From the Sector

Indorama Ventures Public Company Limited (IVL) reported a slight rise in quarterly performance, supported by a gradual recovery in sales volumes and as management executes the company’s IVL 2.0 strategy to optimize its manufacturing model, reduce costs, and enhance competitiveness.

Indorama Ventures’ reported Adjusted EBITDA  of $370 million in 2Q24, a 1% rise QoQ and a decline of 11% YoY. The company’s sales volumes increased 1% YoY due to subdued economic activity, but also signaling the end of a prolonged period of destocking that began in late 2022. Operating rates for the group increased from 74% to 76% in 1H24, although still at lower-than-average levels, signifying the weak global economic conditions. On a proforma basis, considering asset optimization actions, operating rates increase to 81%.

The Indovinya segment posted a robust performance on improved margins and rebounding demand for its high value-add downstream products. The packaging business, newly renamed ‘Indovida’, also performed well due to its leading footprint in emerging markets.

Looking ahead, Indorama Ventures is encouraged by the gradual improvement in the operating environment as customer inventory levels normalize, which is expected to spur further growth in volumes across all segments in 2H24. The company also expects to benefit in 2H24 from its shale gas advantage in the U.S, reflected in ethylene crack margins, positively impacting its integrated MEG business. Continued higher import prices in Western markets will enhance the company’s competitiveness as a leading local operator.

While the polyester industry manages the downcycle, Indorama Ventures’ experienced management team is working hard to deleverage and optimize the business under the company’s IVL 2.0 strategy to emerge stronger and drive enhanced earnings quality in an era of higher interest rates and a substantially changed industry landscape. As flagged at its Capital Markets Day on 6 March this year and reaffirmed in its Mid year strategic update on 24 July, the company is making substantial progress with IVL 2.0. In 2Q24, it recorded an impairment and expense provision of $666 million ($543 million is non cash) under its asset optimization program to improve manufacturing efficiency and reduce fixed costs. The cost benefits will start from 3Q24 and amount to about $170 million in savings in 2025. The company expects that the remaining asset optimizations will not have material impairments.

Management is continuing its intense focus on managing costs and extracting efficiencies, including its Olympus 2.0 program. These efforts achieved $47 million in savings in 1H24 ($29 million in 2Q24). The company is continually optimizing its capital expenditure, with capex supporting investments in sustainability—such as recycling in India—and automation and digital technology, as well as ongoing projects.

A key part of Indorama Ventures’ transformation journey is the implementation of new digital and AI tools to drive operational excellence in key areas, including manufacturing, commercial, procurement, sales, supply chain, and finance excellence. A significant portion of operations now have the new SAP S/4HANA ERP platform as a digital core, while rollouts of other world-leading solutions are ongoing in a phased approach through to 2026.

Segment Performances
The Combined PET (CPET) with Intermediate Chemicals segment posted an Adjusted EBITDA of $234 million in 2Q24, a 6% decline QoQ and a 25% decrease YoY, due to a one-time upside impact from a campaign run of NDC campaign in 1Q24 and as reduced industry spreads weighed on the Integrated PET business. A cracker outage at Lake Charles in the U.S also resulted in a $17-18 million impact to EBITDA. The cracker is gradually up and running in 3Q24.

The Indovinya segment recorded a strong Adjusted EBITDA of $98 million, a 41% gain QoQ and 85% YoY on increased volumes as destocking eased, supported by demand for downstream chemical surfactants amid the U.S crops season.

The Fibers segment recorded Adjusted EBITDA of $39 million, a 2% rise QoQ and a 19% gain YoY amid improved sales strategies and a robust focus on cost management, even as volumes declined, particularly in the Lifestyle business.

• Revenue up 4.8 percent year-on-year to EUR 1.31 bn in the first half of 2024
• Performance program shows effect: EBITDA up 20.4 percent year-on-year to EUR 164.4 mn in in the first half of 2024
• Free cash flow of EUR 141.5 mn (compared with minus EUR 165.4 mn in in the first half of 2023)
• Lenzing confirms EBITDA guidance for 2024

The Lenzing Group reports a gradual improvement in its business performance in the first half of 2024. As expected, the recovery of the markets relevant to Lenzing proved to be sluggish. Although fiber sales volumes increased, fiber prices remained at a low level. The cost of raw materials and energy remained high. At the same time, logistics costs rose significantly in the reporting period.

