From the Sector

At its meeting on December 13, the Supervisory Board of Lenzing AG decided to reappoint Stefan Doboczky as Chief Executive Officer of the Management Board. Stefan Doboczky’s new contract will begin on June 1, 2018 and runs until the end of 2022.

“In recent years, Stefan Doboczky and his colleagues on the Management Board have been able to make excellent use of the favourable market conditions on the basis of the previous restructuring in order to transform an Austrian company with foreign investments into a truly global player with strong Austrian roots. This has created the basis for consistently pursuing the growth strategy we have embarked on with the entire team, even under difficult conditions, and thus securing the long-term future of the Lenzing Group. We are very pleased that Stefan Doboczky will continue to dedicate himself to these tasks over the next five years”, said Hanno Bästlein, Chairman of the Supervisory Board of Lenzing AG on the occasion of Doboczky’s reappointment.
In addition to Stefan Doboczky, the Management Board of Lenzing AG consists of Chief Commercial Officer Robert van de Kerkhof, Chief Financial Officer Thomas Obendrauf and Chief Technology Officer Heiko Arnold.

• Revenue up 9.4 percent to EUR 1,726.6 mn
• EBITDA improvement of 23.9 percent to EUR 397.1 mn
• Retail bond of EUR 120 mn redeemed – Lenzing with net liquidity as at end of September
• State-of-the-art application innovation center opened in Hong Kong

Lenzing – The Lenzing Group generated a substantial increase in revenue and earnings in the first nine months of the 2017 financial year compared to the prior-year period. The company is continuing the implementation of its Group strategy sCore TEN in order to further expand the offering of specialty fibers and be even closer to its customers and business partners.

Consolidated revenue climbed 9.4 percent year-on-year to EUR 1,726.6 mn. This increase is mainly attributable to higher prices for all three fiber generations. Consolidated earnings before tax, depreciation and amortization (EBITDA) rose 23.9 percent to EUR 397.1 mn, corresponding to an EBITDA margin of 23 percent, up from 20.3 percent in the prior-year period. Earnings before interest and tax (EBIT) increased by 34.6 percent to EUR 298.4 mn, resulting in a higher EBIT margin of 17.3 percent (Q1-3 2016: 14 percent). The profit for the period improved by 35.3 percent to EUR 219.3 mn, and earnings per share rose 36 percent to EUR 8.12 per share. In September Lenzing redeemed the retail bond of EUR 120 mn. At the end of the reporting period the Group had net liquidity of EUR 16.9 mn.

“In the first three quarters of 2017, we successfully captured value in a very positive market environment and we continue to implement the sCore TEN strategy with great discipline. The opening of our new application innovation center in Hong Kong is an important step to boost our regional innovation capabilities. We were particularly proud to launch TENCELTM Luxe as a sign of Lenzing’s ongoing commitment to innovation and sustainability”, states Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “After three excellent quarters we are confident to deliver substantially better operating results in 2017 compared to 2016, but at the same time we do expect more headwinds in 2018.”

Focus on customer intimacy

In September 2017, the Lenzing Group opened a new application innovation center (AIC) in Hong Kong, thus setting a further milestone in strengthening its innovation offering to all partners along the value chain. New applications for Lenzing fibers will be developed and tested at the new facility, among them applications for recent innovations such as the TENCELTM Luxe branded lyocell filament, the RefibraTM branded lyocell fiber and the EcoVeroTM branded viscose fiber.

Furthermore, new sales and marketing offices were opened in Turkey and South Korea in the first half of 2017. The direct contact to customers and well-equipped showrooms featuring products made of LenzingTM fibers serve as the basis for providing even better customer support.

Investment program in progress

The Lenzing Group aims to increase the share of specialty fibers as a percentage of revenue to 50 percent by 2020. Following the capacity expansion initiatives in Heiligenkreuz (Austria) and Mobile, Alabama (USA) which are both underway, Lenzing announced its intention to construct the next plant to produce TENCEL® fibers in Thailand.

A new era of sustainable production

In October 2017, the Lenzing Group presented a new product, TENCELTM Luxe, at an exclusive event held in Paris. The TENCELTM Luxe branded filament yarn represents Lenzing’s entry in the filament market. This fiber will support the Lenzing Group’s path towards becoming a true specialty player in the market for botanic materials derived from the sustainable raw material wood.

The launch volumes of TENCELTM Luxe are being produced at the Lenzing site. The basic engineering for a commercial scale plant was commenced.

