From the Sector

• European textile industry needs to prepare for a paradigm shift, and become global leader in sustainable textiles

Organised by EURATEX in partnership with the Portuguese Textile Association (ATP), the Porto Convention – Sustainability meets Competitiveness: How to Square the Circle? – took place on 13-14 October in Porto, Portugal, with nearly 250 entrepreneurs attending from all over Europe. They discussed the current challenges of the European textile industry and set the grounds for a bright future, based on some strong foundations: innovation, creativity, quality and sustainability.

In his keynote speech, Mr. Pedro Siza Vieira, Former Minister for the Economy and Digital Transition of Portugal, assessed the geopolitical and macroeconomics changes, and how this will impact on the future of the textile industry: nearshoring and friend-shoring, independence from foreign gas through the use of European sustainable energy, as well as circular and automated production lines. While the current turbulence causes uncertainty, he sees a better future for our industry.

The first CEO Panel, addressing the theme of How to Measure and Communicate about Sustainability, focused on the challenges to translate “sustainability” towards the consumers. The panel addressed the issue of greenwashing and the role of brands in communicating about sustainability. It looked at how the new European Commission regulations on eco-label, digital product passport (DPP) and product environmental footprint (PEF) will create a new framework.

The second CEO Panel, discussing Financing Sustainability, looked at the cost of sustainable investments, and how this cost should be managed within the entire supply chain, including the brands and retailers.

Four workshops with industry experts followed in the afternoon, addressing the themes of Extended Producer Responsibility (EPR) in Textiles, Digital Product Passport (DPP), Recycling Textile Waste and Labelling Textiles (Product Environmental Footprint). As these initiatives will roll out in the coming years – as part of the EU Textile Strategy – participants got a better understanding of the future framework for our industry.

Dirk Vantyghem, Director General of EURATEX, commented on this: “to prepare for a brighter future requires a new regulatory framework, where quality and durability become the norm, where transparency and sustainability is rewarded, where free riders – who do not comply with rules and standards – are kept outside the market. The EU Textile Strategy aims at creating such a framework, which must be fair and balanced, and requires a close and constant dialogue between the regulator and the industry.”

During the 2nd day of the convention, participants had the opportunity to visit state of the art textile companies (Têxteis J.F. Almeida, RIOPELE, and TMG Automotive) and the Portuguese textile  research centre CITEVE. They showcased how the Portuguese textile industry is making this transition, while remaining globally competitive.

Alberto Paccanelli, President of EURATEX, concluded: “We need to attract creative people in our companies, we need to produce top class quality products, and we need to become more sustainable. That is the recipe for our success in a globalised and highly competitive industry.” Paccanelli is positive about the future: “While we face very tough times, I am optimistic about the future of our European textile industry. The rest of the world is watching us, as we move forward with our strategy. We should become their benchmark and Europe should become a global leader in sustainable textiles.”

On 13-14 October, EURATEX in partnership with ATP is organising the 10th European Textile & Apparel Convention in Porto, Portugal; the convention marks also the 24th Textile Industry Forum for Portugal.

The Porto Convention – titled Sustainability meets Competitiveness: How to Square the Circle? – will look at how companies can anticipate the new European regulatory framework, embrace innovation, and develop a business model where sustainability becomes a source of competitiveness and growth. In the current economic, social and political environment, Europe is facing many challenges: increased energy prices, unforeseen inflation and climate change, which add to the day-to-day challenges of running a business. Embracing the European Union’s commitment to a green and digital transformation, the textile industry needs to also move towards a new circular economy where recycling is at the core of the design process supported by digitalisation, innovation and new skills, and creativity. The conference will address explore solutions to turn quality and sustainability into a source of competitiveness.

The Porto Convention will see representatives of national and European institutions, experts from the industry and like-minded entrepreneurs come together to discuss ideas, share experiences and find solutions to face common challenges.

Baldwin Technology Co. Inc. and Fi-Tech Inc. join partnership to ensure service amid growing demand for sustainable solutions. Fi-Tech Inc. will represent Baldwin Technology Co. Inc.’s complete textile and nonwoven product lines as its sales agent in the U.S. and Canada.

