From the Sector

The Südwolle collection of yarns for weaving and circular knitting continues its evolutionary path based on the key concept of Responsibility. This principle guides Südwolle Group's commitment and engagement regarding all areas of business and stakeholders - the environment, the textile industry production chain, consumers, employees and the social repercussions of its business.

The intersection between these 6 areas has resulted in a collection in which the concept of seasonality is blurred, and products have a flexible, versatile use. The use of cutting-edge technology means yarns offer a high level of quality, suitable for apparel with outstanding durability, a factor that helps to reduce the environmental impact of textile waste and disposable fashion.

Overview of the collection
The collection is divided into 4 themes.
Natural, biodegradable or recycled fibre blends intended for crepe and crinkled fabrics are characterized by substantial twist and a high level of performance. The selection of fibres is oriented towards sustainability, with wool and silk organze combined with LENZINGTM ECOVEROTM viscose and Q-NOVA® regenerated polyamide.

Fuji crepe X-compact Nm 40/1 Z 1050 (40% wool 21.2 μ, 60% FSC certified LENZINGTM viscose EV), new this season, features a smooth look and no pilling thanks to the use of X-compact spinning technology, which produces yarns with excellent performance and durability.

When it comes to light, natural blends, wool and linen or wool, linen and silk blends follow the trend for softly fluid structures, such as the new Peschici Nm 42/1 Z 600 (53% wool 18.4 μ, 23% linen, 24% silk), with a fresh, dry handle and very current dappled effect, which results from the skilful combination of different fibres.

Contributing to a more sustainable and traceable textile production also involves attention to all fibres used. Mohair used for luxury yarns in noble fibres is strictly RMS (Responsible Mohair Standard) certified, which traces its origin, guaranteeing animal welfare and production according to responsible standards, similar to the analogous RWS (Responsible Wool Standard) used for wool. Bosforo RWS RMS Nm 32/1 Z 950 (20% wool 20.8 μ RWS, 60% FSC certified LENZINGTM viscose EV, 20% RMS Kid Mohair) is a fresh, bright yarn that is soft on the skin, suitable for trans-seasonal products, an example of careful selection of raw materials.

Among the fancy yarns, delicately animated structures predominate for naturally elegant creations, represented by Niche Nm 34/2 S 460 (42% wool 21.2 μ, 58% bourette silk), a twisted yarn in wool and bourette silk, which adds dynamism with its characteristic rough, knotty surface.

Santoni Shanghai Knitting Machinery Co., Ltd. announced the strategic acquisition of Terrot GmbH, a manufacturer of circular knitting machines based in Chemnitz, Germany. The move comes as the latest development in Santoni Shanghai’s long-term vision to build an ecosystem that aims to reshape and consolidate the circular knitting industry. The transaction will be finalized pending approval from Chinese regulatory authorities.

The global circular knitting machine market is expected to see significant growth in the coming years, with a July 2023 report from Consegic Business Intelligence forecasting a 5.7% CAGR from 2023 to 2030, propelled by an increasing consumer preference for breathable and comfortable knitted fabrics as well as increasingly diversification of demand for knitted apparel. To seize this market opportunity, Santoni Shanghai has developed an ambitious strategic plan centered around innovation, sustainability and digitalization. The new partnership with Terrot aims to further this strategy by enhancing Santoni’s integrated and scaled-up ecosystem, while also driving the sustainable development of the global knitting machinery industry.

“With the strategic investment of Santoni, we aim to strengthen our position as the preferred solution provider to many of the world’s leading textile manufacturers and top brands as well as continue working with industry talents as we provide valuable and essential know-how to drive premium ‘Made in Germany’ textile machinery.” said Robert Czajkowski, Managing Director of Terrot GmbH. "We have found a strong, globally active partner with clear dedication to quality, performance and excellent expertise in all circular knitting segments, who understands the unique value proposition and potentials of our portfolio and with whom we can realize our growth objectives” he added.

Germany-based ZwissTex is a leading manufacturer of textiles with over 150 years of experience, creating innovative and sustainable textile solutions for the automotive and apparel industries. The company also operates in Mexico, to specifically serve the automotive sector across North American Free Trade Agreement (NAFTA) markets. Via OEMs, ZwissTex supplies German automakers including Volkswagen Auto Group, BMW, and Mercedes, as well as American manufacturers in select cases.

Unlike other Kornit customers, ZwissTex had no previous experience printing their own materials, and saw Kornit’s sustainable, single-step, Presto MAX S production system as an effective means of increasing their product capabilities.

“Our textiles were not classically printed in the past, and we did not produce any classical textiles in fashion, which is why we didn’t have any printing experience internally,” said Ralph Moldan, Technical Specialist at ZwissTex, as the system was being installed in their facility. “The only option was to find a system that would enable us to implement the areas in which we are active on the market easily and quickly, without requiring a lot of printing experience.”