Outlook
Demand development on the global fiber market remains positive within the context of a generally friendly macroeconomic environment. Lenzing expects wood-based cellulose fibers to grow at an even higher rate than the overall fiber market. After three excellent quarters, the Lenzing Group will achieve an operating result in 2017 that is significantly better than 2016.

For 2018, Lenzing sees a number of somewhat opposing factors that limit visibility regarding fiber price developments. Overall market demand is expected to remain high. However, the Group expects a substantial increase on the supply side, especially for viscose but also for cotton. Price trends for selected key raw materials, especially caustic soda, are difficult to predict. Against this background the Lenzing Group expects a much more challenging market environment for standard viscose during the upcoming quarters.

The above-mentioned development reassures the Lenzing Group in its chosen corporate strategy sCore TEN. The Group initiated its transformation from a volume-oriented viscose player to a value-oriented specialty fiber player at the end of 2015, and will continue the disciplined implementation of its business strategy.

Bobingen - On the 4th October 2017 a new brand was introduced at Trevira: Trevira SINFINECO®. This label may be carried by all textiles that contain sustainable Trevira products. Sustainable, innovative, high-value and responsible – these are the values the new brand stands for.

As an industrial enterprise, Trevira is conscious of its special responsibility for an intact environment and has long advocated the recycling of valuable raw materials and waste products. Trevira CEO Klaus Holz: “We at Trevira wish to preserve the environment and at the same time work to create value. These are the criteria of our sustainability concept.“

Creation of the new brand is therefore only a logical step, one that enables customers to label their sustainable Trevira products as such. Trevira is known for the high quality of its products. In every way recycled products are as good as the original materials in terms of quality and performance.

Two vital elements in Pre-Consumer Recycling and an important concept in Post-Consumer Recycling form part of the sustainability strategy of Trevira to conserve resources and maintain value. :

In the area of Pre-Consumer Recycling, on the one hand, residual materials resulting from the manufacture of polyester fibres and filaments in Bobingen and Guben, dependent on the manufacturing step, are processed in the agglomeration plant and restored to become serviceable primary material. The recyclates are then fed back to our fibre and filament spinning mills, to be made into new top-quality products.

On the other hand, in fibre production there occurs in the manufacture of tow a small proportion of tow that cannot be used for converting and has to be cut out. Instead of selling this material as waste, it is cut up, pressed into balls and then carded / combed by a partner, resulting in a 1A quality product. The GRS certification (Global Recycled Standard) is requested for this. As with converter tow from new material, the recycled tow is mostly incorporated into polyester wool blends (55 % PET / 45 % wool), which are used primarily in corporate wear and uniforms.

In the area of Post-Consumer Recycling, Trevira offers filament yarns consisting of 100 % recycled PET bottles. Our parent company Indorama manufactures very high quality recycled chips from PET bottles. Since only transparent PET bottles are used in Thailand, the flakes and chips are of a particularly good and very uniform quality. The recycled chips, fibres and filaments from Indorama bear the GRS certificates (Global Recycled Standard) and RCS-NL (Recycled Claim Standard). Trevira processes the regranulate made by Indorama from bottle flakes into filament yarns consisting 100 % of recycled material. The filament yarns are available in titres 167 and 76 dtex normal polyester. Alongside technical applications, they are used in the automotive and apparel sectors. In addition, many promising developments with the recycled material are on their way.

• Revenue up 11 percent to EUR 1,149.1 mn
• EBITDA increase of 38.8 percent to EUR 270.7 mn
• Detailed planning for new production plant for TENCEL® fibers in Thailand in Progress
• New sales offices opened in Turkey and Korea
• New EcoVeroTM branded viscose fibers with very favorable ecological footprint launched

The Lenzing Group generated new record highs in the first half of the 2017 financial year for both revenue and earnings. The key underlying factors were good capacity utilization, higher selling prices and an attractive product mix. Lenzing will continue to focus on the disciplined implementation of the Group strategy sCore TEN, in order to be even closer to the customer and to further expand the offering of specialty fibers.

Consolidated revenue increased by 11 percent from the first half of the previous financial year to EUR 1,149.1 mn. Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) were up 38.8 percent to EUR 270.7 mn, corresponding to an EBITDA margin of 23.6 percent in comparison to 18.9 percent in the prior-year period. Earnings before interest and tax (EBIT) increased by 57.4 percent to EUR 204.2 mn, resulting in a higher EBIT margin of 17.8 percent (H1 2016: 12.5 percent). The profit for the period improved by 58.9 percent to EUR 150.3 mn, and earnings per share climbed 59 percent to EUR 5.55 per share.