Founded in 1972 and headquartered in Richmond, Virginia, Fi-Tech is an agency and distribution firm for textile and non-woven machinery. Its initial focus was on synthetic fibers and nonwovens and it has since expanded its portfolio to represent manufacturers of complete machines or technical components used in the production of nonwovens, synthetic fibers, polymer, textiles, converting, perforated products and tobacco processing. Fi-Tech also maintains a spare parts inventory for many of the companies it represents.

“With the increasing demand of Baldwin’s finishing technology, we needed to find the right partner for sales promotion in the U.S. and Canadian markets for knits, wovens and non-wovens,” said Rick Stanford, Baldwin Technology’s VP Global Business Development, Textiles. “Fi-Tech of Richmond, Virginia is the perfect partner. They are well established in the textile and non-wovens industry and their portfolio of principals provides excellent synergy with Baldwin’s precision spray and plasma treater systems.”

Baldwin’s solutions are used in a wide variety of fabrics from basic jersey and fleece with softening and anti-microbial finishes to technical fabrics such as outdoor gear, military, upholstery, automotive and industrial fabrics utilizing the latest in technical finishes such as DWR, soil release, flame retardants and insect repellent among others.

This year’s JEC forum DACH, taking place from November 29 to 30, 2022, is strategically located in a composites « golden triangle », between Munich, Augsburg and Ingelstadt. This dynamic area, at the heart of the Bavarian region is known to be hosting major companies such as Airbus, Faurecia, Kuka, Siemens, Voith Composites, KraussMaffei Technologies, Cevotec, Munich Composites, or Premium Aerotec, thus promising a two-days opportunity to meet with key decision makers.

The digital platform available to all participants prior to the event enables to schedule one to one business meetings between buyers and suppliers from the whole value chain of composites, as well as informal networking during breaks, lunches and evening event.

In total, 500 attendees, suppliers and buyers, from Germany, Austria and Switzerland, are expected to participate to JEC Forum DACH 2022.

Business meetings event*
DAY 1 – November 29, 2022:

• 10.15 – 11.45 am – “Keynote and Plenary Conference Session : Market Developments
• Moderator: Dr. Michael Effing, AVK
• 4.0 – 5.30 pm – “Keynote and Plenary Conference Session: Recycling of Composites

DAY 2 – November 30, 2022:

• 9.00– 10.30 am – “Keynote and Plenary Conference Session: Sustainability of Composites
• 3.15 – 4.45 pm – “Keynote and Plenary Conference Session: Innovations: Raw Materials, Processes and Applications

Celebrating composites innovation through awards and startup competition

• The AVK Innovation Awards: Goal is to promote and give prominence to new products/components and applications made from fiber-reinforced plastics (FRP) and promote new processes and methods for manufacturing FRP products.
• Startup Booster competition: The contest is open to entrepreneurs, SMEs, startups and academic spinoffs building innovative composite and advanced materials projects that are based in Germany, Austria or Switzerland (the DACH region).

*You can view the full program here.

C.L.A.S.S. continues its path of "strategic sustainable synergies" with the aim of sharing its message of responsible innovation, and returns for the second time to Milan Fashion Week with WSM White Sustainable Milano. The objective is to represent a selected and smart path of the production chain related to materials, technologies, production, customization, finishing processes and dyes that are increasingly less impactful on the environment.
 
After debuting last February, “Unveiling the Fashion Backstage”, the educational and narrative journey of WSM | White Sustainable Milano developed in synergy with Giusy Bettoni, founder and CEO of C.L.A.S.S., returns to the VISCONTI HALL and grows in terms of attendance and thematic areas.

The exhibiting copmpanies are: Bemberg™ by Asahi Kasei, Maeba International, Linificio e Canapificio Nazionale SB, Edmos, Toyoshima, Iluna Group and YKK.

Y-3 returns to present the closing chapter of its Fall/Winter 2022 collection. Representing the final iteration of the brand’s “20 Years: Recoded” thematic narrative, Chapter 4 boldly celebrates one of the label’s most revered and lasting motifs – exotic prints – as adidas and Yohji Yamamoto fearlessly reimagine historic looks and textures for a new era.

Subversively exploring the year-long theme of collective memory, the latest chapter draws on Yohji Yamamoto’s inherently rebellious spirit. With Y-3 shifting its creative focus to a distinctly textural concept – Memories of Exotics – the German sportswear brand and the Japanese visionary recall a legacy of animal prints and iconography, distorting iconic signifiers through a slew of all-over print graphics.  

