From the Sector

• 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.

• Archroma joins hands with Lahore University of Engineering & Technology to foster innovative research in textiles

Reinach, Switzerland - Archroma, a global leader in color and specialty chemicals, announced it has signed a Memorandum of Understanding (MoU) with the University of Engineering & Technology (UET), Lahore, Pakistan. The MoU will pave way for cooperation initially for a five-year period.

The partnership will explore innovations in textile research with futuristic visualization for Pakistan to help the Pakistan textile industry to keep in line with the fast pace of global apparel requirements and evolutions. Both partners will jointly hold sessions to prepare students for the challenges of the textile industry through in-house training sessions, developmental projects, research in textile applications and process innovative methodologies by pioneering value additions. The students of UET will also be able to join internship placement programs at Archroma Center of Excellence at Karachi.

The MoU was officially signed at a ceremony recently held in Faisalabad by Prof. Dr. Fazal Ahmed Khalid, Vice Chancellor of UET and Mujtaba Rahim of CEO Archroma Pakistan Limited.

Speaking at the occasion, Mujtaba Rahim said: “We, at Archroma, believe in continuous improvement and challenging the status quo leading to enhance sustainable growth especially in our product lines creating value for our stakeholders. Through this initiative of mutual cooperation, we will be able to share latest knowledge and technical developments and to work together with the faculty and research team of UET. We also wish to share the innovative textile solutions of Archroma with the students enabling them to enhance their academic performance. Our MoU will go a long way in adding value in the fast growing textile segment, from education to R&D development.”

“This partnership is going to have far-reaching impact in textile research which will bear highly positive results for UET and Archroma. Our academic team has already collaborated with Archroma on projects that will have a far reaching impact on the textile industry. We are very enthusiastic about formalizing our mutual relationship and look forward to interesting research outcomes. Industrial liaison of students will create confidence and the training, internships and working sessions will benefit them in their career development,” Prof. Dr. Fazal Ahmed Khalid commented.

India is a very important market for the German textile machinery industry, with an export of more than €255 million (+ 8 %) in 2017. Many German machinery builders have longstanding relations with Indian customers and quite a number of them also provide production plants and training centres in India. Not surprisingly, about 370 decision-makers and experts from the textile and nonwoven related industry attended the VDMA conference and B2B event called “German Technology meets Indian Textiles and Nonwovens” in Mumbai on 15-16 May 2018 (www.germantech-indiantextile.de).

According to a survey, both the event and German textile machinery engineering received the highest marks among the visitors. About 57 % of the visitors stated very good and 38 % good experience with machines and components from German suppliers. The performance and service promise as well as the high-quality standards have made German machine suppliers as most reliable partners in India and other countries. This positive result has by far not been reached by any other manufacturing nation from Europe or Asia. Asked for future processes, investments in technical textiles and/or nonwoven production seem to be the most favorite sectors in India. Around 74 % of the visitors plan to expand their production capacities with new machines and components whereas 26 % intend to replace old machinery by new machines and components. High productivity, after-sales service, end-product quality, low operating and acquisition costs are the decisive machine procurement criteria in this order. The investments plans are based on a positive business and investment outlook in India. 45 % of the visitors surveyed plan to invest more than 10 % within the next 12 months and 30 % up to 10 %. 25 % of the visitors expect a sales increase by more than 10 % for the next 12 months and 60 % anticipate a sales growth of up to 10%.

Considering this positive business climate and the high interest from the Indian industry, the 32 well-known VDMA members participated in the conference have good chances to offer the right technologies and to place new orders. The presented technology topics along the entire textile value chain will help the Indian industry to fulfill their expansion plans and to meet the challenges such as rising salary costs and shortage of labor in industrial regions. The major cutting-edge topics of the conference program were as follows:

•    Higher profits throughout the entire textile value chain
•    Energy, material, water and dyestuff savings for an environmentally friendly production
•    New applications such as technical textiles, nonwovens (e. g. hygiene products) or home textiles (e. g. terry towels)
•    Automation, industry 4.0, digital communication and smart factory solutions
•    Quality improvements e. g. with measurement and control systems
•    Lower investment costs in spinning preparation with integrated draw frames
•    New technologies to combine spinning and knitting
•    Smart textiles and added value products e. g. with embroidery machines

Whereas the event on 15-16 May 2018 focused on customers, a training session at the prestigious Veermata Jijabai Technological Institute VJTI in Mumbai on 17 May 2018 was addressed to future engineers. More than 220 textile manufacturing and mechanical engineering students followed the technical presentations. The VDMA's contribution to improve the education of future customers and partners was very much appreciated.

• China-based Yanfeng Global Automotive Interiors improves cutting precision with Lectra’s Vector® iX6

Paris – Lectra, the technological partner for companies using fabrics and leather, is pleased to announce that Yanfeng Global Automotive Interiors (YFAI), the world’s largest supplier of vehicle interior components, has adopted the Vector iX6® advanced fabric-cutting solution to stay apace of evolving production needs.

