From the Sector

DOMO Chemicals, a global leader in the field of material engineering will discuss economic and environmental challenges at the 2019 Wood Mackenzie European Nylon Conference in Frankfurt am Main, Germany from March 5 to 7.

Ron Bult, Director of Global Sales of DOMO Engineering Plas-tics will highlight solutions based on ECONAMID®, a family of PA6 & PA66 compounds based on sustainable post-industrial feedstock derived either from film manufactur-ing or from fiber and yarn manufacturing. Depending on the applications and the desired level of physical and mechanical properties, DOMO can provide grades that are unfilled, mineral filled, glass-fiber filled, or carbon-fiber filled.

“DOMO is making major efforts to accelerate the development of sustainable solu-tions that bring value to our customers’ businesses, while acting responsibly towards the environment, employees and communities,” says Bult.

Also at the conference, Philippe Guerineau, VP Sales & Marketing in the company’s Nylon & Intermediates business unit, will join a panel discussion at the conference to discuss on the economic outlook and the future of the polyamide industry. DOMO will be holding consultations and exclusive events for its customers as well.

After many years of successful cooperation on JEC World since 2015, the Aachen Center for Integrative Lightweight Production (AZL) renewed the cooperation with the JEC Group for 2019:

At the dedicated exhibition area called “Composites in Action - JEC Group in partnership with AZL” (Hall 5A, D17), AZL and its 9 Partner Institutes of RWTH Aachen University present their latest research and development results. The innovations covering the whole composite value chain including research results of AZL, Fraunhofer Institute for Production Technology IPT and Fraunhofer Institute for Laser Technology ILT, the Institute of Plastics Processing (IKV) in Industry and the Skilled Crafts as well as RWTH Aachen University institutes including the Laboratory for Machine Tools and Production Engineering (WZL), the Welding and Joining Institute (ISF), the “Institut für Textiltechnik” (ITA), the Institute for Automotive Engineering (IKA), the Institute of Structural Mechanics and Lightweight Design (SLA). Following companies are sponsoring partners of this booth and will present their latest products and services: Hille Engineering, Maru Hachi, TELENE and Textechno.

This year, AZL is very proud to present a new machine system development at their booth:
The real machine setup of the “Ultra-Fast Consolidator Machine” will be shown at the AZL booth (Hall 5A, D17) which is one of three finalists for the JEC AWARD 2019 in the category “Industry and Equipment”.

At the joint stand of the Aachen Centre for Integrative Lightweight Construction (AZL) in Hall 5A, booth D17, the Institut für Textiltechnik of RWTH Aachen University (ITA) will demonstrate its expertise in the field of glass fibres, preforms and textile concrete 12-14 March 2019 in Paris.
The exhibits come from various fields of application and address the automotive, aerospace and mechanical engineering sectors.

1. Innovative glass fibre research at ITA
   The newly constructed induction heated glass fibre production line enables increased flexibility in research. For the first time, glass fibres will be produced live at the ITA booth at JEC World. One of the innovations of the system is the inductively heated bushing. It features a flexible design and consists of a platinum/rhodium alloy (Pt/Rh20) for use in high-temperature glasses.
   The glass fibre production line was designed in such a way that new concepts and ideas can be tested quickly. The modular design allows a high flexibility, the induction system a significantly faster operability.
   Research and development projects can therefore be carried out faster and more cost-effectively.
    
2. DrapeCube - Forming of textile semi-finished products
   The DrapeCube offers a cost-effective design for the production of fibre preforms from textile semi-finished products. It is used in the production of preforms for prototypes and in small series and is suit-able for companies active in the production of fibre-reinforced plas-tics (FRP).
   In the production of FRP components, the preforming process de-fines a large part of the subsequent component costs. In small- and medium-sized enterprises, this process step is often still carried out manually. This results in high quality fluctuations and component prices. Especially in the case of highly stressed structural components, the fluctuation in quality leads to oversizing of the components.
   Thus, the lightweight construction potential of fiber-reinforced plastics is underused. One solution is offered by the stamp forming process adapted from the sheet metal forming industry for shaping rein-forcing textiles. The textile is inserted between two mould halves (male and female) and automatically formed. Due to high plant and tooling costs, this process is used almost exclusively in large-scale production.
   The ITA has developed the DrapeCube forming station which offers a cost-effective alternative and is able to completely reproduce the current state of the art for forming textile half branches. The process steps will be demonstrated in a video at the booth.
    
