From the Sector

adidas revealed the Official Match Balls for the 2023/24 UEFA Champions League and the UEFA Women’s Champions League.

Set on a metallic silver background, the men’s iteration of the Official Match Ball integrates a single letter from the instantly recognisable chorus lyric – ‘THE CHAMPIONS’ - onto each of the 12 stars, in an opulent calligraphy style. Visual representations of the musical tones of the song interject the stars, in striking royal purple, red and blue - colours specifically chosen to represent the footballing royalty competing for the coveted UEFA Champions League trophy.

The introduction of a bespoke anthem for the UEFA Women’s Champions League in the 2021/22 season, marked the start of a new dawn for the tournament. In honour of that moment, the new design incorporates the lyrics of the song in two of the ball’s eye-catching star panels – creating a unique circular text pattern in bright orange. The remaining ten stars feature a wavy purple and pink print, curated using the same words from the anthem, but significantly enlarged to create an abstract and attention-grabbing look.

The balls are optimised to cope with the demands of the modern game, incorporating a range of adidas performance technology – including a PRISMA surface texture which offers Europe’s finest players precision on the ball. The outer texture coating, found on all UEFA Champions League and UEFA Women’s Champions League Official Match Balls, offers secure grip and control on the ball while the thermally bonded seamless construction ensures the balls retain optimum shape to deliver ultimate performance on the pitch.

Using recovered resin from discarded car bumpers, Autoneum’s sustainable Re-Liner technology transforms a previously unusable waste product into lightweight and durable wheelhouse outer liners. In addition to their high recycled content, the eco-friendly components require significantly less energy to produce than conventional alternatives. The innovation presents another important step towards a more sustainable circular economy and has now been nominated for the 2023 PACE Award.

Autoneum has been selected as one of the finalists for the 2023 Automotive News PACE Awards. Entering its 29th year, this prestigious award honors superior innovation, technological advancement and business performance among automotive suppliers.

Re-Liner is based on a core of polyolefins recovered from post-consumer bumpers and has a textile top layer made of fibers from recycled materials. “Autoneum has recognized the untapped potential of recovered resin from automotive bumper covers as a resource and is giving this former waste product a second life,” explained Dan Moler. “The core resin of Re-Liner is 100% automotive post-consumer recycled material, not just a filler or additive to a virgin material. Lightweight, durable, and sustainable wheelhouse outer liners based on this technology are expected to reduce waste generated by bumper covers by nearly one million kilograms in 2023.”

For more than a quarter century of a century, the PACE Award has honored innovations driven by automotive suppliers. The award is known in the global automotive industry for identifying and recognizing the latest game-changing innovation: from the plant floor to the product to the showroom. In 2000, Autoneum (then Rieter Automotive) already received a PACE Award for its Ultra-Light technology. In addition, two of the Company’s technologies have also been nominated as finalists in the past: Ultra-Silent in 2010 and Theta-Fiber in 2012.

adidas and Manchester United Football Club announce the extension of their partnership. Manchester United commenced a historic agreement with adidas at the start of the 2015/16 season, reuniting after 23 years.

The new deal increases the focus on the Manchester United women’s team since their reintroduction in 2018 – continuing Manchester United and adidas’ commitment to drive the women’s game forward.

Manchester United Chief Executive Officer, Richard Arnold said:  
“The relationship between Manchester United and adidas is one of the most iconic in world sport , forged through a shared commitment to style, flair and, most importantly, high performance.

“With its roots in the 1980s, our partnership has been reinvented over the past decade with some of the most innovative designs and technology in sportswear. We are now looking forward to refreshing this powerful partnership again through the remainder of this decade and into the 2030s.”  

Chief Executive Officer at adidas, Bjørn Gulden, said:  
“We are extremely proud to announce the extension of the contract with Manchester United. adidas and Manchester United are two of the most important brands in International Football and it is very natural for us to continue our cooperation. We will combine tradition and innovation to please both the players and the fans. 

