From the Sector

Carbios published its operating and financial results for the first half of 2022. The financial statements as of June 30, 2022 were approved by Carbios' Board of Directors.

• Project to build the world's first PET biorecycling plant, in partnership with Indorama Ventures, the world's largest manufacturer of recycled PET: Establishment in France with strong backing from national government and the Grand-Est Region
• On track to bring recycled PET from Carbios' proprietary innovation process to market by 2025
• Fully operational industrial demonstration plant and step-by-step technological validation of the scale-up of the industrial solution designed and developed by Carbios
• Launch of a textile consortium in partnership with On, Patagonia, PUMA and Salomon
• Scientific article in the prestigious Biophysical Journal
• Carbios strengthens its Governance and Management team
• Carbios enhance its financial structure, banking the €30 million loan from the European Investment Bank (EIB)
• Carbios Group's net cash position: €121 million at June 30, 2022

See the full report here.

Within the scope of the United Nations Economic Commission for Europe (UNECE) initiative “The Sustainability Pledge”, to improve transparency and traceability for sustainable garment and footwear supply chains, the Swiss company Haelixa traces Egyptian cotton from the source up to premium shirts.

The UNECE and United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) has been developing over the period 2019-2022 policy recommendations, implementation guidelines, a call to action, and a traceability toolbox including blockchain and DNA tracing solutions, which has been implemented in few different textile supply chains. Haelixa is part of the group of experts that develops such policy recommendations and conducts projects with key industry players to set traceability benchmarks and later develop them into standards.

Fashion brands are often responsible for complex global value chains and traceability is the needed tool to enable trust, transparency and credible sustainability. The magnitude of the supply chain traceability challenge can be overwhelming for brands, but the UNECE initiative framework facilitates the alignment with suppliers, provides the necessary guidance and the needed tools, with Haelixa as physical traceability provider.

To make the premium shirts traceable, Haelixa has developed a DNA marker to label the raw material, premium Egyptian cotton. The DNA marker has been applied as fine spray to GIZA 96 lint cotton in Borg Al Arab, Egypt and used to produce the finest fabric by Swiss manufacturer Weba. Once applied to the fibers, Haelixa’s DNA markers stay safely embedded into the material and withstand the industrial processing, ensuring traceability from the source until the finished garment. Samples of lint cotton, yarn, and fabric at different steps were verified with a test based on PCR, and the correct DNA marker was detected, thereby enabling the identification of the premium product, of its origin and the specific supply chain. The forensic data obtained were recorded on a blockchain system provided by UNECE. The marked fabric was used to make Hugo Boss cotton dress shirts. As one of the leading premium fashion brands and partner to the UNECE project, Hugo Boss is responsible for a complex global value chain and strives for high sustainability standards and is looking at traceability options.

“In cases like this one, where the material is of the highest quality and the product is shipped from one facility to another for premium processing, adding physical traceability is critical to ensure that the origin, quality and processing claims can be backed up" says Gediminas Mikutis, CTO and co-founder at Haelixa.

Maria Teresa Pisani, Economic Affairs Officer and Project Lead at UNECE, emphasized: “Traceability and transparency are crucial elements to protect environmental, social, and human rights along global value chains. At UNECE, we aim to enhance traceability approaches by exploring new and innovative solutions that help identify and address negative impacts in the fashion industry.”

A huge logistics hub which is set to become AkzoNobel’s largest warehousing base in China is on course to be completed by the middle of 2023.

Located at the company’s decorative paints site in Songjiang, Shanghai, the new €10.3 million facility – a nerve center for production, storage and transport – will use intelligent digital technologies and advanced security management to customize storage and operation modes for different product categories.

“Eastern China is a strategically important region for us and the new facility will ensure that we’re well placed to meet the steady growth in demand which is expected over the next ten years,” says Mark Kwok, AkzoNobel’s President of China/North Asia and Business Director for Decorative Paints China/North Asia.

Equipped with a heat-insulating and light-permeable roof – along with nearly 5,000 solar panels that will generate 1.6 million kWh of electricity – the new facility will collect clean energy and use it for warehouse and office lighting, as well as charging forklifts.