3. Carbon fibre reinforced plastic (CFRP) preform
   The CFRP preform consists of carbon multiaxial fabrics formed by expanded polystyrene (EPS) to optimise draping quality. Preforms of increased quality can be produced by gentle, textile-compatible forming with foam expansion. For the first time, foam expansion was used to form preforms in such a way that the draping quality is improved compared to classic stamp forming.
   The advantages of the CFRP preform lie in the savings in plant costs, as the investment is much lower. In addition, the proportion of waste is reduced because near-net-shape production is possible. In addition, rejects are reduced, as fewer faults occur in the textile.
    
4. Embroidered preform with integrated metal insert
   The 12k carbon fibre rovings are shaped into a preform using Tai-lored Fibre Placement (TFP) which is a technical embroidery pro-cess. For the further layer build-up, a fastener is not only integrated under the roving layers but also fixed by additional loops. The highly integrative preforming approach offers the possibility of reducing weight and process steps as well as increasing mechanical perfor-mance.
   Until now, inserts were glued or holes had to be drilled in the com-ponent. Bonded fasteners are limited by the adhesive surface. The bonding of fasteners into drilled holes results in high drill abrasion and thus high tool wear.
   The advantages of the embroidered preform with integrated metal fasteners are the reduction of scrap due to TFP preforming and the increase in the specific pull-out force. In addition, it is possible to automatize the production of integrative preforms. This makes the preform with integrated metal fasteners interesting for the automotive and aerospace industries.

China is the world's largest producer and exporter of nonwoven fabrics, as well as having the largest consumer market for products made from nonwovens, making the upcoming biennial China International Nonwovens Expo & Forum (CINE – supported by Techtextil) the place to be for industry players from 3 – 5 June. This year’s event will relocate to a different venue, the Shanghai Convention & Exhibition Center of International Sourcing, located conveniently between Hongqiao airport and downtown Shanghai.

“The nonwovens market has been one of the fastest growing sectors of the Chinese textile industry over the last decade, and we expect this to continue in the coming years,” Wendy Wen, Senior General Manager of the fair’s co-organiser, Messe Frankfurt (HK) Ltd, commented. “The demographic changes, evolution of the manufacturing sector and greater awareness of environmental protection that have driven growth in China, among other factors, are also evident in a number of markets in the region, particularly Southeast Asia, so we anticipate production growth will remain strong to meet export demand, even if the Chinese economy slows further.”

Reports by the China Nonwovens & Industrial Textiles Association (CNITA), the Freedonia Group and Smithers Pira support this. Nonwovens output in China grew year-on-year by 9.67% for the first 11 months of 2018, exceeding the corresponding figure for 2017 of 8.71%, while demand for nonwovens is predicted to reach 4.9 million metric tons in 2022, a 6.9% per year increase over this period.

Turning to the region, in 2015 Asia occupied 43.1% of the global nonwovens market – with China alone accounting for more than half of the share – with this figure expected to increase to 47.1% in 2020. The Freedonia report also notes that healthy growth in markets nearby to China such as India, Indonesia, Malaysia, the Philippines and Vietnam will also fuel nonwovens output in the country to meet export demand.

Globally, nonwovens demand is expected to increase 4.4% per year to 12.2 million metric tons in 2022, with developing regions being the main driver of this, in particular within Asia-Pacific. In the PP nonwovens sector, output is predicted to nearly double between 2013 and 2020, with the major drivers of this growth being baby diaper, adult incontinence and feminine hygiene products. In the durable nonwovens sector, annual growth of 6 to 7% for the period 2017 – 2023 is also anticipated for filtration, engineering construction and packaging uses.

• Three companies with complementary strengths team up
• BASF leads a Series A investment round with Materialise as one of the co-investors

BASF Venture Capital is leading the Series A investment round in Essentium, Inc., an innovative developer of disruptive, industrial additive manufacturing solutions headquartered in College Station, Texas. Materialise is one of the co-investors in the Series A investment round in Essentium, Inc. BASF and Essentium have been working together on advanced fused filament fabrication (FFF) solutions using Essentium’s proprietary FlashFuseTM technology for high mechanical strength in the build direction for extrusion printed parts. The two companies are now extending their strategic partnership to establish a consistent global materials supply chain supportive of Essentium’s new High Speed Extrusion (HSE) additive manufacturing platform. Essentium and BASF welcome Materialise to enter this strategic partnership to develop 3D printing software for the Essentium technology. This will allow users to take advantage of the speed of the HSE technology while having immediate access to the full Materialise software capabilities for professional 3D printing. The three companies combine their complementary strengths to jointly advance 3D printing technology and customer value to enable industrial additive manufacturing.

