From the Sector

• Sales Volume rose 3% QoQ and 2% YoY to 3.55MT
• Adjusted EBITDA of $366M, a rise of 32% QoQ and a decline of 2% YoY
• Operating cash flows of $184M
• Net Operating Debt to Equity of 1.12
• Reported EPS of THB0.17

Indorama Ventures Public Company Limited (IVL) reported an improved quarterly performance as the prolonged destocking trend showed further signs of easing. During the quarter, the company progressed its IVL 2.0 evolved strategy to enhance earnings quality and transform its business to emerge stronger from the downturn in global chemical markets.

Indorama Ventures’ reported Adjusted EBITDA1  of $366 million in 1Q24, a 32% increase QoQ and a 2% decline YoY. Sales volume grew 3% QoQ as the widespread customer destocking that sapped demand through 2023 shows signs of a gradual recovery across all sectors, partially offset by a winter freeze in the U.S. The result was supported by lower utilities costs in Europe, Red Sea-related supply chain disruptions that benefited the company’s import parity advantages, and favorable shale gas economics that bolstered profitability in the U.S.

Indorama Ventures expects the recovery in volumes to continue through 2024, albeit at a gradual pace as destocking normalizes and the approaching summer supports demand. However, the overall landscape for the global chemical industry remains challenging due to excess capacity builds, as well due to persistent inflation and high interest rates which weigh on industry spreads and continue to impair profitability, especially across the polyester value chain. Our HVA segment ‘Indovinya’ is progressing well into the second quarter post the easing of destocking and anticipating a healthy 2024.

The company’s experienced management remains intensely focused on managing costs, optimizing competitiveness, and maintaining high liquidity. Indorama Ventures’ diverse geographical footprint is a key advantage in the current low-margin environment, allowing its businesses to maintain their strong market premium, supported by protection from trade and non-trade barriers.

In 1Q, the company made headway with its IVL 2.0 three-year plan to leverage its global leadership position and forge a new era of opportunity amid significant structural changes in chemical markets. Under the evolved strategy, which the company outlined at its annual Capital Markets Day in March, Indorama Ventures is optimizing assets, reducing debt, and focusing on generating free cash flow to deliver enhanced shareholder returns. Today, 70% of the company's revenue has deployed the SAPS/4HANA ERP and is using the infrastructure to enhance digital procurement, sales excellence, and integration of supply chains across the business. The company believes these AI tools will improve productivity and costs, as well as release working capital in line with its modernization strategy.

As part of IVL 2.0, the company is optimizing 7 sites, including the ongoing evaluation of its PTA/PET operation in the Netherlands. It has also made significant progress in its program to refinance $1.1 billion of debt within the first half of 2024 to ensure ample liquidity. Recent capital raisings include a $255 million ‘Ninja loan’, a THB 10 billion debenture, a $100M bi-lateral loan, and this week’s successful close of a $500 million syndicated loan – achieved at lower-than-average spreads compared to previous issuances.

To unlock value, Indorama Ventures is preparing its packaging and surfactants businesses for IPOs. From 1Q24, the Indovinya segment (previously named ‘Integrated Oxides and Derivatives’) is focused on developing its attractive downstream surfactants operations as a separate segment. The segment’s Intermediate Chemicals business, consisting of shale base integrated Ethylene MEG, MTBE and merchant Purified EO assets, have been moved under the Combined PET (CPET) segment where they are a natural fit.

Segment Performances
In 1Q24, CPET segment (including Intermediate Chemicals) posted Adjusted EBITDA of $249 million, a 34% gain QoQ and 4% YoY as supply chain disruptions and a consequent spike in global ocean freight rates supported high prices and margins, and as Western markets benefited from lower energy costs. The Indovinya segment reported a stable Adjusted EBITDA of $70 million, impacted by the winter freeze in the U.S and a mini turnaround at a PO/PG plant. The Fibers segment achieved a remarkable 73% increase in Adjusted EBITDA to $39 million QoQ, and 2% YoY, as destocking waned across all three business verticals and drove an 8% QoQ increase in volume.