The seasonal offering is highlighted by a selection of pieces that juxtapose leopard prints and fabrics with muted palettes, functional details, and dynamic sporting silhouettes. Curated as a daring blend of past and future, the collection clashes the brand’s heritage with its progressive vision for tomorrow.

Accompanying the launch of Fall/Winter 2022 Chapter 4 is a visual campaign that oscillates between mystery, intrigue, and sporting dynamism. Shot by Heji Shin with creative direction from Jamie Reid and styling from Robbie Spencer, the visuals channel a visceral, rather than understated, interpretation of Y-3’s past, present, and future.

Prof. Manfred Renner and Prof. Christian Doetsch will take joint leadership of the Fraunhofer Institute for Environmental, Safety and Energy Technology UMSICHT from August 2022. As renowned scientists, they have most recently shaped the direction of the institute as heads of the Products division and Energy division respectively, and will now follow in the footsteps of Prof. Eckhard Weidner, who has entered retirement.

This is the first time in its history that Fraunhofer UMSICHT is led by two directors. Both institute directors began their professional careers at the institute and from August they will have a joint hand in its future.

Prof. Manfred Renner holds a doctorate in mechanical engineering, specializing in process engineering and business development. Since 2006, he has held various roles at Fraunhofer UMSICHT, most recently heading up the Products division and overseeing its 126 employees and its budget of 14.8 million euros. He has set international standards through his award-winning research into a free of water tanning leather tanning process that uses compressed carbon dioxide. With the development of innovative aerogel-based insulation materials for building facades, he has made a significant contribution to environmentally friendly, circular applications in the construction industry and initiated a number of industrial projects. One of the notable technological breakthroughs made by his team was the development of a new type of fire-resistant glass, which can withstand even the most extreme heat. This won his development team the Joseph von Fraunhofer Prize in October 2020.

Alongside becoming institute director, Prof. Renner will also take over the leadership of the Fraunhofer Cluster of Excellence Circular Plastics Economy CCPE in August 2022. In this role, he will represent the Fraunhofer-Gesellschaft on a national and international level with regard to the transformation of industry and society to a circular economy. In addition, he will start his professorship in Responsible Process Engineering at the Faculty of Mechanical Engineering of the Ruhr-Universität Bochum. Over the course of his professorship, he will shape the systemic development of the circular economy at a corporate, regional and European level.

Prof. Christian Doetsch has worked in energy research for more than 25 years, spending most of this time at Fraunhofer UMSICHT. As head of the Energy division, he managed a team of around 145 employees and was responsible for a budget of approximately 10.4 million euros. His technological focal points are energy storage, Power-to-X technologies including hydrogen electrolysis and chemical conversion, catalysts, and energy system modeling and optimization. His overarching aim is the integration of renewable energies into a cross-sectoral, resilient energy system.

In 2015, Doetsch co-founded the award-winning start-up Volterion GmbH & Co. KG, which develops redox flow batteries. He attained high visibility on a global scale by redesigning stacks, one of the main components of redox flow batteries, an achievement for which he, his team and Volterion representatives were awarded the Joseph von Fraunhofer Prize in May 2021. The energy expert also acts as deputy spokesperson for the Fraunhofer Energy Alliance and task manager for the energy storage group at the International Energy Agency (IEA). He also co-founded the “Open District Hub e. V.,” an association that promotes the energy transition in the sector by means of energy systems integration.

Since January 2020, he has been Professor of Cross Energy Systems at the Faculty of Mechanical Engineering of the Ruhr-Universität Bochum. In this role, he conducts research into ecological evaluation and resilience of cross-sectoral energy systems.

• 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).

The FACHPACK in Nuremberg ranks among the most important packaging industry gatherings. From 27 to 29 September 2022, Sappi will be presenting its latest products and solutions for functional paper packaging, flexible packaging papers, label papers, containerboard and paperboard. The company is focusing its efforts on sustainable, recyclable and innovative solutions.