One benefit of integrating Kornit technology into the ZwissTex production ecosystem: applying ink only where it is needed and seen, rather than to the full surface of each material. This translates to both reducing the company’s carbon footprint, and minimizing materials waste for a more cost-effective operation.

Prior to making the decision to invest in Kornit, ZwissTex conducted a series of tests and consultations, evaluating possible applications for different materials and engaging with their own key clients to ensure these finished products would meet their rigorous quality and durability standards. This included presenting Kornit-decorated samples at the Techtextil 2022 exhibition in Frankfurt.

Moldan found Kornit’s production capabilities opened new doors to customization of interior areas, a market that continues to grow. He anticipates this technology will create new opportunities with customers they could not reach previously, including new opportunities in sectors such as motor homes, airlines, and aircraft outfitters.

OETI - Institute for Ecology, Technology and Innovation’ (or OETI for short), is now working with the independent platform ‘MeineRaumluft’.

OETI and MeineRaumluft will work closely together to make a sustainable contribution to optimising the indoor climate. Starting this autumn, they will implement a groundbreaking initiative in Austria. The primary objective of this initiative is to raise awareness of the significance of indoor air as a factor for health and productivity in work and office environments. This message will be conveyed by means of precise measurements, knowledge sharing as well as practical recommendations

OETI has a great deal of expertise in the field of indoor air measurements and certifications. The accredited institution is certified for emission testing according to ISO 16000 parts 2, 3, 6, 9 and 11 as well as EN 16516. OETI also sets standards for indoor air quality with its CLEANAIR certification.

Albany International Corp. has completed its acquisition of Heimbach Group (Heimbach). Headquartered in Düren, Germany, Heimbach is a global supplier of paper machine clothing for the production of all grades of paper and cardboard on all machine types as well as high-tech textile products used in a variety of sectors, such as the food processing, chemicals, construction materials and automotive industries.

Daniel Halftermeyer, President of Machine Clothing, said, “We are excited about the opportunities to create additional value for our shareholders and customers through the increased scale, complementary technologies and broader geographic footprint this transaction provides. Together we will effectively combine the strengths of each company to set a new standard in customer value delivery as the industry’s partner-of-choice.”

Albany acquired Heimbach for €132 million in cash, and assumed net debt of approximately €22 million. The transaction was funded with cash held in Europe.

SETEX Schermuly textile computer GmbH, a global leader in manufacturing process management software and textile machinery controls, is pleased to announce the transfer of a majority stake to Elvaston Capital Management GmbH.

Private equity partner Elvaston has established the overarching Textile Solutions Holding GmbH. This company will manage a portfolio of technology companies that ensure seamless integration along the textile process chain and introduce unique market functionalities.

The current company owners of SETEX, Christoph and Oliver Schermuly, will continue their roles as managing directors.

SETEX is convinced that this step will further expand SETEX's competitiveness and growth potential.

Trützschler announces their cooperation with Balkan Textile Machinery. INC.CO, a partner which completes Trützschler's product portfolio for recycling by cutting and pulling solutions.

Both Balkan and Trützschler are family-owned companies for whom sustainability in the textile chain is a major concern. Balkan is well established in Turkey, one of the most important markets for textile recycling. Their robust and reliable machines help to cut, mix and tear textile waste to individual fibers, and to press them into bales of secondary fibers. These bales can be fed to the preparation process with Trützschler machines.

“We are now able to provide a complete line-up of technologically leading machinery which has been specifically developed for rotor and ring yarns from recycled materials”, says Markus Wurster, Director Sales and Marketing at Trützschler Group. “Customers benefit from less complexity when planning and executing a mill project. The combined processes from Trützschler and Balkan are perfectly fine-tuned, reliable and reproducible. And of course, customers have access to Trützschler’s premium service.” Osman Balkan, Owner of Balkan Textile Machinery. INC.CO, adds: “I am very happy that we can join forces with such a strong international player like Trützschler. Together we can make a significant contribution to dealing with textile waste globally."

Archroma, a global leader in specialty chemicals towards sustainable solutions, was highlighted for its advanced sustainable practices and innovation in Pakistan by the Swiss Embassy. Foreign Minister of Switzerland, Mr. Ignazio Cassis who was on an official state visit to Pakistan visited Archroma Center of Excellence at Karachi on 9 July 2023 along with high-level officials and three Members of Swiss Parliament.

Mr. Ignazio Cassis was greeted by Archroma employees at the Archroma Center of Excellence. He inaugurated the company’s "Wall of Pride", an impressive collection of recognitions, accolades and honors earned by Archroma in Pakistan since the company’s inception in October 2013.

