From the Sector

European Textiles and Clothing (T&C) industry coming out of the Covid19-crisis, but facing new challenges ahead. This recovery may however be disrupted by the current supply chain and energy problems. Latest economic data on the European T&C industry confirm further recovery from the corona pandemic. The textile activity has now surpassed its pre-pandemic level from Q4 2019 (+3.6%); the clothing sector still remains 11.5% below, but continues to improve.

In quarter-on-quarter terms, the EU turnover showed signs of improvements across the sector. The textile turnover increased by +3.3% in Q2 2021, after slightly contracting in Q1 2021. Similarly, the business activity in the clothing sector expanded by +7% in Q2 2021, after increasing by +1% in the previous quarter.
 
In the 2nd quarter 2021, the EU-27 trade balance for T&C improved, resulting mostly from an increase of export sales across third markets and a drop of textile imports. T&C Extra-EU exports boomed by +49% as compared with the same quarter of the previous year. T&C Extra-EU imports went down by -26% as compared with the same quarter of the previous year, following a decrease of imports from some main supplier countries. EU imports from China and the UK collapsed due to a combination of Brexit and weaker demand in Europe.
 
During the second quarter of 2021, job creation was slowly stabilising in the textile industry (-0.2% q-o-q), while employment in the clothing sector continued to be affected by lower levels of production activity in industry during the first part of the year (-1.2%). When compared to its pre-pandemic level in Q4 2019, EU employment in Q2 2021 was still 4.4% down in textiles and 11.8% down in clothing.

However, this fragile recovery is hampered by higher shipping costs and prices’ increase in raw materials and energy. The cost of energy, in particular gas, has increased more than 3 times since the beginning of this year. Since the announcement of the EU’s “Fit for 55” package, we have seen CO2 prices rising above €60. This inevitably has an impact on the industry’s competitiveness, especially in a global context. The future recovery is also threatened by some factors limiting production, such as shortage of labour force and equipment, which are putting additional pressure on T&C industries.

Director General Dirk Vantyghem commented on these latest figures: “Our companies have shown great resilience during the pandemic, and their latest export performance is an encouraging sign of recovery. This recovery may however be disrupted by the current supply chain and energy problems. Once again, recent developments show that this transition towards more sustainable production can only work if organised in a global context, avoiding carbon leakage and with an effective level playing field. This must be considered in the upcoming EU Textiles Strategy.”

The Indorama Mobility Group, a manufacturer of industrial fibers, cords and fabrics, - like other companies - is confronted with significant inflation since the beginning of the year. The global economy has gradually recovered in 2021 from the impact of the COVID-19 pandemic, but is still experiencing very volatile market conditions: The global freight remains unreliable and expensive, cost for energy and global commodities is increasing, and the increasing focus on sustainability and environmental impact is driving compliance cost upward in most part of the world.

In detail:

• Utilities: gas price has tripled in the past few months in Europe (from a level of 15 EUR/MWh in Q4’20 to 45 EUR/MWh recently), while increasing by 50% in USA
• CO₂ emissions and compliance cost: prices for CO₂ certificates in Europe have almost doubled, approaching 60 EUR/ton from 30 EUR/ton at the end of last year, while regulations continue to expand the need for CO2 compensation
• Chemicals and additives (spinfinish, dip chemicals, coating & laminating chemicals): cost have increased by 5%
• Packaging: prices for standard packaging materials have increased by more than 30%
• Logistic: despite our local manufacturing footprint which is not fully affected by global freight issues, the regional logistic costs are also increasing up to 20% (road transport)

Despite constant efforts to optimise the cost structure through comprehensive initiatives to improve operations, cost increases have now reached a level, the group said, that can no longer be offset and must be passed on to the market. This is a necessary step to be able to continue supplying high-quality products and services of the broad product portfolio, it said.