YFAI supplies a broad range of products spanning instrument panels, cockpit systems, door panels, floor consoles and overhead consoles—the majority of which incorporate vinyl and laminated woven fabric pieces.

Growing consumer demand for personalization and customization is contributing to an overall increase in soft trim content in vehicle interior components. The Vector iX6 provided by Lectra is intended to help YFAI increase the capacity and fabric-cutting efficiency of its new vehicle program in Anting.

In the manufacturing of vehicle interiors, cutting level precision is of the utmost importance because pieces must fit into door panel designs with a high degree of accuracy. Equipped with a special cutting blade, Vector iX6’s ultra-precise cutting improves material utilization by minimizing buffer between parts. The solution’s superior cutting control software and high-frequency vibration cutting also enable a considerable improvement in productivity.

“As vehicle interior designs become increasingly complex, process requirements change accordingly,” remarks Guan Qinghua, Director, Advanced Manufacturing Engineering, YFAI. “The ability to achieve greater productivity and precision for the smaller fabric and vinyl pieces becomes particularly critical. Lectra’s Vector iX6 satisfies this need while also improving fabric utilization and cutting efficiency.”

“Understanding evolving market trends lies at the heart of what we do,” states Javier Garcia, Senior Vice-President, Automotive Sales, Lectra. “Since its launch, Vector iX6 has been quickly adopted by interior component suppliers like YFAI. VectorAuto iX6 contributes to a drastic reduction in the manufacturing cost per set, especially for small parts produced using vinyl and other materials complex to cut.

At Kingpins Amsterdam, RUDOLF GROUP launches a selection of chemical auxiliaries for fashion and function as well their new HUB 1922.
The RUDOLF GROUP, not completely new to garment and denim finishing, decides to take the first steps of what will be a long and exciting journey in the field. In order to shorten the distance with both manufacturers and apparel brands and retailers it deploys two synergic initiatives:

• A refined selection of chemicals auxiliaries targeting garment finishing and delivering, in addition to current aesthetics, sophisticated functionalities that take denim to the next level in terms of both performance and enhanced quality.
• The launch of a new project that, combining German engineering and Italian style, provides solutions at the crossroad of fashion and utilitarian functionality. The project, called HUB 1922, introduces elements of unorthodox diversity and fosters collaborative environments that can be truly disruptive.

The word HUB is evocative of the main part of something where there is most activity, whereas the number, 1922, is the year of foundation of the RUDOLF GROUP and therefore symbol of heritage, tradition and significant experience. Ultimately, HUB 1922 wants to be the unmatched one-stop shopping for fashion and function, innovation and creativity in garment processing. A hub that enables continuous, synergetic, and powerful collaboration with brands and retailers to deliver disruptive innovations in the global markets.

It introduces functional chemistry in an universe that is almost entirely driven by aesthetics and the extension to other materials and product categories (such as outdoor apparel and performance wear), of knowledge and techniques developed for denim over the past 50 years. Very aware of its status of rookie and yet very determined, the project HUB 1922 begins exploring through concepts and values rooted in deep scientific knowledge, true responsibility, technical innovation and fresh creativity.
At Kingpins Amsterdam, HUB 1922 will present 3 concepts rooted in RUDOLF’s sophisticated and conscious chemistry:

• ODYSSEY: a voyage through textures and innovation, softness, comfort and signature handfeels.
• SHELTER: performance inspired by natural models for urban protection and for much reduced domestic washing.
• MEMOFLEX: A modern-day miracle preventing denim from sagging and bagging. A truly denim Botox that shows improved quality on many stretch fabrics.

Since when it was founded, almost 100 years ago, RUDOLF GROUP’s secret of success is being big enough to matter, small enough to care. Captured in this definition are an obvious desire to play a meaningful role in the textile industry and an equally palpable vocation to customer service.

Alberto de Conti, Head of Rudolf Fashion Division: “Every generation has their time to make a mark on the world. Considering the environmental emergencies in garment production and the lack of real innovation on the retail shelves, for the current generation of companies active in garment finishing that time is now.”

RUDOLF GROUP acknowledges therefore that there is an additional opportunity to responsibly further redefine the future and turns their sizeable R&D power towards refining their approach to what is fashion quintessential staple: garment and denim finishing. Through a renewed, highly responsible involvement in garment finishing and with the introduction of HUB 1922, the RUDOLF GROUP wants to send out a message of true optimism. It is about showing the entire industry that there is a blank canvas ahead and tangible difference can be made.

• A unique partnership enabled Lectra to test its revolutionary laser-cutting technology in a real production environment while delivering sustainable competitive advantage to the world’s leading supplier of airbag cushions.