• Currency-neutral revenues flat versus the prior-year level
• Top-line development reflects improved sell-out trends and conservative sell-in strategy
• Gross margin up 0.6pp to 50.9%; strong improvement compared to Q1 reflecting better sell-through and less discounting
• Operating profit of € 176 million includes extraordinary expenses of around € 160 million related to one-off costs, donations and accruals for future donations
• Inventory position improves substantially versus Q1 level to € 5.5 billion; now up only 1% year-over-year

In the second quarter of 2023, currency-neutral revenues were flat versus the prior-year level. The top-line development continued to be impacted by the company’s conservative sell-in approach in order to reduce high inventory levels, particularly in North America and Greater China. At the same time, adidas second quarter revenues benefited from the first sale of some of its Yeezy inventory. The initial product drop in June generated revenues of around € 400 million in Q2, which is largely in line with the Yeezy sales generated in the prior year’s quarter.

Footwear revenues grew 1% during the quarter, reflecting strong growth in football, basketball, tennis and US sports. Apparel sales declined 3% in the second quarter. As the apparel market continues to be particularly overstocked, the company continued its conservative sell-in strategy to improve sell-through and margins in the medium term. Accessories grew 8% during the quarter driven by growth in football.  

Lifestyle revenues were down during the quarter despite extraordinary demand for the company’s Samba, Gazelle and Campus franchises. While adidas slowly started to scale its offering for these product families during the second quarter, the total volume still only represents a small portion of the company’s overall business. Sales in the adidas Performance categories continued to show positive momentum. This reflects strong demand for new product introductions such as the latest iterations of its Predator, X and Copa football boots, as well as jerseys for both the FIFA Women’s World Cup 2023 and the company’s unique portfolio of football teams ahead of the start of the European club season. In addition, the Adizero product family in running continued to gain a lot of attention around marathon races across the world, translating into higher demand. At the same time, the brand’s Barricade tennis franchise grew strongly, leveraging the excitement around major tournaments.

In euro terms, the company’s revenues declined 5% to € 5.343 billion in the second quarter (2022: € 5.596 billion).

Stronger sell-out trends and conservative sell-in
As a result of the company’s initiatives to reduce high inventory levels, currency-neutral sales in wholesale declined 10% despite double-digit growth in Greater China and Latin America. At the same time, direct-to-consumer (DTC) revenues grew 16% versus the prior year. This development was driven by strong growth in both the company’s e-commerce business (+14%) as well as own retail stores (+19%), reflecting continued strong sell-out trends across most regions. The outperformance of the company’s DTC channel versus the wholesale business was also related to the first sale of the Yeezy inventory, which was done exclusively through adidas’ own e-commerce channel.

Double-digit growth in Greater China and Latin America
Currency-neutral sales in North America declined 16% during the quarter. The region is particularly affected by elevated inventory levels in the market and – in response to this – the company’s significantly reduced sell-in. Revenues in Greater China grew 16% in Q2, reflecting double-digit sell-out growth in both wholesale and own retail. Sales in EMEA were down slightly (-1%) despite double-digit DTC growth. While the company’s initiatives to reduce inventory levels and discounting weighed on the overall top-line development in the region, adidas recorded significantly improving full-price trends during the quarter. Revenues in Asia-Pacific increased 7% during the quarter, driven by strong double-digit growth in DTC. Latin America continued to increase at a double-digit rate (+30%), reflecting strong growth in both wholesale and DTC.

Gross margin improves to 50.9%
The company’s second quarter gross margin increased 0.6 percentage points to 50.9% (2022: 50.3%). This improvement was mainly driven by price increases the company has implemented as well as by an improved channel mix. At the same time, higher supply chain costs and unfavorable currency movements continued to strongly weigh on the gross margin development. While still adversely impacting the company’s gross margin in the quarter, discounting levels significantly improved compared to the first quarter of the year.  