• Parade Example for physical Trade Shows

A whole year without physical trade fairs, long months without personal exchange: last week the physical International Textile Trade Show MUNICH FABRIC START and the International Denim Trade Show BLUEZONE took place for the textile industry in Munich. The team at Munich Fabric Start Exhibitions GmbH is bringing a bit of normality back to the industry, but also to event management. Thanks to detailed, Covid-19 compliant fair formats, the organisers show that trade fairs are possible and can be successfully implemented with the appropriate measures.

More than 600 international suppliers presented their new collections and developments for Autumn.Winter 22/23 in around 1000 collections in the Fabrics, Additionals, Design Studios, Sourcing, ReSource and Sustainable Innovations areas at MUNICH FABRIC START as well as denim, sportswear and KEYHOUSE at BLUEZONE.

A winning fusion of BLUEZONE & KEYHOUSE well-attended events

Under the motto "BACK TO THE FUTURE", BLUEZONE offered a way back to the tactile experience of textiles and the reunion of the denim community. In addition to international denim weavers and manufacturers, visitors to the Zenith Hall also saw a qualitative selection of KEYHOUSE exhibitors who presented their futuristic innovations for the fashion industry.

Positive visitor & exhibitor echo despite Covid-19 measures

In keeping with the season's title "RISE", the visitors were greeted by inspiring, colourful trend forums with unique highlights for Autumn.Winter 22/23 collection development. In the halls, the industry was able to discover a trade show with the well-known and proven pre-pandemic quality with manufacturers and suppliers presenting in all 8 areas. Non-European suppliers were represented by agencies and offered well-attended show in show concepts.

The newly formed ReSOURCE x SUSTAINABLE INNOVATIONS Area also drew in the crowds. In a modern atmosphere, information was shared on sourcing sustainable textiles and additionals as well as innovative concepts. Another highlight was the launch of FABRIC.iD, the innovative process for the complete digitisation of fabrics to greater serve the industry's digital future.

On the occasion of releasing its 2021 Spring Report, EURATEX calls the European Institutions to implement a new Industrial Strategy which will effectively support the European textiles industry. EURATEX welcomes the fact that Textile and Clothing industry is recognised as one of the 14 essential ecosystems of the European economy, but we need to take effective measures to support these sectors, and take into consideration the global dimension.

Economic data for 2020 in EURATEX Spring Report show preoccupying trends. Figures reflect a dramatic contraction in demand and production: EU turnover contracted by -9.3% in textiles (which is in line with the general manufacturing average) and by -17.7% in clothing, compared with 2019. Furthermore, supply chain disruptions and substantial price increases of some raw materials are putting significant pressure on the T&C industries across Europe. The trade deficit for European textiles and clothing jumped from € -47 bln in 2019 to € -62 bln in 2020, an increase of more than 30%, which is almost entirely due to the import of Chinese face masks and related products. Fortunately, more recent figures from the 1st quarter of 2021 indicate some signs of recovery.

That figure illustrates very well today’s political discussions on the future of the European industry. Many European companies have made considerable efforts to adapt their production to the pandemic, but clearly this was not enough. Whether the production cost in Europe is too high or the EU should adapt its procurement rules, the industry needs have a coherent long-term plan to become more competitive and conquer new markets.

EURATEX General Assembly highlighted the critical role of the new EU Industrial Strategy. The inclusion of textiles and clothing in the fourteen ecosystems is a step in the right direction to consolidate the industrial base but we should look also at the global challenges. European companies should continue investing in innovation, design and quality, in combination with a structural move towards more sustainable textiles. At the same time, the EU should create an environment - both inside the Single Market and globally - where everybody plays by the same rules.

Contact restrictions, home office and altered daily lives – our lives in 2020 were radically changed. This was also the case for various sectors of the economy, including the textile and clothing industry. However, with crisis come opportunities and stimuli for change. Under the motto “Still Physical”, manufacturers recount their personal success stories in 2020 – the industry can look forward to a selection of sustainable materials curated exclusively by the PERFORMANCE FORUM Jury. Areas of focus: natural fibers that highlight wellbeing aspects, plant-based materials that make us strong and excite on an emotional level, bio-nylons and bio-based finishings that rethink function. “Still Physical – Your Success Story of 2020” will be on display online as the first of its kind within a trade fair week from 17 to 21 May 2020.