Indorama Ventures Public Company Limited, a global sustainable chemical company, announced that MSCI awarded the company an upgraded ‘AA’ from ‘A’ rating, ranking it in the ‘Leader’ category for its Environmental, Social, and Governance (ESG) performance towards achieving its ongoing sustainability goals and commitments.

Morgan Stanley Capital International (MSCI), a provider of research-driven indices and analytics, ranked Indorama Ventures among the top 12% of 57 global companies in the commodity chemicals sector. This upgraded rating illustrates Indorama Ventures’ performance to exceed industry peers while minimizing its environmental footprint.

• Revenue up 5.7 percent year-on-year to EUR 658.4 million
• EBITDA more than doubles year-on-year to EUR 71.4 million
• Free cash flow of EUR 87.3 million (compared with minus EUR 132.3 million in the first quarter of 2023) and thereby positive for the third consecutive quarter
• Performance program shows positive effect on revenue, EDITDA, and free cash flow
• Lenzing confirms EBITDA guidance for 2024

The Lenzing Group, a leading supplier of regenerated cellulose for the textile and nonwovens industries, recorded a further improvement in fiber sales volumes in the first quarter of 2024. An expected recovery in markets relevant for Lenzing has to date failed to materialize. Fiber prices remained at a low level. Although the costs of raw materials and energy continued to decrease, they remained higher than in the pre-crisis 2019 year.

Outlook
Even though the IMF has upgraded its growth forecast for 2024 from 3.1 percent to 3.2 percent, a number of risks remain for the global economy: potential geopolitical shocks, persistently higher inflation and key interest rates, as well as market risks emanating from the Chinese real estate market are currently considered to be the most relevant.

General inflation and falling incomes in real terms are continuing to exert a negative impact on consumer sentiment. A recovery in the consumer clothing market, which is important for Lenzing, will also depend on a further normalization of stock levels.

The currency environment is expected to remain volatile in regions relevant to Lenzing.

In the trend-setting market for cotton, a stable price trend is expected for the 2023/2024 harvest season.

Earnings visibility remains limited overall.

Revenue and earnings in the first quarter exceeded Lenzing’s expectations, despite the persistently difficult market. Lenzing is ahead of schedule with the implementation of its performance program. By appointing a separate Managing Board member, the projects identified to date are to be implemented even more rapidly, and new potentials are to be leveraged. Lenzing expects that these measures will increasingly contribute to further earnings improvement over the coming quarters compared to the first quarter of 2024.

Taking the aforementioned factors into consideration, the Lenzing Group confirms its guidance for the 2024 financial year of year-on-year higher EBITDA.

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 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.

Major developments:

• Currency-neutral sales up 8% driven by growth in all regions except North America
• Double-digit DTC growth reflects strong adidas sell-through
• Gross margin improves 6.4pp to 51.2%, reflecting healthier inventory levels, reduced discounting, lower sourcing costs and a more favorable business mix
• Operating profit of € 336 million compared to € 60 million in the prior-year period
• Inventories down more than € 1.2 billion versus the prior year to € 4.4 billion
• Top- and bottom-line guidance upgraded on April 16 due to successful start to the year

Full-year outlook
adidas expects revenues to increase at a mid- to high-single-digit rate in 2024
On April 16, adidas upgraded its full-year financial guidance as a result of the better-than-expected performance in the first quarter. adidas now expects currency-neutral revenues to increase at a mid- to high-single-digit rate in 2024 (previously: increase at a mid-single-digit rate). Within this guidance, it is assumed that the remaining Yeezy inventory will be sold on average at cost, resulting in sales of around € 200 million throughout the remainder of the year. This corresponds to a projected total amount of Yeezy-related sales of around € 350 million in FY 2024 (previously: around € 250 million), of which around € 150 million were generated in the first quarter. For its underlying business, adidas remains focused on scaling its successful franchises, introducing new ones, and leveraging its significantly better, broader, and deeper product range. Improved retailer relationships, more impactful marketing initiatives, and the company’s activities around major sports events are also expected to contribute to sales increases throughout 2024.