The use of clean energy, logistics optimization and the automation of warehouse operations will make an important contribution to the company’s ambition of cutting carbon emissions by 50% and moving to 100% renewable electricity by 2030.

Earlier this year, AkzoNobel also announced that it was investing in a new production line for water-based texture paints in Songjiang. The new 2,500 square meter plant will boost capacity for producing Dulux products for various markets.

The new warehousing facility is scheduled for completion in May 2023.

• Integrated Sustainability Report 2021 – 2022 published

DyStar, a leading specialty chemical company released its twelfth annual Sustainability Performance Report. The report is prepared in accordance with the updated GRI Standards 2021: Core option. DyStar continues to adopt the Integrated Reporting <IR> framework to communicate how the group has successfully created tangible value across multiple stakeholder groups in six major capitals.

DyStar reports that they have inched themselves closer to some of their 2025 target of reducing the environmental footprint by 30% for every ton of product, from 2011 levels. Here are some key highlights for FY2021:

• Recorded more than 29% increase in revenue compared to 2020
• Zero workplace fatalities, high-consequence injuries, and work-related ill health
• 40% reduction in Greenhouse gas (GHG) emission intensity, compared to 2011
• 37% decrease in wastewater emission intensity, compared to 2011

The Group was able to remain resilient and steer itself toward optimistic growth and recovery from the global pandemic in FY2021. In face of recent geopolitical events and macroeconomic factors such as soaring energy costs, DyStar and the wider supply chain will continue to face challenges. As a result, the company believes it is crucial to stay committed to their 2025 Sustainability goals to continue generating value for all stakeholders in the longer term, well beyond these turbulent times.

The report communicates DyStar’s progress towards its sustainability agenda and material topics. As part of our commitment to environmental sustainability, only an e-magazine and a PDF version will be made available for download from www.DyStar.com/sustainability-reports/

Monforts will highlight its technologies for special technical textile applications at this year’s ITMA ASIA + CITME which takes place at the National Exhibition and Convention Center in Shanghai, China, from November 20-24.

One of Monforts' developments is the Montex 8500 XXL stenter system for the production of technical fabrics in widths of up to 6.8 metres. Among the products made on this system are treated nonwovens for the geotextiles and filter media markets, tarpaulins, advertising banners, black-out curtains, membranes and many more.

On Montex©Coat coating lines, meanwhile, the possibilities range from the single-sided application of finishing agents for outdoor clothing and adding functionality to home textiles, to the creation of materials for sophisticated lightweight construction and automotive and aerospace components.

“Many more applications are possible, such as the overdyeing of denim, the creation of double-face coated materials, fabrics awnings, tents and medical drapes and the pre-treatment of substrates for digital printing”, explains Gunnar Meyer, Monforts area sales manager for China. “A range of different doctor blades and their combinations can be supplied to meet individual requirements, including air knife, roller knife, foam, screen and magnetic roller coating. The latter option is recommended for lines with working widths of over 2.4 metres.”

In addition, Monforts can provide the necessary explosion-proof ranges for solvent-based coatings and high temperature processes up to 320°C, such as the PTFE coating of nonwoven filter material. These lines are equipped with special burners, stenter chains, and insulation.

Freudenberg Performance Materials Apparel (Freudenberg) is pleased to announce the establishment of the Apparel Technical Solution Center – Asia at its Nantong factory in China to expand the company’s innovation capabilities. With floor space of 900 m2, the new center offers technical expertise and innovations to apparel customers from nearly all apparel segments in Asia and around the world.

New capabilities with the Apparel Technical Solution Center – Asia
Committed to bringing enhanced technical support and services tailored to customers’ needs, the dedicated Apparel Technical Solution Center – Asia (ATSC) is equipped with cutting-edge technology. This includes a wide variety of fusing and bonding machines, laser and ultrasonic cutters, specialized sewing machines for sportswear applications, fiber filling machines for insulation applications, and washing and dry-cleaning machines that meet GB and AATCC standards.

