From the Sector

• Revenue rose to EUR 2.57 bn, while EBITDA declined to EUR 241.9 mn
• Implementation of EUR 70 mn cost reduction program proceeding according to plan
• Largest investment program in the company’s history including the lyocell plant in Thailand and the pulp mill in Brazil implemented on time and within budget
• Outlook: Lenzing expects EBITDA in 2023 to be in a range of EUR 320 mn to EUR 420 mn

The Lenzing Group was increasingly affected by extreme developments on the global energy and raw material markets in the 2022 financial year, in tandem with most of manufacturing industry in Europe. The market environment also deteriorated significantly in the third and fourth quarters, while worsening consumer sentiment placed an additional burden on Lenzing’s business growth.

In the year under review, revenue increased by 16.9 percent year-on-year to reach EUR 2.57 bn, primarily as a result of higher fiber prices. The quantity of fiber sold decreased, while the quantity of pulp sold rose. In addition to lower demand, the earnings trend particularly reflects the increase in energy and raw material costs. Earnings before interest, tax, depreciation and amortization (EBITDA) decreased by 33.3 percent year-on-year to EUR 241.9 mn in 2022. The net result for the year was minus EUR 37.2 mn (compared with EUR 127.7 mn in the 2021 financial year), while earnings per share stood at minus EUR 2.75 (compared with EUR 4.16 in the 2021 financial year).

Outlook
The war in Ukraine and the tighter monetary policy pursued by many central banks to combat inflation will continue to exert pressure on the global economy. The easing of China’s zero-Covid policy could lead to an unexpectedly rapid recovery. However, the IMF has warned that risks remain high overall and projects growth of 2.9 percent in 2023. Exchange rate volatility looks set to continue in regions that are important to Lenzing.

These challenging market conditions are also continuing to weigh on consumer confidence and sentiment in the sectors relevant to Lenzing. The outlook has improved slightly of late, with inventory levels returning to normal across the value chain. Nonetheless, subdued demand remains a source of concern for market players.

Inventories in the bellwether cotton market have diminished recently, although they remain above pre-pandemic levels. A decline in crops is foreseeable in the current 2022/2023 harvest season. The sharp rise in prices on the energy and raw material markets will continue to pose significant challenges for the market.

Overall, earnings visibility remains restricted.

In structural terms, Lenzing expects a continued rise in demand for environmentally friendly fibers in the textile and clothing industry, as well as in the hygiene and medical sectors. Thus, with its “Better Growth” strategy, Lenzing is very well positioned and will continue to drive growth in specialty products, while pursuing its sustainability targets including the transformation from a linear to a circular economy model.

In light of these factors and assuming a further market recovery in the current financial year, the Lenzing Group expects EBITDA in 2023 to be in a range of EUR 320 mn to EUR 420 mn.

• Acquisition of QAT Services Limited laboratory in Hong Kong

On 01.03.2023 Hohenstein takes over the DAkkS accredited QAT Services Limited laboratory.  With this acquisition, the internationally recognized testing service provider is integrating the hardgoods knowledge of QATS employees into the Hohenstein portfolio.  As a result, Hohenstein will provide full-service capabilities for Greater China and beyond.

"The expansion is a strategically important step for Hohenstein,” emphasizes Prof. Mecheels, owner and CEO of Hohenstein.  "We are expanding our testing spectrum beyond the textile industry, in which we have been an established service provider for decades – and thus ensure both safe products and secure jobs."  From now on, Hohenstein will also be testing food contact material, furniture, toys and much more.  Hohenstein China Managing Director Christopher Au is also convinced: "With this step, Hohenstein is setting an important focus and strengthening its position for international customers."

• Registered in majority as a class 1 medical device  

CELLIANT -  a performance textile that converts body heat into infrared energy - is designated as a Class 1 Medical Device in Australia, Canada, the EU and European Economic Area (EEA), Japan, New Zealand, the United Arab Emirates, the United Kingdom and the United States. CELLIANT is cleared to market in China, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Russia, Saudi Arabia, Singapore, South Africa, Taiwan, Thailand and Vietnam, with more countries and regions to follow.

In 2017, the FDA determined that products containing CELLIANT are medical devices as defined in section 201(h) of the Federal Food, Drug and Cosmetic Act and are general wellness products because they are intended to temporarily increase blood flow and local circulation at the site of the application in healthy individuals.
 