“The first half-year developed very well for the Lenzing Group, and we are pleased with the best half-year period in the company’s history. We will continue our disciplined implementation of the sCore TEN strategy. The expansion of new state-of-the-art production capacities for our specialty fibers is proceeding well and will support our customers in their own expansion efforts for products made of our botanic fibers. The decision to set up a subsidiary and acquire a respective landplot in Thailand is the next step in the implementation of this strategy. On the innovation side we are proud that after the introduction of RefibraTM branded lyocell fibers, we launched now EcoVeroTM. This is a particularly high-performance fiber featuring a very favorable ecological footprint and sets the new benchmark for the entire industry – from fiber to garment”, states Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “Assuming that fiber market conditions remain at current levels, we expect a substantial earnings improvement in 2017 compared to 2016.”

Lectra has leveraged more than 10 years of experience in connected manufacturing to offer Versalis®, an innovative digital solution designed to cut leather without compromise on quality. Featuring a powerful automatic nesting system for overall improvements in efficiency, the fully automated solution enables automotive leather suppliers to cut costs, improve productivity and minimize waste while also establishing a pathway to value-added Industry 4.0 processes.

Currently, almost 90% of leather used for automotive applications is cut using manual die presses, which require designers to build a physical prototype and finalize the design through trial and error. Lectra offers a fully digitalized leather solution from prototyping to cut parts—when used in combination with Lectra’s 3D prototyping and pattern-making software, Versalis digital leather cutting solution enables a 12-16 week reduction in development and launch cycles for vehicle seating models.
During the leather-cutting phase, the latest release of Versalis LeatherSuite allows automotive leather suppliers to achieve up to 15% greater productivity. Lectra’s end-to-end automotive leather offering furthermore guarantees optimal uptime through an extensive worldwide support network of field engineers and technical experts.
"Lectra focuses on a consultative approach that allows it to fully understand the customer’s needs before building a solution comprising software, hardware, consulting, training, and after-sales support,” said Frost & Sullivan Industry Analyst Kamalesh Mohanarangam. "Lectra’s equipment is fitted with more than 200 sensors that predict failure and immediately report issues to its call centres. This product feature and service has resulted in 98% uptime and very fast mean time to repair."

Although digital leather cutting solutions are an investment, leather cutters and Tier-1 suppliers have begun to recognize the value of these products. On average, Lectra’s solutions help customers achieve up to 7% savings on leather compared to manual die-press methods by minimizing human error and variability in the cutting room. A benchmark test of leather trim cutting for door panels demonstrated a 3.5% gain in material made possible by Versalis’ superior nesting capabilities compared to the customer’s yield using manual nesting with die press machines, representing potential savings of €9 million per year.
Versalis is the fruit of significant R&D investment for the company, which has always made re-investment of capital a priority. As part of a transformational plan, Lectra spent more than €50 million in investments between 2011 and 2015. With Lectra’s new strategy focusing on supporting their customers’ transition to Industry 4.0 standards, Lectra will increase the share of revenues dedicated to R&D to 10% for the period from 2017 to 2019, representing a rise of about 50% between 2016 and 2019.

Composites use in Building and Construction will be highlighted at JEC newest event dedicated to this specific Composites Industry next month in Chicago, IL, USA. The numerous and diverse benefits that these innovative materials bring to the Building Industry will help overcome the coming challenges such as, urbanization, increase of natural disasters (floods, storms, tsunamis, earthquakes…), along with the decrease of non-renewable raw materials and the high standard levels set by the society in terms of lightness and fluidity. Composites Materials bring answers and opportunities to tackle those issues in sustainable, durable and reliable manners. Solutions like ease of fabrication (Owens Corning), structures durability (Biteam), anti-seismic reinforcement (DowAksa), use of end-of-life products such as recycled bottles of water (Premier Composites Technologies), aerial forms (Optima Projects Ltd) or again energy saving (Armageddon Energy).

Following its strategy to address every Composites End-user, the JEC Innovation Awards will reward these 6 Composites Innovators in Building & Construction that will change the way we build.
If the majority of submissions relied on glass fibers, which is common in the Construction field, we see an increased interest in carbon fibers, especially for structural applications. And similarly to all sectors of the composite industry, thermoplastics are gaining in importance in Construction. Therefore, to promote the growing use of composites as a construction material, 6 categories are awarded, covering a large panel of applications and possibilities.