Transformation: Technology first?
The pandemic has forced us into new, primarily digital forms of living and working. Our daily lives are characterised by home offices, home schooling and online meetings. The desire for real, physically perceptible experiences has grown incessantly within the last year. In the same context, people nowadays are strongly driven by technological progress – yet how far can we allow technological change to go and how do we wish to live in the future? Long before the pandemic, the trend towards self-monitoring and control of important bodily functions developed. The sports industry developed tools to measure levels of performance and monitor bodily functions with the goal of enhancing performance. Self-optimisation, body shaping and health promotion have become standard nowadays. Staying healthy and keeping fit are now social imperatives in our performance-oriented society. The pandemic has made us rethink, made us pause – with sustainable function still in focus, yet function needs to be rethought for the future, distancing ourselves from mere performance enhancement, and embracing clothing that facilitates people in feeling good.

Touch & Feel
In a visual, digital world, one sense has been forgotten: the sense of touch. Materials trigger completely different reactions, consciously or unconsciously. Moreover, the surface texture is also decisive in the functionality of a fabric, lending it its unique characteristics. In times of contact restrictions and lockdown, there is a need for a space for emotions, for regeneration and physical wellbeing. This is also reflected in the desire for appropriate apparel that leaves a pleasant sensation on the skin. Lightweight, warm and of a softer nature, plant-based fibers fulfil the desire for comfort and promote wellbeing.

We are physical – we are nature
How will we shape and adapt the post-pandemic textile and apparel industry? The Corona crisis once again reminds us of our existential bond with the natural world. While humanity fights against the spread of a deadly virus with social isolation, one thing is doing well: our planet. It is recovering from all the exhaust gases that are released into the air daily by cars and factories. There is a shift in focus towards taking time out in nature, whether in the form of a morning run, a mountain hike or a yoga session on the grass.

Your success story of 2020
What has touched them? Which experiences have shaped their latest innovations? Does the crisis also present opportunities? The chance for something new, for a rethink, on an even more sustainable, more ecological path? Which highlights, which stories are worth communicating and where did the focus lie in 2020? Various material manufacturers already started to focus on sustainability and the cautious use of resources some time ago. Innovations in the areas of materials and in processing methods are the driving forces of the development towards more sustainability. However, we need to realign all processes and structures in our supply and production chains and adapt them to the needs of a resource-conserving, responsible industry. A pioneering example of such alignment was the decision of PERFORMANCE DAYS to only present sustainable materials at the PERFORMANCE FORUM from the November 2019 trade fair event onwards. Additionally, the setting-up of the new digital sourcing platform “THE LOOP” shows how technology can be implemented aside from material and processing innovations in such a way that our procedures and structures can be adapted to difficult conditions.

Informative & up-to-date: the digital trade fair week from 17 to 21 May 2021
As usual, the highlighted fabrics from the Focus Topic “Still Physical”, which the exhibitors have defined as their personal success stories, will be available shortly on the PERFORMANCE DAYS website highlighting all details and facets.

The dates are set: IFFT/Interior Lifestyle Living is welcoming exhibitor registration for its 2021 edition, to be held from 18 – 20 October 2021 in the South Halls of Tokyo Big Sight. The dedicated fair for interior design is once again set to attract not only retail buyers but also visitors from design and architecture offices, commercial facilities, and other contract businesses. The 2019 edition welcomed 352 exhibitors from 14 countries and regions as well as 16,016 visitors from 34 countries and regions, receiving much positive feedback for its increased focus on contract business.
 