At Hologenix®, whose CELLIANT® infrared technology is an ingredient in world-class brands across many categories, science matters. The company has a distinguished Science Advisory Board composed of experts in the fields of photobiology, nanotechnology, sleep medicine, diabetes and wound care. The Science Advisory Board has overseen nine peer-reviewed published studies that collectively demonstrate CELLIANT’s effectiveness and the benefits of infrared energy. This claim set provides the basis for products containing CELLIANT to be designated as a Class 1 Medical Device in 38 countries and cleared to market in 15, with more countries and regions to follow. This elevated status in 53 countries translates to CELLIANT being an ideal partner for global companies who are seeking innovation in textiles to distinguish their products.   

“We have laid the groundwork for our partner brands to capitalize on the benefits of our infrared technology and to enhance their ability to do business,” said Seth Casden, Hologenix co-founder and CEO.  “We firmly believe that regulatory status matters and that is why we have grown the number of countries we have such relationships with by over a third in the last three years. It is definitely a competitive advantage of our company and CELLIANT.”

“Globally, the awareness of the benefits of infrared textiles, which absorb body heat and reflect it back as therapeutic infrared energy, has grown exponentially over the last 10 years,” continued Casden. “And in the United States infrared is gaining a strong foothold.”

For the first time in two years, global automotive production recorded a significant increase in full-year 2022 with 82.0 million vehicles produced (2021: 77.2 million vehicles) and growth of 6.2%, driven by the regions Asia and North America, but remained below 2019 levels.
Autoneum's revenue in local currencies increased significantly by 8.5%, largely due to inflation-related compensation. In the regions Europe and Asia, Autoneum's production volumes developed below market. Compared to the July 2022 estimate, revenue was around CHF 90 million lower than assumed due to volume factors. The strong fluctuations in production volumes due to vehicle manufacturer supply chain issues continued in 2022 and were exacerbated by the war in Ukraine in Europe and by COVID-related lockdowns in Autoneum's Asian main market China. Consolidated revenue in Swiss francs increased by 6.1% year-on-year to CHF 1 804.5 million (2021: CHF 1 700.4 million) due to the strong Swiss franc.

Revenue development in the regions
In local currencies, revenue of Business Group Europe increased by 2.7%, while production volumes of vehicle manufacturers decreased by 1.3%. The growth in revenue resulted from inflation compensation, while Autoneum's production volumes were significantly lower compared to the previous year. Business Group North America increased its revenue in local currencies by 11.0%. The number of vehicles produced increased by 9.7% year-on-year. Volume development at Autoneum’s North American plants clearly improved compared with 2021 due to the allocation of semiconductors to the vehicle models supplied by Autoneum. Revenue of Business Group Asia declined by 2.7% in local currencies, and thus was significantly below the market (+7.7%). Autoneum's production facilities in its main market China are located in regions that were hit particularly hard by the COVID-related lockdowns. Growth in China was also driven by Chinese vehicle manufacturers, with whom Autoneum generated only little revenue last year.
Business Group SAMEA (South America, Middle East and Africa) achieved hyperinflation-adjusted revenue growth in local currencies of 65.2% year-on-year. This increase was mainly due to inflation compensation and in terms of volume slightly outperformed the market, which grew by 7.5%.

Due to significantly lower production volumes in Autoneum's regions Europe and Asia of around CHF 90 million compared to the half-year estimate and further increases in energy costs in the second half of the year, Autoneum expects the full-year 2022 result to be at the lower end of the guidance published on June 15, 2022.

The full year-end financial statements and the Annual Report 2022 will be presented at the Media Conference on March 1, 2023.

Japan International Apparel Machinery & Textile Industry Trade Show (JIAM) has wrapped up four successful days of business at INTEX OSAKA. From 30 November – 3 December 2022, a total of 10,452 visitors found their way to the fairground. 150 exhibitors from 11 different countries and regions welcomed visitors with an extensive and diverse selection of products. Buyers from Bangladesh, India, Sri Lanka, South Korea, and Pakistan constituted the top five visiting countries (excluding Japan), compensating for a drop in visitors from China this year due to COVID-19 travel restrictions.

Under the theme of "It all connects at JIAM – the forefront of technology and master craftsmanship", the 2022 edition showcased apparel manufacturing solutions catered to each and every need, combining skillsets and knowledge with modern technology. At the opening ceremony, Mr Shinsuke Uchinashi, Chairman of the Japan Sewing Machinery Manufacturers Association (JASMA), commented, "In the new normal, there is growing demand for new technological advancements, productivity improvements, and greater quality control. In addition to solving these pain points, this edition’s exhibitors are also showcasing various innovations in response to automation, IoT, and networking."