Outlook
The IMF left its growth forecast for 2024 unchanged at 3.2 percent and raised it to 3.3 percent for 2025. Nevertheless, a number of risks for the global economy remain.

Forecasting future economic growth is rendered more difficult by smoldering global conflicts, trade disputes, and the uncertain outcome of elections, including the USA and the EU.

Consumers are holding back on unnecessary purchases in an environment of rising prices, falling real wages in some cases, and concerns about economic growth. This is hampering a revival of the consumer apparel market, which is important for Lenzing.

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

In the trend-setting market for cotton, a reduction in stock levels and a stable price trend at a low level is expected for the remainder of the 2023/2024 harvest season.

Earnings visibility remains limited overall.

Revenue and earnings in the first half of the year exceeded Lenzing’s expectations, despite the persistently difficult market. Lenzing is ahead of schedule with the implementation of its performance program. The company expects that the measures will make a greater contribution to further improving earnings in the coming quarters.

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

Structurally, Lenzing continues to anticipate growth in demand for environmentally responsible fibers for the textile and clothing industry as well as for the hygiene and medical sectors. As a consequence, Lenzing is very well positioned with its strategy and is pushing both profitable growth with specialty fibers and the further expansion of its market leadership in the sustainability area.

Indorama Ventures Public Company Limited announces its role in the T-REX (Textile Recycling Excellence) Project. This initiative aims to establish a harmonized EU blueprint for the closed-loop sorting and recycling of household textile waste to help the fashion industry transition towards a more circular and sustainable future. By bringing together key stakeholders across the entire value chain, the project positions itself at the forefront of sustainable innovation.

The designated spinning partner, Indorama Ventures, will process the chemical recycled feedstock into polyester yarns and fibers through the extrusion process, ensuring the elimination of impurities. The company’s participation in the project also aligns with its goals of driving the circular economy and circular fashion industry through PET recycling and supply of recycled materials, underscoring its commitment to sustainability.

The T-REX Project launched with the aim of creating a harmonised blueprint which will support the creation of a circular system for post-consumer textile waste within Europe. The EU funded project brings together a consortium of 13 major players from across the entire value chain along with research institutes to transform end-of-use textiles from waste into valuable feedstock and a commodity for new business models that can be adopted at scale.

Major developments:

• Currency-neutral sales up 11%, driven by adidas brand accelerating to 16% growth
• adidas brand up double digits across all channels with increases in all markets
• Underlying gross margin improves around 1.5 percentage points to 50.5% despite significant currency headwinds
• Operating profit of € 346 million compared to € 176 million in prior-year period
• Healthy inventories at a level of € 4.5 billion to support future top-line growth
• Full-year guidance upgraded on July 16 to reflect current brand momentum

Full-year outlook
High-single-digit revenue increase expected in 2024
On July 16, adidas raised its top- and bottom-line guidance as a result of the better-than-expected performance during the second quarter and taking into account the current brand momentum. adidas now expects currency-neutral revenues to increase at a high-single-digit rate in 2024 (previously: to increase at a mid- to high-single-digit rate). The company’s operating profit is now expected to reach a level of around € 1.0 billion (previously: to reach a level of around € 700 million). Within this guidance, adidas 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 revenues of around € 150 million and no further profit contribution during the second half of 2024.

Outlook impacted by significant currency headwinds
The company continues to expect unfavorable currency effects to weigh significantly on its profitability this year. These effects are negatively impacting both reported revenues and the gross margin development in 2024. This was particularly the case during the first half of the year.

Women play a decisive role in achieving social and economic improvements for entire communities, including those involved in cotton production. Nonetheless, female farmers continue to face systemic disadvantages. Cotton made in Africa (CmiA) is pursuing gender justice to redress this imbalance, and the results of a recent study reveal significant progress in this regard.