Reaching the next level of growth and performance
Global Safety Textiles (GST) is the leading independent producer of airbag fabric and airbag cushions and supplier to the majority of airbag manufacturers.
Recognized for its long tradition of research and development, GST uses stateof- the-art technology to manufacture technical textiles for a variety of passive safety applications.
With operations on four continents, the German group has a workforce of more than 5,000.
The company’s worldwide operations and resources enable it to fulfill high volumes of orders promptly, providing the global automotive industry with a steady supply of airbag fabrics and cushions.To address GST’s main business challenges and meet their demanding manufacturing specifications, the group evaluated the performance of FocusQuantum OPW for one-piece-woven (OPW) airbag fabric together with Lectra in the pre-launch phase of the advanced laser airbag cutting solution. Following successful testing of Lectra’s advanced airbag cutting technology in a real production environment in Poland, the group then decided to acquire FocusQuantum OPW for implementation in China.

A one-off join testing collaboration on customer premise
The result of a mutually beneficial collaboration between Lectra and its longstanding customer, specifications for laser OPW airbag cutting solution FocusQuantum took into account GST’s exacting requirements. Once the development of FocusQuantum OPW was completed, both companies agreed to conduct joint
testing. “We came to the idea of joint testing when we visited Lectra’s R&D center in Bordeaux,” says Uwe Zimmermann, COO, GST.
“We discussed taking validation of our specifications to the next level. The idea came up to do it directly in a manufacturing environment.”
The extensive testing enabled GST’s experts to certify FocusQuantum as a proven technological platform for the mass production of airbags. “Process capability was a formal part of validations at GST Poland,” recalls Piotr Siwek. Manufacturing Engineering Manager. “It was verified and confirmed that FocusQuantum meets GST’s targets. The biggest improvement over the previous solution was the software, which we also helped Lectra develop. FocusQuantum Suite is one of the biggest advantages.”

Worldwide standartisation and rollout in China
As a result of the successful joint testing, GST decided to proceed with implementation in China. “Because GST aims to become a major player in Asia,
implementation of FocusQuantum in China is the next logical step for us,” explains Zimmermann. “Standardization of all our equipment worldwide is mandatory for us. That’s why we decided to work with a global player like Lectra.” With more than twice the productivity of the previous solution, FocusQuantum
has exceeded GST’s performance targets. The significantly higher level of process capability has both improved cutting quality and reduced the number
of defective cut parts.
“When we compare the unit output and unit cutting cost, we see a real improvement over the previous generation, so we are quite satisfied with the machine,” notes Sky Yang, General Manager, GST China. “It’s more reliable and productivity is significantly higher.”

The AZL will continue its collaboration on composites in buildings and infrastructure after completing an initial market and technology study which identified new potentials for composite technologies in buildings and infrastructure markets. The aim of the new AZL Workgroup which will meet for the first time on January 25th, 2018 is to jointly develop new applications and to support the business development for composites in these two growing markets. The meeting is open to interested companies from the composite industry as well as the building and infrastructure markets.

The aim of the initial workgroup meeting will be to turn insights from the study into a long-term workgroup collaboration and to define topics and initiatives for the joint cooperation in the field of process and manufacturing technologies, fire safety regulations, materials as well as standards and norms. Industrial keynote presentations will introduce these action fields and will provide an insight into building and infrastructure applications for composites. The meeting will furthermore provide a platform to network with companies along the entire composite value chain.

Dr. Amer Affan, CEO and founder of AFFAN Innovative Structures based in Dubai is in charge of various composite projects for buildings such as the Museum of the Future in Dubai: “We have been utilizing structural composites in construction since 2010. Composites is a truly high-tech material compared with the traditional building materials (steel, concrete, timber and aluminum) but it is still to be recognized as such in the conservative and price-sensitive building industry. AZL, particularly its location at the RWTH Aachen University and its partner companies, offers a good platform to progress the use of composites in construction.”

AZL together with more than 25 companies just completed the Joint Market and Technology Study on “New Potentials for Composite Technologies in Buildings and Infrastructure” establishing a broad knowledge on business opportunities for composite technologies in these two growing markets. In a structured approach, the study determined the key segments as well as the technologies/applications with the highest market and technological potential. Analyses of 20 market segments, investigation of 438 applications, technology analyses of 25 highlight components and 11 detailed business cases were elaborated throughout the study. Additional to requirement analyses for materials and production technologies, new concepts for efficient profitable production technologies and cost engineering analysis were developed. With the workgroup, the AZL will take this initiative a step further with the aim to build a long-term cooperation platform for composites in buildings and infrastructure markets.