BASF is contributing comprehensive material know-how, a broad product portfolio, and its global network to the partnership. Materialise adds nearly three decades of expertise in the development of innovative 3D printing software solutions. Essentium is addressing additive manufacturing at scale by developing an industrial additive platform truly built for the production floor, providing its FlashFuseTM electric welding technology, and engineering-grade, multi-layer filaments for demanding applications. Together, the three partners intend to innovate solutions with advanced combination of hardware, software and materials to unleash the potential of Essentium’s unique high-speed-printer technology, coordinating their strengths to the best advantage.

“Our joint investment strengthens our co-operations with both Essentium and Materialise and accelerates the innovation potential of this powerful team to the benefit of BASF’s customers,” said Markus Solibieda, Managing Director of BASF Venture Capital.

“With this strategic investment, Essentium and BASF are focusing on improved supply chain performance, material consistency and accessibility. Essentium is also delighted to begin a new partnership with Materialise as the three companies focus efforts toward a new era for smart solutions in the global additive extrusion space. Together, we believe manufacturers everywhere will be able to accelerate production due to increased access to our new solutions, bolstered by a holistic, customer-centric approach,” comments Dr. Blake Teipel, CEO of Essentium, Inc.

“Materialise, Essentium and BASF share a vision for growth in the 3D printing industry that builds on the creation of meaningful applications in an open and vibrant ecosystem”, said Bart Van der Schueren, CTO of Materialise. “This partnership helps to promote a more open market model, which will fuel the adoption of 3D printing in the industrial field by offering users more control, more choice in materials and ultimately lower cost and higher volumes.”

BASF and Materialise are joined by a syndicate of private venture investors. Moving forward, BASF, Materialise, and Essentium will jointly drive the transition from 3D printing to scalable additive manufacturing.

Decline in revenue due to lower prices for standard viscose, less favorable currencies and lower production volume

• Pressure on prices for key raw materials remains high
• Positive impact due to focus on specialty fibers and further optimization of the product mix
• Expansion project in Mobile temporarily mothballed
• Acquisition of the remaining 30 percent of Lenzing (Nanjing) Fibers Co. Ltd.

The Lenzing Group recorded a solid business development in the first three quarters of 2018. The decline in revenue and earnings compared with the same period of the previous year was essentially based on a mix of lower prices for standard viscose, more unfavorable exchange rates and price increases for key raw materials. The Lenzing Group’s strategic orientation with a focus on specialty fibers had a positive impact in this environment.

Revenue decreased by 5.2 percent to EUR 1,636.2 mn over the comparative period of the previous year. Apart from the high starting base, this was primarily attributable to the expected challenging market environment for standard viscose, less favorable exchange rates and lower production volume. EBITDA (earnings before interest, tax, depreciation and amortization) recorded a decline by 26.8 percent to EUR 290.6 mn due to price increases for key raw materials and higher energy and dissolving wood pulp prices. The EBITDA margin dropped from 23 percent in the first three quarters of the previous year to 17.8 percent. EBIT (earnings before interest and tax) fell by 36.2 percent to EUR 190.3 mn, leading to a lower EBIT margin of 11.6 percent (01-09/2017: 17.3 percent). Net profit for the period dropped by 39 percent from EUR 219.3 mn in the previous year to EUR 133.8 mn. Earnings per share equaled EUR 5.06 (01-09/2017: EUR 8.12).

“The Lenzing Group is currently operating in a challenging environment. Against this background, we are satisfied with the solid business development and the corporate strategy sCore TEN has a positive impact. The new production line in Heiligenkreuz started up successfully and customers’ feedback has been positive,” says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “While many viscose producers are faced with a very tense profit situation, we are well positioned due to our specialty strategy and still expect a satisfactory full year”, Doboczky adds.

Key strategic measures were implemented during the first three quarters of 2018 in line with the sCore TEN strategy. The start-up of new capacities for lyocell fibers in Heiligenkreuz, the production start of LENZING™ ECOVERO™ fibers at the Nanjing site and the investment in another pilot line for TENCEL™ Luxe filaments are important steps to accomplish the goal of increasing the share of specialty fibers in total revenue.