Mr. Cassis visited the Research & Technology (R&T), Application, Analytical Laboratories & Training Academy spread on three floors at the Archroma Center of Excellence and saw the developmental work in progress. He was shown printing of multi-colored fabrics along with research based developmental analysis in the laboratories.

The globally acclaimed ‘Zero Liquid Discharge Sustainable Effluent Treatment Plant’ and the aniline-free* indigo produced at Jamshoro were the two of the main highlights showcased as best-in-class sustainable practices in the industry. Presentations and discussions were held on continued enhancement of these landmarks with the local industry.

• Sales up 1.9% year-on-year to €560.5 million with stable adjusted EBITDA of €88.0 million
• Strong business performance of the Graphite Solutions, Process Technology and Composite Solutions businesses
• Sales and earnings decline at Carbon Fibers due to weakness of wind market
• Impairment at Carbon Fibers of €44.7 million

Despite the increasingly difficult economic environment, SGL Carbon was able to increase sales in H1 2023 from €549.8 million in the previous year to €560.5 million. Adjusted EBITDA (EBITDApre) remained almost unchanged at €88.0 million (H1 2022: €87.9 million). The expected good business performance of the Graphite Solutions business unit and the better-than-expected sales and earnings development of Process Technology and Composite Solutions compensated the drop in demand in Carbon Fibers.

In particular, the Graphite Solutions (GS) business unit contributed to the stable development of the Company with a 15.3% increase in sales to €280.6 million (H1 2022: €243.4 million) and a 20.6% improvement in adjusted EBITDA to €65.1 million (H1 2022: €54.0 million). GS benefited especially from the high demand of the semiconductor industry. The semiconductor and LED market segment now accounts for around 45% of GS revenue (H1 2022: around 35%).

With a 30.9% increase in sales to €64.4 million (H1 2022: €49.2 million) and a significant rise in adjusted EBITDA from €4.1 million to €11.9 million, the business performance of Process Technology (PT) was significantly above the original planning. Composite Solutions (CS) also reported a higher-than-forecast sales increase of 14.4% to €79.6 million in H1 2023 (H1 2022: €69.6 million) and an improvement in adjusted EBITDA of 26.8% to €12.3 million (H1 2022: €9.7 million). 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 (H1 2022: €176.0 million) and a 78.4% drop in earnings to €6.1 million (H1 2022: €28.2 million).

An important market segment for 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. SGL Carbon expects customer demand from the wind industry to pick up in 2024.

As already announced in the ad hoc release of July 24, 2023, an impairment loss of €44.7 million was recognized on the assets of Carbon Fibers as of June 30, 2023.

Results situation
SGL Carbon's adjusted EBITDA (EBITDApre) remained almost stable in a half-year comparison at €88.0 million (H1 2022: €87.9 million). Due to the lack of demand from wind industry, CF's production capacity utilization decreased and idle capacity costs weighed on adjusted EBITDA. By contrast, higher margins from product mix and volume effects in the other three business units had a positive impact on adjusted EBITDA.

Non-recurring items and one-off effects not included in adjusted EBITDA totaled minus €46.9 million in the first half of 2023, of which €44.7 million resulted from an impairment loss in the CF business unit.

In addition to the above-mentioned effects and nearly unchanged depreciation and amortization of €29.1 million (H1 2022: €28.9 million), the decline in EBIT resulted in particular from the impairment loss already described (€44.7 million). After €69.6 million in H1 2022, EBIT amounted to €12.0 million in the reporting period.

Taking into account the slightly improved financial result of minus €15.8 million (H1 2022: minus €16.6 million), consolidated net income for the first six months of the current financial year amounted to minus €10.0 million, compared to €48.8 million in the first half of the previous year.

Net financial debt and equity
To complete its refinancing, SGL Carbon issued convertible bonds with a volume of €118.7 million in June 2023 and drew an existing term loan facility of €75 million in July 2023, which was used together with cash of the Company on July 28, 2023 to repay the corporate bond (outstanding as of June 30, 2023: €237.4 million). Accordingly, cash and cash equivalents increased to €310.5 million as of June 30, 2023 (€227.3 million as of December 31, 2022) and financial debt temporarily increased to €480.4 million (€398.1 million as of December 31, 2022). Net financial debt remained nearly unchanged at €169.9 million as of June 30, 2023 (Dec. 31, 2022: € 170.8 million).

Despite the impairment loss of €44.7 million in Carbon Fibers, shareholders' equity amounted to €565.2 million as of June 30, 2023, only slightly lower than at the end of 2022 (Dec. 31, 2022: €569.3 million). This corresponds to an equity ratio of 36.1% (Dec. 31, 2022: 38.5%).

• 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