A recent study shows women taking leadership through Cotton made in Africa as lead farmers. In this position, they serve as role models; they offer other female farmers someone to turn to; and they establish co-operatives together with other women to increase both their autonomy and their financial independence by creating new sources of income.

A major factor in this success has been collaboration with African cotton companies in the cultivation regions. This involves regular verifications to assess whether the partners’ activities comply with the standard’s requirements. The verifications are structured around a large selection of indicators that address issues including whether gender-related training was completed or whether projects promoting gender justice were conducted. Over the past years, this approach has not only raised awareness of gender equality among village communities but also increasingly challenged or dissolved traditional norms among the partner companies’ management and staff, thereby resolving inequities and empowering women at the systemic level. The study revealed that respondents see Cotton made in Africa as playing a highly supportive role. Intensive communication through training, verifications, and discussions with other cotton companies has given partner companies a clear awareness of how important gender justice is. As a result, they have become significantly more active in this regard, thereby encouraging women to assume a stronger position in agriculture and the communities. This is reflected in the fact that over 80 percent of both male and female respondents in Mozambique disagreed with the statement that care work should only be done by women. At least 60 percent of female and male farmers surveyed apply the skills and knowledge acquired through the training, which expressly addresses gender-specific aspects. In addition, over 80 percent of surveyed women stated that they receive the same share of proceeds from cotton sales as the other members of their families.

CmiA’s gender study was based on the internationally recognised Women’s Empowerment in Agriculture Index, which aims to measure and improve the role of women in agriculture. In addition to the survey of over 500 farmers, 26 qualitative interviews and around 30 group discussions were conducted in cotton-growing areas of Mozambique (in south-eastern Africa) and Benin (in western Africa) in order to ensure a representative sample.

Cotton made in Africa shares the United Nations’ views on the significance of gender equality, as outlined in the Sustainable Development Goals (SDGs), especially SDG 5. In its own work as a sustainability standard, CmiA also follows international norms and frameworks, such as ILO conventions or Agenda 2030; at a higher level, CmiA promotes gender equality in the textile industry by participating in expert groups like the Partnership for Sustainable Textiles’ strategy committee for gender equality.

In a position paper published, the companies organised in the VDMA Textile Machinery Association comment on the ambitious EU regulations and their national implementation for the sustainable and circular transformation of the textile and clothing industry.

The production of textiles requires a large number of resources, such as water, energy and chemicals. “The members of VDMA Textile Machinery support customers with products worldwide to utilise great potential already at the textile production stage to thereby reduce CO2 emissions“, explained Verena Thies, Deputy Chairwoman of VDMA Textile Machinery.

The position statement emphasises the importance of efficient processes, circular economy and binding rules for all market participants. Besides, the position paper summarises the status of textile-to-textile recycling processes as well as the framework conditions for reprocessing of recyclates. The companies of VDMA Textile Machinery develop processes and technologies for recycling and provide the technical prerequisites for the efficient reuse and recycling of textile raw materials, whether natural or man-made fibres.
The Executive Board of VDMA Textile Machinery stresses additionally, that the new EU regulations for circular economy and their national implementation must be designed with realistic targets, measurable effects and as little bureaucracy as possible. Furthermore, market surveillance is needed to ensure a level playing field for all market participants.

On behalf of the industry, the VDMA Textile Machinery Association calls for creating better location conditions in Germany and EU as a favourable environment for innovation und competitiveness for textile machinery manufacturing to significantly advance the sustainability of the textile industry: The Textile Machinery Association strongly emphasises the need for a wide range of low-cost green energy, which is essential for the implementation and sustainable use of recycling solutions in the manufacturing industry. The association also sees the positive shaping of location conditions (the potential for skilled labour, a reduction in bureaucracy, shorter approval periods, investment security and predictability as well as a reduction in the tax burden) as a decisive factor for supporting sustainable business in the highly competitive textile and clothing industry.

Autoneum significantly increased its revenue consolidated in Swiss francs by CHF 109.8 million to CHF 1 212.3 million compared to the prior-year period, supported by inorganic growth. In a slightly declining market, the Company succeeded in increasing its EBIT margin excluding special effects by 1.3 percentage points to 5.4%. A solid net result of CHF 36.1 million was generated in the first half-year of 2024. Due to the positive margin development, the Company now expects an EBIT margin of 5.0% to 5.5% for the current financial year (previously 4.5% to 5.5%).