Outlook impacted by significant currency headwinds
Unfavorable currency effects are projected to weigh significantly on the company’s profitability in 2024. They are expected to continue to adversely impact both reported revenues and the gross margin development in the remainder of the year.

Operating profit of around € 700 million projected
Following the better-than-expected performance in the first quarter, the company also increased its full-year profit guidance on April 16. The company’s operating profit is now expected to reach a level of around € 700 million (previously: to reach a level of around € 500 million). The improved bottom-line guidance includes a contribution of around € 50 million from Yeezy (previously: no Yeezy contribution) related to the drop in Q1. The sale of the remaining Yeezy inventory is assumed to result in no further profit contribution during the remainder of the year.

Texworld Apparel Sourcing Paris opens its doors from 1 to 3 July at Paris Expo Porte de Versailles. More than a thousand exhibitors from the world's major sourcing countries will be offering inspirational sources for building collections for 2025-2026. This season's show will focus on suppliers of innovative products and solutions for high-performance and sustainable fashion.

Yarn in the spotlight
Taking us further upstream in the industry and for the first time at the Parisian trade shows, a pavilion featuring yarn producers will be found at the exhibition. Co-organised with Yarn Expo, a Shanghai show in the Messe Frankfurt galaxy, this dedicated pavilion will feature companies from China, India, Pakistan and Taiwan.

A Leather trends area at Leatherworld, partnerships at Avantex
As in previous summers, this season’s show will bring together all the different aspects of Texworld Apparel Sourcing Paris. Leatherworld, the platform dedicated to leather sourcing, is announcing the return of a South African pavilion. This area will also host a Leather Trends area created and run by Italian publisher Edizioni AF, a specialist in the leather industry. Particular attention will be paid to the design processes and choice of materials used by Italian accessories and footwear manufacturers.

A number of new features are also expected in the Avantex innovations area: Partnerships with the IFA Paris fashion design school, the TCBL association and the TUV Rheinland certification body, which will showcase  solutions in sustainable fashion and textiles, and provide an opportunity to discuss these issues at expert round tables.

Furthermore, the fair will be showcasing Texpertise Econogy, the sustainable economy approach developed by the international Messe Frankfurt group to guide visitors in their sourcing choices. Following its launch in February, the upcoming event will continue to promote sustainability with a number of features and provide a platform for green pioneers.

International technology group ANDRITZ has successfully started up a new nonwovens production line supplied to Teknomelt Teknik Mensucat San. ve Tic. A.S. in Kahramanmaras, Türkiye. The new neXline wetlace CCP (carded-carded-pulp) line produces nonwoven roll goods for biodegradable, plastic-free wet wipes

By combining the benefits of two technologies, spunlace and wetlaid, the line enables the use of bio-based fibers, like viscose and wood pulp, to produce a high-performance and sustainable wipe with the same technical product characteristics and performances as a conventional wipe made of synthetic fibers while protecting the environment.

Teknomelt is one of the leading manufacturers of nonwoven meltblown, spunbond, SMS and SMMS fabrics in Türkiye. The company serves a wide range of markets, exporting 45% of its production. With the new ANDRITZ Wetlace CCP line, the company is expanding its range of sustainable nonwovens production for wipes. 

RadiciGroup announced the launch of the first physical and digital nylon traceability project at Techtextil 2024. A gilet made from the yarn manufactured in one of the Group’s European industrial sites, which, thanks to a QR code on the garment, can reveal its origin and display information about its production process.