Justin Jin, CEO of the Korean company AXIA Materials participated in the study and is part of the AZL Partner Network: “As producer of large thermoplastic composite sheets and composite SIP (Structural Insulated Panel), we are eager to drive composites in B&I applications with the best efficient way. The AZL study on Buildings and Infrastructure provided us a great networking with key players in this business field and opportunities to strengthen our products with the key elements from partners. The study also gave us a proper market understanding including market size/volume in numbers to prove the value of this technology to building industry. We are looking forward to following up on these first insights and to realize applications with the AZL and its partners.”

Besides the networking options, the meeting will offer the opportunity to get an insight into the activities of the AZL Network consisting of nine research institutes at the RWTH Aachen Campus and more than 80 companies from 21 countries. During an optional guided tour, participants will visit selected institutes at the RWTH Aachen Campus. The meeting is open to all interested companies and free of charge.

More Information on Meeting and the Study
Information on AZL activities in the field of buildings and infrastructure:
www.azl-lightweight-production.com/composites-buildings-infrastructure
Details and registration to first Workgroup Meeting on January 25th, 2018:
http://www.azl-lightweight-production.com/termine/1st-workgroup-meeting-buildings-infrastructure

The Industry of the Future Alliance (AIF) has awarded Lectra with their ‘Showcase for the Industry of the Future’ label for demonstrating the criteria exemplarity, innovation and commitment. This certification is given to companies who have concretely developed a ground-breaking project to organize their production by leveraging the potential of digital.

The AIF bestowed Lectra with this distinction for its competitiveness concerning cost, quality and delivery times, all obtained thanks to a lean approach and reflection around the design of its products. Further, Lectra received the certification for its competitiveness regarding value, achieved thanks to mastering customer use from which new associated services have flowed. Since 2013, Lectra has invested €86 million in R&D, representing 9.4% of its revenues. This Investment has enabled Lectra to undergo a metamorphosis—based on methodological advances and fundamental technologies—increasing recruitment and growing competitiveness in all of its markets and geographical sectors.

With ten years’ experience in the industrial internet of things for cutting and expertise in software Solutions to automate and optimize design and product development, Lectra is in an unrivalled position to Support customers as they enter the ‘industry of the future’ era.

Pressure from certain shareholders to relocate manufacturing to China in 2005, triggered Lectra’s industrial project. Following risk analyses—the cost of transport for the European market, the turnover in qualified labor, uncertainty over patent rights and quality—Lectra decided to keep manufacturing in France. This choice was conditional on: disruptive innovation; upgrading; increased value to customers; and a rise in productivity.

The project was accompanied by a well-structured lean approach and organizational changes, which enabled Lectra to achieve the desired level of excellence in terms of productivity and competitiveness.

Some of the changes that took place thanks to this project are as follows: Growth in industrial performance due to an improvement in working conditions, with teams involved in the lean approach; Production engineers involved in creating awareness around factory constraints for a new offer as early as the design process. This co-design product/process optimizes global costs; Emphasis on product, process and logistics’ modularity with the latest possible integration of options (delayed differentiation). This enables logistics’ constraints to be taken into account as early as the engineering phase. Product modularity allows, for example, machines to be put in containers when they might otherwise require special heavy-goods transport.

Lectra’s factory improved its productivity rate by 18 points in three years, and has since maintained it at 89%. Costs have already reduced by 25% and the quality and level of service has improved. In terms of positioning, Lectra has confirmed its leadership in the high-end segment. Lectra has enriched its offer with end-to-end services and innovative, connected products whose embedded intelligence offers Smart Services, notably for predictive maintenance.

  The new cutting room will expand the German car parts maker’s airbag cutting capacity in Europe. This latest collaboration between Lectra and its longtime customer builds on a mutual relationship of trust reaching back to previous ZF TRW projects in Portugal, Poland, Mexico and China. Having recently devised a worldwide airbag growth strategy, the company turned once more to Lectra to help reinforce the capacity of its European manufacturing base.
Early in 2016, Lectra unveiled the revolutionary FocusQuantum range, leading to certification of the integrated airbag cutting solution by the customer’s cutting room managers across the globe. Later that year, ZF TRW also certified Lectra’s FocusQuantum Suite cutting preparation software. The stringent process carried out by ZF TRW bore out the productivity, performance and quality of the state-of-the-art airbag cutting solution and advanced software system.

“By evaluating the solution in accordance with established practices, we were able to confirm that FocusQuantum will help satisfy the projected output of our newest facility,” notes Victor Seoane, head of Global Manufacturing Engineering for Inflatable Restraint Systems, ZF TRW. "We were impressed by the innovation that Lectra’s FocusQuantum offers, enabling us to significantly reduce our cutting cost per bag."
“With this new collaboration, Lectra demonstrates yet again the added value built into the integrated design of FocusQuantum,” states Céline Choussy Bedouet, Chief Marketing and Communications Officer, Lectra. "The acquisition of two FocusQuantum will enable ZF TRW to meet short-term productivity objectives while also laying the foundation for future growth.”