The ATSC offers technical know-how to help customers design complex apparel solutions. In particular, it furthers Freudenberg’s dedication to joint innovations with sportswear customers and to finding technical solutions for performance applications.

Further innovation at the Nantong factory
The factory was moved to the Nantong Economic and Technological Development Area to meet increased production demand with state-of-the-art technological capabilities. Covering an area of nearly 50,000 m² with cotton interlining, bi-elastic fusible interlining, and preformed materials production lines, the new site went into operation in 2021.

Dedicated to continuously improving production quality, the new factory also includes an innovative online defect detection system. This system enables defect information to be captured in real time and sent to operators for immediate adjustments, increasing the rate of bi-elastic interlinings and shirt interlinings. Furthermore, the online weft density automatic adjustment system helps improve the stability of the drying process and the quality of semi-finished products.

• Innovations in Recycling and Sustainability: Sustainable Diaper Components, Natural Fibers, and Kitty Litter from Recycled Nappies

INDA, the Association of the Nonwoven Fabrics Industry, announced the three finalists that will present their innovative material science solutions as they compete for the prestigious RISE® Innovation Award during the 12th edition of the Research, Innovation & Science for Engineered Fabrics Conference (RISE®) to be held in person September 27-28, 2022 at North Carolina State University.  The award recognizes novel innovations within and on the periphery of the nonwovens industry that creatively use next-level science and engineering principles to solve material challenges and expand the usage of nonwovens and engineered fabrics.

Finalists for the 2022 RISE® Innovation Award:
Cat Litter Made from Recycled Nappies – DiaperRecycle
DiaperRecycle has developed technology to recycle used diapers into cat litter. The aim of the company is to make an environmental impact and decrease the climate changing emissions of diaper waste. They’re diverting used diapers (used in households and businesses such as elder care) from landfill, separating the plastic and fiber and making cat litter. The plastic is prepared for recycling by plastics recyclers. The cat litter product is made by DiaperRecycle from the super absorbent fiber of diapers; it’s highly absorbent and flushable.

Biodegradable Diaper Components – Gottlieb Binder GmbH & Co. KG
Together, Avgol and Binder take on the challenge of disposable absorbent articles for the good of future generations and came up with sustainable diaper components. The technologies used are based on biotransformation technology, which makes it possible to achieve more sustainable products by supporting recycling and providing an alternative route for non-recyclable/fugitive waste management.

sero® hemp fibers – Bast Fibre Technologies, Inc.
Bast Fibre Technologies’ sero® hemp fibers offer the nonwoven industry an all-natural substitute for plastic fibers. From dedicated European- and US-based production facilities, BFT transforms raw bast fibers into premium natural fibers for applications ranging from single-use and durable wipes to industrial applications. Suitable for minority or majority blends, sero® hemp combines easily with standard nonwoven fibers to produce fabrics that meet the industry requirements for strength, uniformity, and processing efficiency.

RISE® conference attendees, technology scouts and product developers in the nonwoven/engineered fabrics industry seeking new developments to advance their businesses, will electronically vote for the recipient of the 2022 RISE® Innovation Award. The winner will be announced Wed., Sept. 28^th.

Technical experts on INDA’s Technical Advisory Board selected three finalists from among 12 nominations.  The 22-member board of technical professionals is represented by companies such as Absorbent Hygiene Insights LLC, Attindas Hygiene Partners, Berry Global, Cotton Incorporated, Crown Abbey, LLC, The DAK Group, Fi-Tech, Inc. Freudenberg Performance Materials, Glatfelter Sontara Old Hickory, Inc., Lenzing Fibers, Inc., Natureworks LLC, Nice-Pak Products, Inc./PDI, Nonwovens by Design, Norafin (Americas) Inc., The Nonwovens Institute at North Carolina State University, Poccia Consulting, LLC, The Procter & Gamble Company, RKW North America, Inc., Rockline Industries, Smith, Johnson & Associates, Suominen Corporation, and Texas Tech University.

“The RISE Conference recognizes and promotes innovation across the nonwoven and engineered material industry. Technology leaders will share invaluable information on innovative new approaches and concepts to resolve material science challenges. For any technical leader, technology scout or new product innovator, RISE is an event not to be missed,” said Tony Fragnito, INDA’s President.