Product traceability is a key element in guaranteeing transparency along the entire supply chain, as it means each stage of production – from spinning to weaving and from packaging through to retail – can be monitored and recorded. The project, made possible by a partnership with FibreTrace, allows manufactured nylon yarns to be traced both physically and digitally. In fact, RadiciGroup inserts a tracer (an inorganic additive) that is uniquely associated with the yarn and remains identifiable throughout all stages of processing – on both the fabric and the finished garment. Naturally, the tracer does not alter the esthetical, functional and technical performance of the yarns in any way.

In terms of digital traceability, during the production stages a scanner detects the presence of the tracer and can transmit the data relating to provenance onto a dedicated digital platform. Finally, the consumer, via a QR code, can access the digital platform that provides all information concerning the provenance of the product and its journey through the supply chain.
 
“This project is the result of almost two years’ work by our Research & Development team. We’re very proud to bring to the market the first physical and digital nylon traceability solution and we plan to extend this initiative to other fibres produced by the Group,” emphasised Filippo Bona, R&D Manager of RadiciGroup Advanced Textile Solutions.

Archroma has introduced a new bio-based durable water repellent (DWR) finish that helps mills and brands produce apparel that is soft to the touch and yet offers robust rain and stain protection and an improved sustainability profile.

PHOBOTEX® NTR-50 LIQ is designed to provide great water repellence on all kinds of fibers while achieving a soft handle and avoiding undesired effects like yellowing and chalk marking. It performs especially well on synthetic fibers and their blends, making it ideal for apparel, outdoor wear and home textiles.

The new DWR is based on 50% renewable carbon content based on ASTM D6866 and is free of per- and polyfluoroalkyl substances (PFAS) and formaldehyde. It is also crosslinker-free, which makes it more flexible in use. While offering good wash durability on its own, PHOBOTEX® NTR-50 LIQ can be combined with a crosslinker like ARKOPHOB® NTR-40, which has a biocarbon content of 40%, to further boost wash and/or dry-cleaning resistance.

Sportswear, fashion and home textiles treated with the PHOBOTEX® NTR-50 LIQ durable water repellent qualify for the High IQ® Repel assurance program. The High IQ® program assures consumers that these products deliver performance, protection and comfort and meet strict environmental standards.

The next AACHEN-DRESDEN-DENKENDORF INTERNATIONAL TEXTILE CONFERENCE will take place on November 21/22 2024 in Stuttgart on site.  

You are invited to submit abstracts for oral or poster presentations related to the following topics:

• Textile Mechanical Engineering
• Biobased Fibers
• High Performance Fibers
• Fiber Composites and Lightweight Construction
• Circular Economy and Recycling
• Medicine and Health
• Functionalization and Finishing
• Transfer Session “From Idea to Practice”

 
Deadline abstract submission for oral presentations: April 30, 2024
Deadline abstract submission for poster presentations: September 30, 2024

Partner countries for 2024 are Belgium, Netherlands and Luxembourg.

adidas announced preliminary results for the first quarter of 2024. In Q1, currency-neutral revenues increased 8% versus the prior year level. In euro terms, the company’s revenues grew 4% to € 5.458 billion (2023: € 5.274 billion). The company’s gross margin improved 6.4 percentage points to 51.2% during the quarter (2023: 44.8%). Operating profit reached € 336 million in Q1 (2023: € 60 million).

As a result of the better-than-expected performance during the quarter, the company has increased its full-year guidance. adidas now expects currency-neutral revenues to increase at a mid- to high-single-digit rate in 2024 (previously: increase at a mid-single-digit rate). The company’s operating profit is now expected to reach a level of around € 700 million (previously: to reach a level of around € 500 million).  

The latest Yeezy drop generated revenues of around € 150 million and an operating profit of around € 50 million in the first quarter. In its guidance, the company assumes the sale of the remaining Yeezy inventory during the remainder of the year to occur on average at cost. This would result in additional sales of around € 200 million and no further profit contribution during the remainder of the year.

The company continues to expect unfavorable currency effects to weigh significantly on the company’s profitability this year. These effects are projected to continue to negatively impact both reported revenues and the gross margin development in 2024.