• Wide range of barrier papers in the market for sustainable and recyclable packaging solutions
• High-impact brand presence in corrugated board packaging thanks to Fusion Nature Plus in combination with Fusion Topliner
• Parade Label Pro wet-glue label paper for an efficient operation and an excellent visual impression

Wide range of barrier papers
Sappi’s ultimate goal as a specialist in barrier papers is to replace non-recyclable aluminium and plastic multi-layer laminates through the introduction of truly sustainable alternatives that meet all market requirements in terms of performance and recycling. Sappi is continuously expanding its portfolio of barrier papers. At the show, Sappi will be showcasing several examples of food and non-food applications using these barrier papers.

A smooth surface and a high degree of whiteness: Parade Label Pro
Sappi will also be presenting its new, non-wet-strength wet-glue label paper Parade Label Pro – featuring samples from all over the world. This glossy, double-coated quality paper offers a smooth surface plus a high degree of whiteness. It’s suitable for numerous label and flexible packaging applications, such as labels for disposable bottles, food and non-food containers as well as wrappers for a variety of products. It can be printed in offset, flexo and gravure, and finished with hot foil and blind embossing, for example.

Brand presentation that appeals to the senses
“For manufacturers of branded goods, it is becoming increasingly important to convey brand values and product characteristics in a way that is emotionally appealing and that really sets the stage,” explains Luis Mata, Sales Director Packaging of Sappi Europe. At the FACHPACK, Sappi will also be presenting its containerboard products for corrugated board applications, which, with their brilliant colour reproduction, enhance on-shelf product impact and ensure real brand differentiation.

Sappi’s popular Algro Design paperboard portfolio also allows the design scope and leeway to communicate brand values in an emotionally appealing way.

Indorama Ventures Public Company Limited (IVL) announced that construction of an integrated PTA-PET plant in Corpus Christi, Texas, will resume in August this year. Corpus Christi Polymers LLC (CCP), a partnership between three companies, is expected to begin production in 2025 and ensure continued cost-competitive production to support the growth of IVL’s global PET operations into the next decade.

CCP was formed in 2018 as a joint venture between Indorama Ventures Corpus Christi Holdings LLC, a subsidiary of Indorama Ventures; DAK Americas LLC, a subsidiary of Alpek S.A.B. de C.V.; and APG Polytech USA Holdings, Inc, a subsidiary of Far Eastern New Century, following the purchase of a partially constructed facility of M&G Resins in Corpus Christi. Each partner will procure its own raw materials and receive one third of the PTA and PET produced at the facility to sell and distribute independently.

Construction of the plant is resuming following a period of pandemic-related disruptions. Through the pandemic, the partners firmly resolved to continue planning amid continued robust demand for PET packaging and the need for shorter supply chains. As the impact of the pandemic eased in 2022, the management team was strengthened in preparation for the resumption in activities.

CCP is expected to be the largest vertically integrated PTA-PET production plant in the Americas, and IVL’s biggest greenfields project in the U.S. since the development of the AlphaPet production facility at Decatur, Alabama in 2009. The new Texas facility is a significant addition to IVL’s leading global footprint, and will expand its coverage to customers across the U.S. The plant’s vertical integration optimizes PTA-PET production and, together with the availability of raw materials Paraxylene and Mono Ethylene Glycol in the U.S., ensures long-term competitive-cost supply for IVL’s locally integrated polyester value chain.

The facility will have nominal annual capacities of 1.1 million metric tons of PET and 1.3 million metric tons of PTA, shared between the partners. It will employ three state-of-the-art technologies: PTA: IntegRex®, PET melt: Invista, and PET solid state: Easy Up (HCIRR – Horizontal Continuous slightly Inclined Rotary Reactor).

CCP is adding to its leadership team to prepare for the new growth opportunities. Mr Russell Wilson will leave his role with IVL as Head of Manufacturing Americas, Combined PET, to take up a new role as Chief Executive Officer of CCP from 18 July. He brings 30 years of Aromatics and PET leadership experience including prior roles with Amoco and BP before joining IVL. Mr Todd Hogue, IVL’s Global Head of EH&S, replaces Mr Wilson as IVL’s representative on CCP’s Board. Mr Michael Day joined CCP as Project Director in June and brings 34 years of construction leadership experience including senior roles with Bilfinger, KBR, and CB&I.  Mr Jeff Shea will assume the role of Chief Operating Officer on 18 July.  Mr Shea has been in the PET industry for the last 22 years and has managed PET sites for the last 17.