A wide variety of special seminars held in Hall 4 were well received. Highlights included a skills training seminar hosted by an emeritus professor and panel discussions by leading companies in the manufacturing industry. SDGs, examples of IoT in industrial sewing machines, and upcycling initiatives were also on the agenda, with visitors gathered around the presented items taking notes.
 
The Home Sewing Zone led by three machine manufactures and JASMA held daily workshops where visitors could learn about upcycling using scraps, and take a break at the café with "cup sleeves" of their own making. Ms Kazuko Mizuochi of JASMA said, "We had a great attendance from the very first day. We were able to familiarize participants with sewing machines and also promote upcycling activities."

The next edition will take place from 27 – 30 November 2024 at INTEX OSAKA.

First insights, first new materials and trend highlights: On 29 and 30 November 2022, the European premium fabric sector will meet for an important exchange with international producers at VIEW in Munich to find out about the first colour and material trends for spring/summer 2024 at the earliest possible time. A selected range of around 300 pre-collections will be on show at the MVG Museum. This means that VIEW will once again be strong and business-relevant this season.

The past VIEW Premium Selection in June 2022 was a great success. Completely booked out and more international than ever, the Preview Textile Show of Munich Fabric Start Exhibitions GmbH was an important contact point for the buying and design teams of companies such as Akris, Baldessarini, Bogner, Calvin Klein, Cinque, Comma, Drykorn, Escada, Hugo Boss, Lala Berlin, Lagerfeld, Laurél, MAC, Marc Cain, Marc O'Polo, Riani, Schumacher or Strellson. The trend towards an increasingly international range continues in November. Numerous buyers, designers and product managers from European ready-to-wear manufacturers are expected in Munich the week after next, looking for new material innovations and trends at VIEW and the parallel ISPO.

International exhibitor portfolio with many new names
Material influences from Europe to Asia bring a highly exciting mix for the trend research of the new collections. Exhibitors from Bulgaria, China, Denmark, Germany, France, Great Britain, Greece, Hong Kong, Italy, Japan, Korea, Spain and Turkey are among the participants.

The newcomers and returnees include, in addition to others:
AGNSTR / ALA CAMPOLMI / BAIRD MC NUTT / BELL & THUNDER / CB STILE / COLORA / EKOTEN / FABRIC LAB / GUARISCO / JECA LIMITED / KING BUTTON / LANIFICIO CAVERNI / LIMONATA EAST / M.T.T. MANIFATTURA / MANTERO / MILIOR / MTP PIEROZZI / PADROCASAS / PIZVAL / RIBBONTEX / SITIP / TEKSTINA SINCE 1828 / TEXMODA / VIVOLO und WAY.

• Last twelve months (LTM) Core EBITDA of US$2.5B, an increase of 60% YoY
• Core EBITDA per ton of US$163 in LTM3Q22 and US$159 in 3Q22
• Operating cash flow of US$1,952 in LTM3Q22, an increase of 59% YoY
• 3Q22 Core Net Profit of THB 10.34B and Reported Net Profit of THB 8.14B

Indorama Ventures Public Company Limited (IVL) reported a resilient year-to-date performance and increasing earnings in a challenging macroeconomic environment.

IVL posted Core EBITDA of US$606 million in 3Q22, a 39% increase YoY and a decline of 20% QoQ as the strong tailwinds that drove record earnings into 2022 began to normalize in the third quarter.  

Strategic acquisitions, including Oxiteno, are bolstering IVL’s increasingly diverse geographic footprint and product portfolio, supporting earnings through volatile economic conditions. Revenue declined 10% QoQ in 3Q and grew 27% YoY as Combined PET, the largest business segment, saw steady volumes through the year, and new portfolio additions performed strongly, such as surfactants in the Integrated Oxides and Derivatives segment. With more than 70% of IVL’s platform catering to consumer daily necessities, demand remains stable.

Fibers segment posted YTD Core EBITDA of $189 million, a rise of 2% YoY. 3Q Core EBITDA increased 2% YoY, and decreased of 11% QoQ, to US$49 million. The Lifestyle fibers business continues to be impacted by the lockdown in China, while management in the Hygiene and Mobility verticals in Europe are effectively managing high energy costs.

Combined PET (CPET) segment achieved YTD Core EBITDA of US$1,192 million, an increase of 42% YoY. Core EBITDA in 3Q22 rose 27% YoY to US$327 million, and declined 24% QoQ, as business remained steady across operations apart from in Europe where peak energy prices continue to put pressure on demand and margins.