IFFT/Interior Lifestyle Living 2019
Returning after a hiatus in 2020 due to the COVID-19 pandemic, IFFT/Interior Lifestyle Living will once again create opportunities for exhibitors to meet new clients and expand their businesses. Messe Frankfurt Japan Ltd is working to put all of the appropriate safety and hygiene measures in place to protect participants during the fair period, and prevent the spread of COVID-19.
 
New ETHICAL zone added to satisfy consumer demand
A newly introduced ETHICAL zone will help industry players explore the themes of sustainability and ecology, which are continuing to gain traction in the interior design market. The zone focuses on environmental protection, up-cycling, fair trade, products that support people with disabilities, organic products, local production for local consumption, and more. Furniture production from recycled forest materials will also be a focus of the zone, which will be promoted in the run up to the fair through sector-specific media channels. This will include dedicated promotional activities targeting ethically driven retailers and restaurants.
 
A variety of booth sizes to accommodate exhibitors’ needs
In response to requests from exhibitors who showcase smaller items, a new booth size has been added for 2021. Measuring 6.3 sqm (width 3m x depth 2.1m), the new booth option is one size smaller than the existing 9 sqm booth, adding more choice for exhibitors
 
Dedicated lifestyle themed zones
Proving popular amongst trade buyers during previous editions, ‘CREATIVE RESOURCE’ is a zone devoted to innovative interior materials, as well as parts and services for interior design and home remodelling. Products featured at the zone include wallpaper, floor coverings, paints and related materials. First introduced in 2012, the zone has grown in stature as the destination for the likes of manufacturers, architects, designers and developers to find inspiration.
 
The fair’s zoning encompasses a variety of different product categories and themes. This not only simplifies the sourcing process for trade buyers, but it also maximises business exposure for exhibitors. Day-to-day lifestyle products – both stylish and functional – will be displayed in the ‘HOME’, ‘ACCENT’ and ‘EVERYDAY’ zones with a focus on living spaces, accessories and household items respectively.
 
Moreover, catering to the world of convenience and home cuisine, an array of pragmatically-designed packaged food will be presented at 'FOODIST', while innovative dining items will be gathered at the ‘KITCHEN LIFE’ zone.
 
Highlighting high quality local craftsmanship, designs from Japanese artisanal artists with a modern touch will be located in the ‘JAPAN STYLE’ zone. The latest designs from highly acclaimed international brands will be displayed too, in the ‘MOVEMENT’ area, while work from up-and-coming young designers will appear at the ‘TALENTS’ and ‘NEXT’ zones.
 
About IFFT/Interior Lifestyle Living
IFFT/Interior Lifestyle Living is held annually in fall and is the sister fair of Interior Lifestyle Tokyo held in spring, which is based on Ambiente, Messe Frankfurt’s largest and most important international consumer goods fair, and Heimtextil, the biggest international home and contract textiles fair. With the synergetic effects of these leading global trade fairs in the high-end interior market, and with Messe Frankfurt’s global network, IFFT/Interior Lifestyle Living is a key platform for professionals, buyers, architects and those engaged in domestic and international contract business.

Financial Year 2020

As a consequence of the COVID-19 pandemic, Rieter closed the 2020 financial year with sales of CHF 573.0 million, which corresponds to a decrease of 25% compared to the previous year (2019: CHF 760.0 million). Due to the low sales volume, a loss of CHF 84.4 million was recorded at the EBIT level while at the net profit level the loss was CHF 89.8 million. In view of the loss in the 2020 financial year, the Board of Directors proposes that shareholders waive the payment of a dividend for 2020.

Order intake of CHF 640.2 million in the 2020 financial year was 31% down on the previous year (2019: CHF 926.1 million). Following the significant slump in demand in the second quarter of 2020 (CHF 45.7 million), order intake recovered in the third quarter (CHF 174.4 million) and improved further in the fourth quarter (CHF 215.1 million).

At the end of 2020, the company had an order backlog of about CHF 560 million (December 31, 2019: about CHF 500 million).