The conference program will cover relevant and timely topics including: Creating a Circular Industry, Advancements in Sustainable Inputs in PLA, Developments in Natural Fibers I and II, Sustainable Inputs in Fibers and Biofibers, Sustainable Inputs from Waste Products, and Economic Insights and Market Intelligence.

The second annual Ryan Young Climate+ Awards will take place this November 2022 at the annual Textile Exchange conference. Nominations are open until August 31, 2022.

The late Ryan Young, Textile Exchange COO from 2017-2020, is the inspiration behind Textile Exchange’s Climate+ Strategy, which is for the organization to serve as “a driving force for urgent climate action,” with a goal of 45% reduced CO2 emissions from textile fiber and material production by 2030. Ryan’s bold and courageous spirit defined what Textile Exchange and its members must do to tackle the climate crisis.

In honor of Ryan and his vision, TE will again be awarding Ryan Young Climate+ Awards to outstanding individuals and teams who show a clear commitment to the Climate+ vision along with other leadership traits.

Winners will be announced at the 2022 Textile Exchange Conference which will take place virtually and in person in Colorado Springs, U.S. from November 14-18, 2022.

The 2022 award categories and criteriaare listed below:
Nominees may be brands, retailers, farmers and/or ranchers, and raw material suppliers.
Winners will receive one free full-access pass to attend the Conference (travel not included).

Three Ryan Young Climate+ Award Categories:

1. Overall leadership – individual
2. Overall leadership – team
3. Rising star – individual with less than 5 years of industry experience

Award recipients will meet the following criteria:

• Commitment to Climate+ – involved in accelerating Climate+ action in the apparel, textile, and footwear industry.
• Collaboration – reflective of Ryan’s vision and determination to collaboratively move the industry forward.
• Impact – driving innovative, scalable, transparent programs with measurable impact reduction and/or beneficial impacts on climate, water, soil health, and/or biodiversity at the raw materials level. Achievements/solutions are backed by trusted data and/or reporting.
• Leadership and Inspiration – clearly demonstrating leadership and vision for industry climate solutions over the past year and beyond

IFFAC (Impact Fund for African Creatives) has revealed plans which will revolutionise West African textile and garment production at one stroke. The fund is converting a partially disused textile mill in the region into a hi-tech centre for processing local cotton and recycling waste fabric, to produce both fabric for further processing and new clothes. The mill will be equipped with modern equipment, all sustainably powered by hydroelectricity from the nearby Volta Dam.

West Africa grows about 6% of the world’s cotton but only a tiny fraction of that crop is processed on the continent, the vast majority being shipped thousands of miles to Asia before being shipped back again as finished or part-finished fabrics. The mill project will end the continent’s reliance on such an unsustainable practice with all the obvious financial and environmental benefits.

As well as producing fabric from sustainably grown virgin cotton, a joint venture with Shandong-based WOL Textiles Ltd., a privately owned plant that has long supplied the African market, the mill will be home to a state-of-the-art shredding and recycling facility, a joint venture between IFFAC and the Dutch Circularity B.V. CEO Han Hamers of Circularity B.V. in The Netherlands, has been involved in the production of 100% circular knit and woven articles.

The mill project is expected to create over a thousand jobs. The surrounding area already boasts a significant number of experienced textile workers ready to be retrained on the new equipment. While the majority of the products created will be sold within the region, all processes will confirm to new EU Supply Chain Law to allow for the possibility of export.  

Output is forecast at six million pieces of finished clothing and twenty-five million metres of spun and woven cloth per year. In total, thirty million US$ of investment will be made in the site with operations ready to begin next year (2023).