In the first half of 2024, automotive industry production volumes were somewhat restrained world-wide and even declined slightly in Europe. While economic conditions in the automotive supply industry have improved to a certain extent since the coronavirus crisis, high vehicle prices in some markets were putting a damper on demand. Only North America and Asia recorded slight growth compared to the same period of the previous year.

Despite the flat market development, Autoneum managed to significantly increase both revenue and profitability before special effects over the prior-year period. This positive development was achieved through the automotive business of traditional German company Borgers, which had been acquired as of April 1, 2023, and thus contributed for the first time to the entire reporting period. At the same time, Autoneum achieved operational improvements worldwide.

Outlook
The current S&P market forecasts assume that global automobile production will decline by 2.0%* in 2024 compared with 2023. Based on the forecast market development and further operational improvements, Autoneum continues to expect total revenue in 2024 of CHF 2.3 billion to 2.5 billion and free cash flow in the high upper double-digit million range. Due to the positive margin develop-ment, the company now expects an EBIT margin of 5.0% to 5.5% (previously 4.5% to 5.5%).

* Source: S&P Global Light Vehicle Production Forecast of July 17, 2024.

The summer edition of Texworld Apparel Sourcing Paris welcomed nearly 1,200 exhibitors from 26 countries. This season event was characterised by a number of new features and the dynamics remained satisfactory. Next event: February 10, 2025, in a partially renovated Paris-Le-Bourget exhibition centre for a session rich in initiatives.

The latest edition of Texworld Apparel Sourcing Paris, offered in its full version with the Avantex and Leatherworld sectors, ended on July 3 with attendance levels down on the July 2023 session. Over and above a possible "Olympic Games effect" and its consequences on transport and accommodation costs in the capital, the current economic situation is prompting the show's organizers to explore all alternatives to adapt the offer to market demand. However, these results do not seem to have had any impact on the flow of business between visitors and exhibitors, who reported a fairly positive overall climate.

The dynamic on the booths remained steady and the exchanges satisfactory, as shown by several manufacturers particularly well established on the European market. Indian shirt manufacturer Sheraton Apparel, for example, made around thirty solid contacts over 3 days, and reported several serious approaches to African distributors. The same goes for SMIT, a Turkish company specialising in Made in Turkey sourcing, which was able to see its main European customers and open up new contacts with Canadian and Brazilian buyers.

An expanded offering
At the Near Sourcing Hub, the phygital sourcing space connected by QR Code to the B2B digital platform of Messe Frankfurt France partner FourSource, inquiries to exhibiting companies remained much the same as in 2023. The visitor profile, on the other hand, focused on buyers from networks of small multi-specialist boutiques looking for an original mid-to-top-range offering. It was in response to this market demand for differentiation that the show organizers decided to extend Apparel Sourcing's range to include new categories in the fashion accessories sector, such as jewelry and bags.

High-profile initiatives
Other innovations were also on show this summer. The yarn pavilion - a first conceived in collaboration with Yarn Expo, originally a Shanghai show run by Messe Frankfurt - showcased the expertise of Chinese, Indian, Pakistani and Taiwanese companies, while at the same time highlighting upstream products and services. At Avantex, where some twenty suppliers of solutions for more sustainable fashion were grouped together, the new Designer Hub enabled designers and buyers to discover some original initiatives, such as that of stylist Jean-Luc François' association, supported by Messe Frankfurt's Texpertise network, which trains people who are far from employment, or the 3D design studio Scotomalab.

Materra wins 2024 Avantex Fashion Pitch award
The Avantex Fashion Pitch jury has awarded the 2024 prize to Materra. This British start-up, founded in 2019, designs solutions to support the cotton cultivation adapted to climate change. At the other end of the chain, it offers brands a service designed on a Cotton-As-A-Service model that encourages them to source from the producers it supports. Materra will benefit from a €2,800 stand at Avantex Paris 2025 donated by Messe Frankfurt France, plus €2,000 from Texpertise Network, the textile sector network of the Messe Frankfurt Group, and 1 year's incubation at Foundry donated by IFA Paris, official partner of the competition.

