100 million due to the reversal of a prior year provision. Consequently, basic EPS from continuing operations reached € 1.88 (2021: € 1.93) during the quarter.

Currency-neutral revenues on prior year level in the first half of 2022
In the first half of 2022, currency-neutral revenues were flat versus the prior year period. In euro terms, revenues grew 5% to € 10.897 billion in the first six months of 2022 (2021:
€ 10.345 billion). The company’s gross margin declined 1.7 percentage points to 50.1% (2021: 51.8%) during the first half of the year. While price increases as well as positive exchange rate effects benefited the gross margin, these developments were more than offset by the less favorable market mix and significantly higher supply chain costs. Other operating expenses increased to € 4.759 billion (2021: € 4.154 billion) in the first half of the year and were up 3.5 percentage points to 43.7% (2021: 40.2%) as a percentage of sales. adidas generated an operating profit of € 828 million (2021: € 1.248 billion) during the first six months of the year, resulting in an operating margin of 7.6% (2021: 12.1%). Net income from continuing operations reached € 671 million, reflecting a decline of € 219 million compared to the prior year level (2021: € 890 million). Accordingly, basic earnings per share from continuing operations declined to € 3.47 (2021: € 4.52).

Average operating working capital as a percentage of sales slightly decreases
Inventories increased 35% to € 5.483 billion (2021: € 4.054 billion) at June 30, 2022 in anticipation of strong revenue growth during the second half of the year. Longer lead times as well as the challenging market environment in Greater China also contributed to the increase. On a currency-neutral basis, inventories were up 28%. Operating working capital increased 23% to € 5.191 billion (2021: € 4.213 billion). On a currency-neutral basis, operating working capital was up 14%. Average operating working capital as a percentage of sales decreased 0.4 percentage points to 21.0% (2021: 21.4%), reflecting an overproportional increase in accounts payable due to higher sourcing volumes and product costs.

Adjusted net borrowings at € 5.301 billion
Adjusted net borrowings amounted to € 5.301 billion at June 30, 2022, representing a year-over-year increase of € 2.155 billion (June 30, 2021: € 3.146 billion). This development was mainly due to the significant decrease in cash and cash equivalents.

FY 2022 outlook reflects double-digit growth during the second half of the year
On July 26, adidas adjusted its guidance for FY 2022 due to the slower-than-expected recovery in Greater China since the start of the third quarter resulting from continued widespread covid-19-related restrictions. adidas now expects currency-neutral revenues for the total company to grow at a mid- to high-single-digit rate in 2022 (previously: at the lower end of the 11% to 13% range), reflecting a double-digit decline in Greater China (previously: significant decline). While so far the company did not experience a meaningful slowdown in the sell-through of its products or significant cancellations of wholesale orders in any market other than Greater China, the adjusted guidance also accounts for a potential slowdown of consumer spending in those markets during the second half of the year as a result of the more challenging macroeconomic conditions. Therefore, growth in EMEA is now expected to be in the low teens (previously: mid-teens growth), while revenues in Asia-Pacific are projected to grow at a high-single-digit rate (previously: mid-teens growth). Despite the more conservative view on the development of consumer spending in the second half of the year, adidas has increased its forecasts for North America and Latin America reflecting the strong momentum the brand is enjoying in these markets. In North America, currency-neutral revenues are now expected to increase in the high teens. Sales in Latin America are projected to grow between 30% and 40% (both previously: mid- to high-teens growth).   

Due to the less favorable market mix and the impacts from initiatives to clear excess inventories in Greater China until the end of the year, gross margin is now expected to reach a level of around 49.0% (previously: around 50.7%) in 2022. Consequently, the company’s operating margin is now forecast to be around 7.0% (previously: around 9.4%) and net income from continuing operations is expected to reach a level of around € 1.3 billion (previously: at the lower end of the € 1.8 billion to € 1.9 billion range).

To celebrate the 50th year of Title IX, adidas announced a series of brand initiatives and commitments aimed at creating a more equitable and inclusive future of sport . Commencing with the signing of 15 female student-athletes to name, image, and likeness (NIL) deals across seven collegiate sports, the brand is further underscoring its commitment to women and LGBTQI+ athletes in sport through an expanded partnership with Athlete Ally to grow chapter footprints on college campuses.

In addition, adidas is partnering with Candace Parker to create a mentorship program that provides newly signed student-athletes with guidance as they navigate the NIL era.

“As a leading global sports brand, we're focused on creating long-term equity in sport . That means both investing in the next generation of athletes today and also supporting them in the future,” said Rupert Campbell, president of adidas North America. “We welcome this group of powerful student-athletes to the adidas family and look forward to working alongside them to define what is possible for the future of sport.”

The initial group of student-athletes was revealed at the brand’s Title IX celebration in New York City announced by Billie Jean King and Ally Love , attended by Layshia Clarendon, Kristine Lilly, Ifeoma (Ify) Onumonu, Imani Dorsey, Kelsey Robinson, media, family, and friends.

The following student-athletes have been announced as adidas partners:
Maddy Anderson – Mississippi St., soccer
Emily Mason – Rutgers, soccer
Brianna Copeland – Indiana, softball     
Erin Moss – Georgia Tech, volleyball
Lauren Dooley – Kansas, volleyball
Moriah Oliveira – Miami, track & field
Kinsey Fiedler – Washington, softball
Gianna Pielet – Texas A&M, tennis
Jayci “Jay” Goldsmith – Texas A&M, tennis
Izzy Redmond – ASU, gymnastics
Nicklin Hames – Nebraska, volleyball
Jaiden Thomas – NC State, soccer
Jameese Joseph – NC State, soccer
Hailey Van Lith – Louisville, basketbal
India Wells – Grambling State, softball

An Investment in All Athletes
adidas believes long-term equity in sport starts with investment. This initial all-female group of student-athletes builds on the brand’s March announcement of a sweeping, equitable and inclusive NIL Ambassador Network reaching more than 50,000 eligible student-athletes across 23 sports, all genders and 109 D1 universities beginning this fall at Power 5 programs and HBCUs.

Looking towards the next 50 years of Title IX, the Education Amendment prohibiting discrimination against students based on sex, adidas will continue investing in athletes and programs that increase representation and visibility, with this being a commitment to create a more progressive future of equity in sport .