Project in Mobile temporarily mothballed
Due to the decision to temporarily mothball the lyocell expansion project in Mobile, Alabama (USA), in view of the buoyant US labor market and trade tensions between the major trading blocks, the implementation of the expansion plan for specialty staple fibers will be slowed down. The Lenzing Group will put all its effort to readjust the execution of its growth plan to meet strong market demand for its lyocell fibers. This includes an increased focus on the lyocell expansion project in Prachinburi (Thailand).

Advancing forward solutions
Regarding the capacity expansion for specialty products such as TENCEL™ Luxe filaments and LENZING™ ECOVERO™ viscose fibers, Lenzing is still on track. After the introduction of TENCEL™ Luxe branded lyocell filament yarns in the previous year, Lenzing continues to drive innovations in the area of the value chain. In September, the company also announced the successful development of the LENZING™ Web Technology, a new technology platform focusing on sustainable nonwoven products, which will lead to new market opportunities for the industry. Following several years of research and development work and investments totaling EUR 26 mn, the pilot plant at the headquarters in Lenzing has been successfully put into operation.

Largest dissolving wood pulp line worldwide
At the end of June, the Lenzing Group and Duratex, the largest producer of industrialized wood panels of the southern hemisphere, announced that they had agreed on the terms and conditions to form a joint venture to investigate building the largest single line dissolving wood pulp plant in the state of Minas Gerais (Brazil). This decision supports the self-supply with dissolving wood pulp and the growth in specialty fibers. The joint venture is investigating the construction of a 450,000 t dissolving wood pulp plant, which is expected to become the largest and most competitive single line dissolving wood pulp plant in the world. The final investment decisionto build the dissolving wood pulp plant is subject to the outcome of the basic engineering studies and the approval by the respective supervisory boards.

Acquisition of Chinese operation
At the beginning of November the takeover by the Lenzing Group of the remaining 30 percent of its Chinese subsidiary Lenzing (Nanjing) Fibers Co. Ltd. (LNF) from its state-owned joint venture partner NCFC was completed. After closing of the transaction, the Lenzing Group will hold 100 percent of LNF. The acquisition will have a negative impact on net profit of approx. EUR 21 mn for the fiscal year 2018. The purchase of the shares supports Lenzing’s strategic growth as a producer of specialty fibers from the renewable raw material wood in China and worldwide. It paves the way to setting up further production lines for specialty fibers. Lenzing wants to convert LNF into a specialty fibers hub over time.

Expansion of capacities
CAPEX (investments in intangible assets and property, plant and equipment) rose by 35.5 percent year-on-year to EUR 174.1 mn in the first three quarters of 2018. This is primarily attributable to capacity expansions in Heiligenkreuz and the expansion of the existing dissolving wood pulp plant in Lenzing as well as the investments made so far in Mobile.

Outlook
Demand development on the global fiber market remains positive. Lenzing expects wood-based cellulosic fibers to continue to grow at a higher rate than the overall fiber market. In a challenging market environment the Lenzing Group expects solid results for 2018, albeit lower than in the outstanding last two years.

For 2019, Lenzing expects standard viscose markets to remain under pressure because of an ongoing oversupply and very high raw material prices. Lenzing’s specialty fiber business is expected to continue the very positive development.

The above-mentioned development reassures the Lenzing Group in its chosen corporate strategy sCore TEN. Lenzing is very well positioned in this market environment and will continue its consistent focus on growth with specialty fibers.

• HUB 1922, the fashion division of the RUDOLF GROUP, takes the stage at the Kingpins Show in Amsterdam and presents new technologies that make it possible to move away from environmentally questionable industrial practices.
• HUB 1922 also announces the opening of the new company building in an ancient textile factory near Milan.

Amsterdam/Geretsried/Milan. It was only six months ago that the RUDOLF GROUP, with its fashion Division named HUB 1922, began its journey through the fascinating world of garment finishing. Since then, the team has made significant progress and has moved from being a newcomer to the business to a solid and reliable reality. “HUB 1922 introduces the Rudolf Group to design thinking,” says Alberto De Conti, Head of Fashion Division at Rudolf Group. “And when you break perceived restrictions and paradigms within a strongly science-driven organization, only sky is the limit.”