• Currency-neutral sales up 4%, despite more than € 300 million negative impact from macroeconomic constraints
• Markets representing more than 85% of the business grow 14% overall
• Gross margin down 1.5pp to 50.3% reflecting significantly higher supply chain costs
• Operating profit reaches € 392 million
• Net income from continuing operations amounts to € 360 million
• FY 2022 outlook reflects double-digit growth during the second half of the year

“Our Western markets continued to show strong momentum in the second quarter amid heightened macroeconomic uncertainty. With Asia-Pacific returning to growth, markets combined representing more than 85% of our business grew at a double-digit rate,” said adidas CEO Kasper Rorsted. “With sports back at center stage this summer, revenues in our strategic growth categories Football, Running and Outdoor all increased by double digits. However, the macroeconomic environment, particularly in China, remains challenging. The recovery in this market is – due to continued covid-19-related restrictions – slower than expected. And we have to take into account a potential slowdown in consumer spending in all other markets for the remainder of the year.”

Currency-neutral revenues increase 4% despite macroeconomic constraints
In the second quarter, currency-neutral revenues increased 4% as adidas continued to see strong momentum in Western markets. This growth was achieved despite continued challenges on both supply and demand. Supply chain constraints as a result of last year’s lockdowns in Vietnam reduced top-line growth by around € 200 million in Q2 2022. In addition, the company’s decision to suspend its operations in Russia reduced revenues by more than € 100 million during the quarter. Continued covid-19-related lockdowns in Greater China also weighed on the top-line development in Q2. From a channel perspective, the top-line increase was to a similar extent driven by the company’s own direct-to-consumer (DTC) activities as well as increases in wholesale. Within DTC, e-commerce, which now represents more than 20% of the company’s total business, showed double-digit growth reflecting strong product sell-through. From a category perspective, revenue development was strongest in the company’s strategic growth categories Football, Running and Outdoor, which all grew at strong double-digit rates. In euro terms, revenues grew 10% to € 5.596 billion in the second quarter (2021: € 5.077 billion).

Strong demand in Western markets
Revenue growth in the second quarter was driven by Western markets despite last year’s lockdowns in Vietnam still reducing sales, particularly in EMEA and North America, by
€ 200 million in total. In addition, the top-line development in EMEA was also impacted by the loss of revenue in Russia/CIS of more than € 100 million. Nevertheless, currency-neutral sales grew 7% in the region. Revenues in North America increased 21% during the quarter driven by growth of more than 20% in both DTC and wholesale. Revenues in Latin America increased 37%, while Asia-Pacific returned to growth. Currency-neutral revenues increased 3% in this market despite still being impacted by limited tourism activity in the region. In contrast, the company continued to face a challenging market environment in Greater China, mainly related to the continued broad-based covid-19-related restrictions. As a result, currency-neutral revenues in the market declined 35% during the three-months period, in line with previous expectations. Excluding Greater China, currency-neutral revenues in the company’s other markets combined grew 14% in Q2.

Operating profit of € 392 million reflects operating margin of 7.0%
The company’s gross margin declined 1.5 percentage points to 50.3% (2021: 51.8%). Significantly higher supply chain costs and a less favorable market mix due to the significant sales decline in Greater China weighed on the gross margin development. This could only be partly offset by a higher share of full price sales, first price increases and the benefits from currency fluctuations. Other operating expenses were up 19% to € 2.501 billion (2021: € 2.107 billion). As a percentage of sales, other operating expenses increased 3.2 percentage points to 44.7% (2021: 41.5%). Marketing and point-of-sale expenses grew 8% to € 663 million (2021: € 616 million). The company continued to prioritize investments into the launch of new products such as adidas’ new Sportswear collection, the next iteration of its successful Supernova running franchise and first drops related to the Gucci collaboration as well as campaigns around major events like ‘Run for the Oceans.’ As a percentage of sales, marketing and point-of-sale expenses were down 0.3 percentage points to 11.8% (2021: 12.1%). Operating overhead expenses increased by 23% to a level of € 1.838 billion (2021:
€ 1.492 billion). This increase was driven by adidas’ continuous investments into DTC, its digital capabilities and the company’s logistics infrastructure as well as by unfavorable currency fluctuations. As a percentage of sales, operating overhead expenses increased 3.5 percentage points to 32.8% (2021: 29.4%). The company’s operating profit reached a level of € 392 million (2021: € 543 million), resulting in an operating margin of 7.0% (2021: 10.7%).