Business Groups
Sales of the Business Group Machines & Systems amounted to CHF 295.8 million in 2020, which corresponds to a decrease of 24% compared to the previous year. Due to the low volume and taking into account the expenditure on the ongoing innovation program, the business group recorded a loss of CHF 72.4 million at the EBIT level. Order intake in the reporting year was CHF 363.9 million (-35% compared to the previous year).

The Business Group Components with sales of CHF 174.3 million (-24% compared to the previous year) achieved a profit of CHF 1.4 million at the EBIT level before restructuring charges. EBIT after restructuring charges was CHF -5.5 million. The order intake with CHF 169.1 million (-24% compared to the previous year) was just below sales.

The Business Group After Sales achieved sales of CHF 102.9 million (-27% compared to the previous year) and a positive EBIT of CHF 1.8 million. Order intake was CHF 107.2 million (-24% compared to the previous year). Over 60% of spinning mills were shut down in the second quarter of 2020, with a corresponding impact on the demand for spare parts.

Dividend
Due to the loss of CHF 89.8 million at the net profit level in the 2020 financial year, the Board of Directors proposes that shareholders waive the distribution of a dividend.

Outlook
Rieter expects the market recovery that began in the second half of 2020 to continue in 2021. The company expects an order intake in the first half of 2021 exceeding that of the previous half year (second half of 2020: CHF 389.5 million). Thanks to the improved capacity utilization, Rieter is planning short-time working in only a few areas in the first half of 2021. Nonetheless, as already announced, Rieter still anticipates that sales in the first half of 2021 will be below the break-even point. In connection with the high order backlog at the beginning of 2021, Rieter expects an operating profit for the full year 2021.

Order Intake Continued to Recover in the Fourth Quarter of 2020:

• Order intake increased to CHF 215.1 million in the fourth quarter of 2020 and reached a total of CHF 640.2 million in the 2020 financial year
• As expected, sales of CHF 573.0 million in the 2020 financial year were significantly down on the previous year
• EBIT margin of around -15% and net profit of around -16% of sales expected
• First half of 2021 still heavily impacted by the COVID-19 pandemic
• Change to the Group Executive Committee

Rieter posted a globally and broadly supported order intake of CHF 215.1 million in the fourth quarter of 2020. Thus, the recovery that began in the third quarter of 2020 after the slump in demand in the second quarter continued (order intake second quarter: CHF 45.7 million, third quarter: CHF 174.4 million). Overall, Rieter’s annual order intake for the 2020 financial year totaled CHF 640.2 million, which corresponds to a decrease of 31% compared to the previous year.

At the end of 2020, the company had an order backlog of about CHF 560 million (December 31, 2019: about CHF 500 million).

As expected, as a consequence of the economic effects of the COVID-19 pandemic, the Rieter Group closed the 2020 financial year with considerably lower sales than in the previous year. According to the first, as yet unaudited figures, total sales of CHF 573.0 million were achieved, which corresponds to a decrease of 25% compared to the previous year (2019: CHF 760.0 million).

Order Intake by Business Group
All three business groups were affected by the slump in demand in the second quarter of 2020 due to the COVID-19 pandemic. Despite the recovery in order intake in the third and fourth quarters of 2020, the weak second quarter was only partially offset.

The Business Group Machines & Systems was particularly hard hit by the effects of the pandemic, with a year-on-year decline of 35%. The Business Groups Components and After Sales each recorded a 24% reduction in order intake.*

Sales by Business Group
The exceptional market situation in 2020 gave rise to a significant decline in sales in all three business groups. Accordingly, reluctance to invest and deferred deliveries by customers caused sales in the Business Group Machines & Systems to decline by 24% compared to the previous year.