Operating profit of € 176 million, resulting in an operating margin of 3.3%
Other operating expenses were up 3% to € 2.582 billion (2022: € 2.501 billion). As a percentage of sales, other operating expenses increased 3.6 percentage points to 48.3% (2022: 44.7%). Marketing and point-of-sale expenses decreased 7% to € 617 million (2022: € 663 million). As a percentage of sales, marketing and point-of-sale expenses slightly decreased by 0.3 percentage points to 11.5% (2022: 11.8%). Operating overhead expenses were up 7% to € 1.965 billion (2022: € 1.838 billion), reflecting higher logistics expenses. In addition, the company recorded one-off costs of around € 50 million related to the strategic review the company is currently conducting as well as donations and accruals for further donations in an amount of around € 110 million. As a percentage of sales, operating overhead expenses increased 3.9 percentage points to 36.8% (2022: 32.8%). The company’s operating profit amounted to € 176 million (2022: € 392 million) in the quarter. This amount includes the extraordinary expenses of in total around € 160 million reflecting the one-off costs related to the strategic review as well as the donations and accruals for further donations. The sale of the Yeezy product positively impacted adidas’ operating profit by an incremental amount of around € 150 million in Q2. The operating margin reached 3.3% in the quarter (2022: 7.0%).

Net income from continuing operations of € 96 million
After taxes, the company’s net income from continuing operations amounted to € 96 million (2022: € 360 million), while basic EPS from continuing operations decreased to € 0.48 (2022: € 1.88).

Outlook

adidas expects revenues to decline at a mid-single-digit rate
On July 24, adidas had adjusted its full year financial guidance to reflect the positive impact of the first sale of some of its Yeezy inventory and a slightly better-than-expected development of the adidas business in the first half of the year. At the same time, macroeconomic challenges and geopolitical tensions persist. Elevated recession risks in North America and Europe as well as uncertainty around the recovery in Greater China continue to exist. In addition, the company’s revenue development will continue to be impacted by the initiatives to significantly reduce high inventory levels. As a result, adidas now expects currency-neutral revenues to decline at a mid-single-digit rate in 2023 (previously: decline at a high-single-digit rate).

Underlying operating profit anticipated to be around the break-even level
The company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is still anticipated to be around the break-even level. Including the positive impact from the first Yeezy drop of around € 150 million, the potential write-off of the remaining Yeezy inventory of now € 400 million (previously: € 500 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), the company now expects to report an operating loss of € 450 million in 2023 (previously: loss of € 700 million).

On August 2, the company launched a second drop of Yeezy inventory. Throughout the month of August, adidas is making a range of existing products available through both its own e-commerce channel as well as the digital platforms of selected wholesale partners. If successful, this second drop would further improve the company’s results. However, as the results of this drop are yet unknown, it is not accounted for in the company’s current top- and bottom-line outlook for 2023.

• Revenue of EUR 1.25 bn and EBITDA of EUR 136.5 mn in the first half of 2023
• EBITDA and net result for the period significantly improved compared with the first quarter of 2023
• Cost-cutting program and measures to strengthen sales activities being implemented as planned
• Liquidity position strengthened by successful capital increase and extension of credit terms
• Production of TENCEL™ brand modal fibers successfully launched in China

The business performance of the Lenzing Group, a leading global supplier of specialty fibers for the textile and nonwoven industries, largely reflected the subdued market trends in the first half of 2023. After the market environment deteriorated significantly in the second half of 2022, signs of recovery were evident during the first and second quarters of 2023 in terms of both raw material and energy costs as well as demand. Textile fibers recorded improving demand, and business with nonwoven fibers and with dissolving wood pulp proved to be very stable.

Outlook
The war in Ukraine and the more restrictive monetary policy pursued by many central banks in order to combat inflation are expected to continue to influence global economic activity. The IMF warns that risks remain elevated overall and forecasts growth of 3 percent for both 2023 and 2024. The currency environment is expected to remain volatile in the regions of relevance to Lenzing.

This market environment continues to weigh on the consumer climate and on sentiment in the industries relevant to Lenzing. Recently, however, the outlook brightened somewhat according to a global survey by the ITMF.*

In the trend-setting market for cotton, signs are emerging of a further buildup of stocks in the current 2022/23 crop season. Initial forecasts also see a further buildup of stocks in 2023/24, albeit to a lesser extent.