Net income from continuing operations reaches € 360 million
The company’s net income from continuing operations slightly declined to € 360 million (2021: € 387 million). This result was supported by a one-time tax benefit of more than € 100 million due to the reversal of a prior year provision. Consequently, basic EPS from continuing operations reached € 1.88 (2021: € 1.93) during the quarter.

Currency-neutral revenues on prior year level in the first half of 2022
In the first half of 2022, currency-neutral revenues were flat versus the prior year period. In euro terms, revenues grew 5% to € 10.897 billion in the first six months of 2022 (2021:
€ 10.345 billion). The company’s gross margin declined 1.7 percentage points to 50.1% (2021: 51.8%) during the first half of the year. While price increases as well as positive exchange rate effects benefited the gross margin, these developments were more than offset by the less favorable market mix and significantly higher supply chain costs. Other operating expenses increased to € 4.759 billion (2021: € 4.154 billion) in the first half of the year and were up 3.5 percentage points to 43.7% (2021: 40.2%) as a percentage of sales. adidas generated an operating profit of € 828 million (2021: € 1.248 billion) during the first six months of the year, resulting in an operating margin of 7.6% (2021: 12.1%). Net income from continuing operations reached € 671 million, reflecting a decline of € 219 million compared to the prior year level (2021: € 890 million). Accordingly, basic earnings per share from continuing operations declined to € 3.47 (2021: € 4.52).

Average operating working capital as a percentage of sales slightly decreases
Inventories increased 35% to € 5.483 billion (2021: € 4.054 billion) at June 30, 2022 in anticipation of strong revenue growth during the second half of the year. Longer lead times as well as the challenging market environment in Greater China also contributed to the increase. On a currency-neutral basis, inventories were up 28%. Operating working capital increased 23% to € 5.191 billion (2021: € 4.213 billion). On a currency-neutral basis, operating working capital was up 14%. Average operating working capital as a percentage of sales decreased 0.4 percentage points to 21.0% (2021: 21.4%), reflecting an overproportional increase in accounts payable due to higher sourcing volumes and product costs.

Adjusted net borrowings at € 5.301 billion
Adjusted net borrowings amounted to € 5.301 billion at June 30, 2022, representing a year-over-year increase of € 2.155 billion (June 30, 2021: € 3.146 billion). This development was mainly due to the significant decrease in cash and cash equivalents.

FY 2022 outlook reflects double-digit growth during the second half of the year
On July 26, adidas adjusted its guidance for FY 2022 due to the slower-than-expected recovery in Greater China since the start of the third quarter resulting from continued widespread covid-19-related restrictions. adidas now expects currency-neutral revenues for the total company to grow at a mid- to high-single-digit rate in 2022 (previously: at the lower end of the 11% to 13% range), reflecting a double-digit decline in Greater China (previously: significant decline). While so far the company did not experience a meaningful slowdown in the sell-through of its products or significant cancellations of wholesale orders in any market other than Greater China, the adjusted guidance also accounts for a potential slowdown of consumer spending in those markets during the second half of the year as a result of the more challenging macroeconomic conditions. Therefore, growth in EMEA is now expected to be in the low teens (previously: mid-teens growth), while revenues in Asia-Pacific are projected to grow at a high-single-digit rate (previously: mid-teens growth). Despite the more conservative view on the development of consumer spending in the second half of the year, adidas has increased its forecasts for North America and Latin America reflecting the strong momentum the brand is enjoying in these markets. In North America, currency-neutral revenues are now expected to increase in the high teens. Sales in Latin America are projected to grow between 30% and 40% (both previously: mid- to high-teens growth).   

Due to the less favorable market mix and the impacts from initiatives to clear excess inventories in Greater China until the end of the year, gross margin is now expected to reach a level of around 49.0% (previously: around 50.7%) in 2022. Consequently, the company’s operating margin is now forecast to be around 7.0% (previously: around 9.4%) and net income from continuing operations is expected to reach a level of around € 1.3 billion (previously: at the lower end of the € 1.8 billion to € 1.9 billion range).