Due to COVID-19, a large number of spinning mills stopped production worldwide. This led to low demand for spare parts and wear parts, especially in the second and third quarters of 2020. Accordingly, compared to the previous year, sales in the Business Groups Components and After Sales fell by 24% and 27% respectively in the 2020 financial year.*

Sales by Region
With the exception of Turkey, all regions were affected by the low demand as a consequence of the COVID-19 pandemic.*

EBIT Margin and Net Profit
In the 2020 financial year, Rieter anticipates an EBIT margin of around -15% (2019: 11.2%) and net profit of around -16% of sales (2019: 6.9%). As of December 31, 2020, Rieter had liquid funds of exceeding CHF 280 million and unused credit lines in the mid three-digit million range.

First Half of 2021 Still Heavily Impacted by the COVID-19 Pandemic
Thanks to the improved capacity utilization, Rieter is planning short-time working in only a few areas in the first half of 2021. Nevertheless, Rieter expects sales in the first half of 2021 to be below the break-even point.*

Change to the Group Executive Committee
With effect from March 1, 2021, the Board of Directors of Rieter Holding Ltd. has appointed Roger Albrecht as Head of the Business Group Machines & Systems and a member of the Group Executive Committee.*

Annual General Meeting April 15, 2021
The 2021 Annual General Meeting of Rieter Holding Ltd. will take place in Winterthur on April 15, 2021.*

*See attached document for more information.

The global automobile production has been recovering faster than expected since summer. If this positive trend continues through the full second half of the year, Group revenue in local currencies in the second semester is likely to be just around –5% below the level of the prior year period. For the full year 2020 it is anticipated that revenue in local currencies will decline by around –20% compared to 2019.

Based on this development of revenue, the extensive cost reduction measures taken in response to the COVID-19 crisis and the on-schedule progress of the turnaround in North America, an EBIT margin of 4-5% is expected for the second half of the year and a slightly positive EBIT margin for 2020 as a whole. Supported by the strict management of working capital and investments, the free cash flow is likely to be in the higher double-digit million range, which should enable a slight reduction in debt.

The outlook for 2021 and especially the first half-year remains uncertain and depends strongly on how the pandemic will develop. According to forecasts, global vehicle production in 2021 will still not reach the level of 2019.

• New digital platform unveiled
• Due to the continued impact of the Covid-19 pandemic and after thorough consultation of clients and partners, the JEC World team today announces that the next edition of JEC World is postponed from March 9 to 11 to June 1 to 3, 2021.

With the growing concern among our exhibitors and partners surrounding the critical situation of the Covid  19,  travel  restrictions,  quarantine,  and  lockdown  measures  announced  recently  in  many  countries, the JEC World team has decided to work on a new timeline to hold the next edition of the event in safer conditions in 2021.

Thus, JEC World exhibitors answered a survey proposing three dates to determine which one would suit  them  the  most.  It  appeared  that  a  large  majority  of  respondents  favored  holding  the  next  JEC  World session from June 1 to 3, 2021."We truly regret having to make this difficult decision. However, we are all committed, starting todayto deliver the best JEC World experience to our clients.  We look forward to welcoming the international composites community back to Paris in June 2021", says Eric Pierrejean, CEO of JEC Group. As the leading trade show of the composites industry, JEC World brings together the whole composites materials  value  chain  and  professionals  from  application  sectors,  experts  from  the  scientific  and  academic world, associations and media from more than 112 countries.

JEC  World  is  also  proud  to  introduce  its  audience  this  year,  its  new  digital  platform,  JEC  World  Augmented.

This online platform, programmed to take place alongside JEC World,istailored primarily for attendees who cannot be present physically at the show but still want to experience a tremendousdigital event immersion. "JEC  World  and  its  augmented platform  will  bring  the  international  composites  community  and  specialists   together   to   network   with   exhibitors,   hold   digital   business   meetings,   access   online   conferences, workshops, and discover the latest composites innovation,"  says Adeline Larroque, Show director and EMEA events. "Now, more than ever, the international composites sector needs to come together to discuss today's challenges and tomorrow's composites solutions," adds Larroque.