For an entire semester, the organisation remained focused on one, single goal without getting distracted from it: to become the partner of choice for environmentally conscious advancements in garment processing that are rooted in real experience and science.

Emphasis was put on listening attentively to the market and on engineering solutions proactively, without being prompted.
When it comes to Denim, two separate yet correlated calls for action were heard:
1. the need for a serious departure from established industrial practices that are environmentally questionable
2. the opportunity to change the current rules and stir toward enhanced product quality.

Departure from the environmentally questionable

• HypNO: The next generation of bleach

Many attempts to technical alternatives to local and total denim bleaching have been launched in the market, over the past five years, by a number of competing players. Originality and innovation are at the base of HypNO technical uniqueness that can be injected into traditional denim processing, but that can also be used to create whole new processes and aesthetics.
Birth child of relentless dedication to science, HypNO is the latest alternative to the traditional denim bleaching agents currently under the spotlight because of their alleged safety issues. HypNO is the next generation of bleach.

- HypNO is based on the application of a whole new family of RUCORIT compounds, which are halogene-free and heavy metal-free
- HypNO can replace both potassium permanganate and sodium hypochlorite with one more eco-friendly solution
- HypNO is free from unpleasant smells; it is production friendly and suitable for both spray and bath applications
- HypNO does not require neutralisation with agents such as sodium metabisulphite or peroxides, hence reducing the need for chemicals significantly
- HypNO is GOTS approved. Bluesign and ZDHC Chemical Gateway certifications are intended
- HypNO further helps in the elimination of pumice stones
- HypNO is highly efficient and has been engineered to be cost competitive compared to other existing bleaching solutions

Toward enhanced product quality

• SoSoft, RawLong, DuraBlue

Durability over time still builds a brands’ reputation for quality. The notion of “durability” has changed over the years and has moved from sturdy workwear to the product's ability to retain its characteristics and structural properties.

“It goes against the whole denim philosophy, but, jeans are increasingly bought for what they look like at the time of purchase and are expected to evolve as little as possible. It is what it is; you can’t argue with consumers” says De Conti.

SoSoft, RawLong, DuraBlue, the three new technical concepts launched at Kingpins Amsterdam by the RUDOLF GROUP all sit under the umbrella wings of enhanced quality and specifically address long-lasting softness, preservation of original look and depth of blue.

• SoSoft

All appreciate the softness and suppleness of used/worn denim and the comfort benefit it delivers. It is a generic denim truth, and it is even stronger when it can extend over time. SoSsoft is about softeners carefully engineered for an enduring emotion, one that lives along favourite clothes.

Tried and tested to over 15 home washes, these marvels of chemical engineering allow consumers to toss domestic fabric softeners to the benefit of environmental sustainability.

• RawLong

Denim lovers want raw jeans to fade with time, soften and transform into what feels like an extension of their body. More often, people just want to prolong the look they chose. In both cases, home washing is a headache.

Years of testing have identified RawLong innovative, highly durable and natural solution that keep wearers fresh and at ease in their jeans allowing for long-wearing without washing. Moreover, less home washing means much less impact on the environment.

• DuraBlue

The role of designers is to come up with the bluest of blue jeans in a spectrum of fantastic new blue finishes and supporting textures. The role of DuraBlue is to ensure a continuously updated collection of technical solutions that keep that rich, deep, dark blueness of jeans for much longer while limiting the quality issues that come with denim rubbing. In other words, light underwear, snowy shoes, and white sofas no longer live in fear.

The launch of HUB 1922

• Busto Arsizio, Italy.

On a discreet street of Busto Arsizio, a village at the North of Milan is a red-brick building which in the 1800’s was the house of a textile mill. This 150-year-old structure is where the RUDOLF GROUP, the 100-year-old leader of textile, functional, responsible chemistry, is about to open its Fashion Division. Or, better, it’s HUB 1922.

HUB 1922 is committed to research and develop innovation within garment processing for the privately held mother company. HUB 1922, whose doors are expected to open during fourth quarter of 2018, will foster collaborative efforts with international fashion brands and retailers, will provide product innovation ideas at the crossroad of fashion and utilitarian functionality and will introduce elements of unorthodox diversity rooted in deep scientific knowledge, true environmental responsibility, technical innovation and creativity. “At a time when science plays such a powerful role in the life of society, it is incumbent on fashion to be dealing with scientific research. HUB 1922 facilitates that reunion” concludes De Conti.