However, despite signs of recovery in both demand and raw material and energy costs, earnings visibility remains limited overall.

Lenzing is fully on track with the implementation of its reorganization and cost-cutting program. These and further measures are aimed at positioning Lenzing in the best possible way for the expected market recovery.

In structural terms, Lenzing continues to anticipate growth in demand for environmentally responsible fibers for the textile and clothing industry as well as the hygiene and medical sectors. As a consequence, Lenzing is very well positioned with its “Better Growth” strategy and plans to continue driving growth with specialty fibers as well as its sustainability goals, including the transformation from a linear to a circular economy model.

The successful implementation of the key projects in Thailand and Brazil as well as the investment projects in China and Indonesia will further strengthen Lenzing’s positioning in this respect.

Taking into consideration the aforementioned factors and assuming a further market recovery in the current financial year, the Lenzing Group continues to expect EBITDA in a range between EUR 320 mn and EUR 420 mn for 2023.

*Source: ITMF, 21st Global Textile Industry Survey, July 2023

PrimaLoft, Inc., a leader in advanced material technology, is expanding its  Active Insulation Range by adding four new Active Evolve styles, reaffirming its commitment to providing cutting-edge solutions that meet the evolving needs of consumers.

Originally launched in 2018, PrimaLoft Active Evolve is a line of insulating fabrics that is designed to evolve performance, design, and sustainability. Combining the lightweight warmth of insulation with the breathability of fabric, this technology is developed to perform in a wide range of activities, regardless of intensity or season. From pushing yourself during a cross country ski tour, to working up a sweat hiking to the next peak, PrimaLoft Active Evolve keeps you in your comfort zone – even when you’re pushing yourself out of it.

Several products in the Active Evolve line can be used as a next-to-skin fabric. This enables brands to forego liner fabrics, which means heat and moisture are more efficiently managed, breathability is supported, and user comfort is maintained. In addition to achieving optimal performance during aerobic activity, this yields a wider utility and year-round use, all while allowing brands to use less overall material when designing a garment, reducing footprint and waste.

PrimaLoft Active Evolve offers several advantages to designers. It enables them to utilize the full spectrum of color, incorporate unique patterns, and provides greater flexibility in fabric selection. Additionally, Active Evolve eliminates the need for quilting in the design process. Products within the Active Evolve line are made from up to 100% post-consumer recycled content, including three of the four new styles.

With more than a dozen brand adoptions thus far, PrimaLoft Active Evolve’s adaptability for the user, range of use across activities, and seasonal timing, is quickly making this one of the most versatile products in the PrimaLoft portfolio. For Fall/Winter 2023-2024, key partner brands beside Sitka and Löffler will include CP Company, Eddie Bauer, Endura, Martini Sportswear, OMM, Quiksilver, Ziener and more.

According to preliminary figures for H1 2023, SGL Carbon's Group sales increased year-on-year from €549.8 million to €560.5 million, with EBITDApre¹ almost unchanged at €88.0 million (H1 2022: €87.9 million). The expected good business performance of the Business Unit Graphite Solutions and the better-than-expected sales and earnings development of the segments Process Technology and Composite Solutions compensated the drop in demand in the Business Unit Carbon Fibers.

Graphite Solutions (GS) increased sales by 15.3% year-on-year to €280.6 million and EBITDApre by 20.6% to €65.1 million. With a 30.9% rise in sales (€64.4 million) and a significant improvement in EBITDApre from €4.1 million to €11.9 million, the business performance of Process Technology (PT) was significantly ahead of the original budget. Composite Solutions (CS) also reported a higher-than-expected sales increase of 14.4% to €79.6 million in H1 2023 and an increase in EBITDApre of 26.8% to €12.3 million compared to H1 last year. By contrast, the business performance of the Carbon Fibers (CF) unit was not in line with expectations, with a 28.9% decline in sales to €125.1 million and an EBITDApre contribution of €6.1 million (-78.4% compared to the 1st half of the previous year).