A trendy area at Leatherworld
New for 2024, the Leatherworld sector inaugurated its Leather Trend area, developed in collaboration with publisher Edizioni AF and the Arsutoria School design centre. Designed around the expertise of Italian companies specialising in the manufacture of leather shoes and bags, this inspirational space presented the autumn-winter 25-26 trends through 4 creative axis built around the expression of simplicity, nature, dynamism (sportswear collections) and finally romanticism. Leather Trend was also an opportunity to discover the new leather tanning technology developed by Ecotan, which avoids the use of metals (Chrome) and chemicals in the leather preparation stages thanks to the use of vegetable tannins.

Today more than ever, sustainability in the fashion sector is an imperative that is reshaping the dynamics of the sector. These are important changes driven both by increasing CSR regulations (for example, Business of Fashion revealed that, according to 87% of players, the new regulations will impact their company in 2024), and by consumers’ habits (increasingly sensitive to the topic and consequently more careful in purchasing choices). In this scenario, Lectra analyzed real-time data from Retviews – its artificial intelligence-based solution specialized in competitive intelligence and automatic benchmarking – and unveils how Retviews’ empowers brands to navigate the complexities of sustainable and optimized collection planning.

According to Retviews data, to face sustainability challenges and best orient in the current complex fashion landscape, it will be crucial for brands to keep 5 key indications in mind:

1. Planning sustainable collections
Faced with the new regulations, brands are called to rethink their strategies, without losing sight on performance. For this reason, brands are already moving to optimize and rationalize the creative processes of their collections with a view to sustainability. In particular, Retviews' real-time data analysis reveals a growing trend towards sustainability in the collections of leading brands, where there are important investments in sustainable fabrics for both upper and lower garments. In particular, in the "Top" section, shirts show the most significant growth year over year among the eco-responsible options.

2. Sustainable prices (in every sense)
In this context, the redefinition of prices requires a strategic balance between market dynamics and the consumer's willingness to pay for products redesigned in terms of CSR. Retviews data shows a significant increase in costs in sustainable top collections. However, has this shift affected stock levels?

3. Inventories: optimized management
Tracking stock levels is crucial to season management, as it helps identify best-selling items and trends, as well as identify which items would sell better at full price versus those that should be discounted.
The new premium prices for sustainable collections require optimization of the sales rate, a waste limitation to minimum and a reduction of unsold goods rate.
Analyzing the tops category - In the tops category, where sustainably made products prevail with significantly higher price points than generic tops, Retviews' real-time data reveals that sustainable collections boast a higher sell-out rate compared to non-sustainable products. This superior sell-out rate underscores consumers' willingness to pay a premium for sustainability

4. Traceability and certification of collections
Certification is essential in verifying sustainability claims, fosters trust and ensures compliance. Not only that, it is also important to understand the value of the certifications and which ones appear most frequently in the various markets so as to make targeted decisions and adapt the assortments accordingly. This also let brands to prioritize the right mix of fabrics that can reflect the desires of local consumers. Retviews data highlights a particular focus on “Recycled Claim Standard” (RCS) certification in Europe and on “Fair Trade” and “Good Cashmere Standard” certified garments in the United States.

5. Mix of sustainable fabrics
About environmental impact, fabrics also play a fundamental role. Through data-driven tools, brands are able to find valuable information on sustainable materials that are gaining tractions in collections and thus make informed and strategic decisions in the process of planning their creations.

ACI announces the launch of its conference, Bio-Based Textiles in Clothing: Europe 2025.

Following in the footsteps of the successful Biobased Coatings Europe series with latest edition bringing together over 160 senior level attendees in Valencia in June 2024, this inaugural conference will explore the latest advancements in sustainable clothing made from renewable resources.

Taking place on the 15th & 16th January 2025 in Helsinki, Finland, just after the EU's pivotal Textile EPR Directive comes into force, this event will provide a deep dive into the world of bio-based textiles, examining how plants, microbes, and other novel organic feedstock are being revolutionised into sustainable, stylish garments.