Oerlikons business unit Nonwoven will cooperate with the Chinese machine and plant manufacturer Shaoyang Textile Machinery for nonwoven solutions in the hygiene market. This was announced by the Manmade Fibers segment at ITMA ASIA + CITME 2018.

The aim of both cooperation partners is to jointly advance the international sales of Spunmelt lines for hygiene applications in the field of disposable nonwovens outside China.
Oerlikons business unit Nonwoven will be responsible for the entire project in the future. To this end, the Neumünster-based company will contribute its know-how in plant engineering to the partnership. Additionally, Oerlikon acquires the CE certifications of all exported Shaoyang Spunmelt lines. Oerlikon will also be responsible for product and process guarantees and will provide worldwide customer services outside China. Shaoyang Textile Machinery, on the other hand, supplies the Spunmelt plant technologies.
"With Shaoyang Textile Machinery, we have found a renowned Chinese plant manufacturer with extensive know-how in the construction of Spunmelt plants for hygiene applications, which achieves international standards with its nonwoven qualities," explains Oerlikon Manmade Fiber Segment CEO Georg Stausberg.
Rainer Straub, Head of Oerlikons Nonwoven Business Unit, adds: "The partnership with Shaoyang Textile Machinery enables us to gain a foothold in the highly competitive hygiene market. Our many years of engineering experience guarantee our customers production lines according to international
standards for high-quality nonwovens".

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

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

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

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

Largest dissolving wood pulp line worldwide

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

Even stronger focus on sustainable products

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

Expansion of capacities

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

New brand identity

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

Outlook

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

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

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

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

• Lenzing will hold 51 percent in a future joint venture
• Largest single line dissolving wood pulp plant in the world
• Basic engineering and permitting process to be kicked off
• 43,000 hectares FSC® certified plantation secured
• Final investment decision subject to outcome of basic engineering expected in 2019

Lenzing Group, world market leader in specialty cellulosic fibers and Duratex, the largest producer of industrialized wood panels of the Southern Hemisphere, announce that they agreed on the terms and conditions to form a joint venture to investigate building the largest single line dissolving wood pulp (DWP) plant in the state of Minas Gerais, close to Sao Paulo, Brazil. This decision supports the backward integration and the growth in specialty fibers, defined in Lenzing’s corporate strategy sCore TEN.

The joint venture will investigate the construction of a 450,000 t DWP plant, which is expected to become the largest and most competitive single line DWP plant in the world. Dissolving wood pulp is the key raw material for the production of Lenzing’s bio-based fibers. For the future operation, the two companies have secured a plantation of 43,000 hectares that will provide the FSC® certified biomass. The plantation is fully in line with Lenzing’s wood and pulp sourcing policy. The basic engineering and the application for required permits and merger clearances will now be started.

Lenzing will hold 51 percent of the joint venture which will operate the mill, while Duratex’s share will be 49 percent. The estimated cash investment by the joint venture for the construction of the DWP mill is expected to be somewhat above USD 1 bn (based on current FX rates, net of generic tax refunds and the outcome of the basic engineering study). The joint venture will supply the entire volume of dissolving wood pulp to the Lenzing Group. This step is an essential milestone in the group’s ambition to grow its specialty fibers business.

“Specialty cellulosic fibers are an important contribution to make the global textile industry more sustainable. In line with our corporate strategy sCore TEN we are committed to strong organic growth in this field. We are pleased that with Duratex, a recognized leader in sustainable forestry management, we have a strong partner in this joint venture. Together we will create a very sustainable and competitive raw material base for Lenzing’s global expansion plans”, says Stefan Doboczky, Chief Executive Officer of Lenzing Group.

“Projects of this nature are the result of our strategic plan and of our team’s effort towards drawing Duratex’s future. The Company is known for its financial solidity, high quality, innovation and sustainability; the results of a history spanning over six decades. The partnership with Lenzing for the construction of the largest single line dissolving wood pulp plant in the world is an honor for Duratex. Working with Lenzing, a global benchmark in technology, high quality and corporate governance makes us very proud. We are sure that this joint venture is going to be successful”, affirms Duratex’s Chief Executive Officer Antonio Joaquim de Oliveira.

The final investment decision to build the dissolving wood pulp plant is subject to the outcome of the basic engineering studies and the approval by the respective supervisory boards.