An important market segment of the Carbon Fibers Business Unit is the wind industry. Demand for carbon fibers for the wind industry has declined sharply since the beginning of the year. According to current estimates, the expected recovery in demand in H2 2023 will not materialize for the time being. SGL Carbon expects customer demand from the wind industry to pick up in 2024.

Based on this, an impairment loss of between €40-50 million will be recognized on the assets of the Carbon Fibers Business Unit as of June 30, 2023. The impairment relates exclusively to Carbon Fibers, the operating business of the other Business Units is not affected.

SGL Carbon's equity ratio after the impairment as of June 30, 2023 is approximately 36% (December 31, 2022: 38.5%).

Further information on the first six months of fiscal year 2023 can be obtained from the half-year report, which will be published on August 3, 2023.

¹The definition of key figures used in this release is aligned to the Annual Report 2022.

Indorama Ventures Public Company Limited and Sumitomo Mitsui Banking Corporation (SMBC) signed Thailand’s first sustainability-linked Trade Finance facility of US$50 million to support Indorama Ventures’ contributions to its ambitious sustainability commitment. This new facility reflects Indorama Ventures’ leadership in leveraging sustainable financing in Thailand.

The new facility is short-term working capital finance linked to the company’s sustainability performance targets, including reducing greenhouse gas (GHG) emissions intensity by 10% by 2025 (from a 2020 base), increasing post-consumer PET bale input for recycling to 750,000 tons by 2025, and boosting renewable electricity consumption to 25% by 2030.

Indorama Ventures has secured a total US$2.4 billion in long-term sustainable financing from various national and international financial institutions between 2018–2022. The funds are supporting the company’s expansion and sustainability projects in line with its strategy under Vision 2030 as a purposeful company with ESG at its core.

Freudenberg Performance Materials (Freudenberg) will be presenting new applications for its European environmentally-friendly Evolon® microfiber technology for Fall/Winter 24/25 fashion and leather goods collections at Lineapelle, from September 19-21. These include solutions for artificial leather applications suitable for the shoe, furniture and automotive industries.

Evolon® sustainable microfiber coating substrates
Evolon® microfiber fabrics are ideal coating substrates for artificial leather applications in the shoe, furniture and car industries. They are particularly suitable as a carrier material for PU and PVC coatings. Evolon® microfiber materials have non-fraying edges, which makes converting easier and quicker. They contain 80% recycled PET from Freudenberg’s in-house bottle recycling plant. Furthermore, they are manufactured with no solvent and no chemical binder in the company’s Evolon® plant located in Colmar, France. The plant is accredited according to OEKO-TEX STeP sustainability manufacturing certification and the DETOX TO ZERO criteria. European manufacturing offers logistic benefits to European customers through shorter supply chain and transport routes.

Reinforcement material for leather goods
Manufacturers of leather goods also benefit from Evolon® microfiber when they use it as a reinforcement material for original leather. It is drapable and soft and provides optimal shaping support for leather. In addition, Evolon® materials offer important sustainability advantages for the manufacturing of luxury leather bags, such as being 100% made in Europe, eco-friendly and socially-responsible production, and the use of recycled raw materials.

International technology group ANDRITZ has installed a new spunlace pilot line at its center of competence in Montbonnot, France. It allows customers and partners to conduct trials for producing nonwovens from recycled and/or natural fibers such as hemp, flax, and cotton.

The new pilot line features optimized web forming and entanglement for smooth processing of sensitive and irregular fibers. The innovative card set-up is designed to protect and maintain the quality of the fibers while achieving outstanding productivity rates.

Another special feature of this pilot line is the integrated ANDRITZ Metris digitalization system. It allows the operators to collect and analyze all useful data about the line’s capacity and performance. This is a perfect tool for optimizing costs, saving time and predicting maintenance.

With the new line, the ANDRITZ Nonwoven team now operates two spunlace pilot lines at the Montbonnot technical center. The first line has optimized processes, for instance WetlaceTM, for processing various synthetic and man-made fibers. ANDRITZ process experts ensure that advanced technology and know-how are available under one roof at Montbonnot.