D K Agarwal, CEO of Indorama Ventures, said, “We are pleased with our performance across the business cycle. Our management is working hard to extract the advantages that we enjoy in terms of geographic leadership, product diversity, and an unmatched customer base of global household brands. Together with our habitual lens on cost management, these actions will help us to weather the economic challenges and continue to focus on our long-term potential.”

During an awards ceremony on Monday, October 17, the Society for Human Resource Management (SHRM) Foundation awarded Barry-Wehmiller CEO Bob Chapman its preeminent recognition in people leadership, the Tharseō CEO of the Year Award.

SHRM is the world's largest HR professional society, representing more than 300,000 HR professionals across the globe, impacting 115 million workers and their families. The Tharseō (thar-seh'-ō)—derived from the Greek word for "courageous, confident and bold"—awards are given to those who demonstrate innovative and impactful business practices leading to better workplaces and a better world by serving as visionaries, innovators and change agents.

Chapman has been the CEO of Barry-Wehmiller since 1975. Since then, he has applied a blend of strategy and culture to create a thriving global organization. Chapman’s work is chronicled in his 2015 Wall Street Journal bestseller Everybody Matters: The Extraordinary Power of Caring for Your People Like Family, co-authored by Raj Sisodia, founder of Conscious Capitalism. In 2016, Harvard Business School released a case study about Barry-Wehmiller’s approach to business that is now taught at 80 business schools. A non-profit, Chapman Foundation for Caring Communities, and a leadership consulting firm, Chapman & Co. Leadership Institute, bear Chapman’s name and share some of the foundational learnings that helped transform the culture of once-traditional Barry-Wehmiller into a caring, dignity-honoring, fulfilling place to work.

In recent years, Chapman has focused on creating caring leaders of tomorrow by sponsoring programs in K-12 schools and universities. In 2021, Chapman and his team partnered with Fordham University and other Jesuit business schools to launch the Humanistic Leadership Academy which helps professors and students become more human-centered.

A sought-after global speaker, Chapman recently addressed the United Nations PRME conference on transforming education, the China Organizational Evolution Forum, Brazil’s Virtuous Leadership Conference, Vizient CEO Network, and the Healthcare Burnout Symposium, to name a few.

Highlights Grow & Deliver (compared with Q3 2021)

• Revenue up 19% and 14% higher in constant currencies1, pricing up 13%
• ROS2 at 6.4% (2021: 10.0%), resulting from lower volumes and higher raw material and freight costs, as well as inflation on operating expenses
• Adjusted EBITDA at €283 million (2021: €325 million)
• Q4 2022 adjusted operating income expected below €150 million

Highlights Q3 2022 (compared with Q3 2021)

• Pricing up 13%, offsetting the increase of raw material and other variable costs. Volumes 5% lower, mainly due to destocking in the distribution channels in Decorative Paints in Europe and in Performance Coatings, as well as lower market demand in China
• Operating income at €168 million (2021: €226 million), includes €16 million negative impact from Identified items (2021: €15 million net negative impact) and €17 million negative from the retrospective hyperinflation impact of the first half-year of 2022. OPI margin 5.9% (2021: 9.4%)
• Adjusted operating income3 at €184 million (2021: €241 million); excluding the retrospective impact of hyperinflation accounting at €201 million
• Net cash from operating activities decreased to an inflow of €126 million (2021: inflow of €290 million)
• Net income attributable to shareholders at €84 million (2021: €164 million)
• EPS from total operations at €0.48 (2021: €0.89); adjusted EPS from continuing operations at €0.57 (2021: €0.93)
• Interim dividend of €0.44 per share (2021: €0.44 per share)

AkzoNobel CEO, Thierry Vanlancker, commented: “Our €201 million adjusted operating income excluding the retrospective impact of hyperinflation accounting bring our Q3 results in line with the market update issued at the end of September. Sharply increased macro-economic uncertainties negatively impacted consumer confidence. This resulted in destocking across several distribution channels in decorative paints Europe and performance coatings, while the market in China was impacted by the ongoing zero COVID-19 policy. Thanks to the strong commitment of our teams, we continue to offset the impact of raw material and freight cost inflation with pricing. We’ve now delivered cumulative pricing of 22% over the last two years. The macro-economic turbulence is expected to continue well into next year. We’ve therefore decided to suspend our targets for 2023 and will provide further guidance when announcing our full-year 2022 results. In the meantime, we will continue to focus on our margin management and cost reduction initiatives.”

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.