From the Sector

Twenty years have in fact passed since the Group published its first Social Report in 2004, qualifying it as one of the pioneering companies in the realisation of voluntary non-financial reporting. The document measures the Group’s achievements and the actions it has taken to reduce its environmental impact, respect social values, and implement good business management practices.

Over the years, the Report has steadily evolved and is now a true sustainability report that considers all ESG (Environment, Social and Governance) aspects, showing how they are also central to the company's business strategy. Over time, many new topics have been covered, the accuracy of the data has improved and the scope has expanded to include all Group companies: over 30 sites across Asia, the Americas and Europe.

The information contained in the Sustainability Report shows RadiciGroup's strong commitment, starting with the investments made:

• between 2019 and 2023, €278 million were allocated to support the competitiveness of the Group's companies, of which €45 million in 2023 alone;
• the amount invested in the environment in 2023 and earmarked for the introduction of Best Available Techniques and performance efficiency reached €4.2 million.

Twenty years of reporting have also allowed RadiciGroup to measure the results of the investments it has made, to such an extent that in 2023 it already achieved the first goal of its "From Earth to Earth" Roadmap to 2030, i.e., a Group-wide reduction of 83% in direct CO2 equivalent emissions compared to 2011.

A significant contribution to this result came from the commissioning of an EnviNOx plant at the Radici Chimica plant in Germany, which, thanks to this technological innovation, greatly reduced its direct greenhouse gas emissions (- 92%).

The focus on responsible use of natural resources continues: In 2023, the share of electricity from renewable sources used for production processes was consolidated at 59%. The percentage of water resources saved through the practice of water recycling was also raised to 79%: some of our plants in fact reuse the same water up to 60 times and then return it to the environment. The theme of circular economy remains a cross-cutting one in many of the innovation projects, often also in a collaborative perspective with the rest of the supply chain. In particular, all Radicigroup companies work to contain the generation of scrap and waste through rigorous process management: 73% of all non-hazardous waste was recovered in 2023 and 56% of this was destined for internal recovery.

Even in the product area, measurement is fundamental, which is why RadiciGroup has long used Life Cycle Assessment studies to objectively calculate the environmental impact of its products and introduce environmental footprint mitigation solutions. This commitment is also evidenced by the numerous environmental certifications obtained by RadiciGroup plants.

With a view to promoting collaboration with customers, suppliers, scientific partners or independent experts in order to develop innovative and sustainable technologies or materials, RadiciGroup has strongly promoted open innovation projects: opportunities to stimulate a Group culture increasingly open to change and contamination with different fields of knowledge.

Regarding its employees, the Group has placed significant emphasis on training, particularly in fostering ESG awareness. In fact, in 2023, it organised its first large-scale training program focused on sustainability and circularity, engaging around 240 employees and delivering a total of 1,500 training hours. In addition, an internal human rights survey was launched, the results of which will form the basis for the formulation of a company policy on human rights and diversity.

In September, Ontex reached a binding agreement to sell its Brazilian business activities to Softys SA for an enterprise value of approximately €110 million, enabling improved focus on retail brands and healthcare in Europe and North America. Net proceeds of approximately €82 million are due at closing, which is expected during the first half of 2025, subject to customary conditions.

In October, the social negotiations regarding the transformation of the operating footprint in Belgium were successfully concluded. This transformation fits in Ontex’s footprint optimization, allowing to further strengthen Ontex’s competitive position. The total one-time cost is estimated at €(66) million, of which €(37) million was already recorded in the second quarter.

Q3 2024 results

• Revenue was €468 million, up 1.7% like for like. Volumes, including mix effects, were up 4.4%, driven by contract gains and supportive demand in adult care, and by growth in baby care with new retail customers in North America. Sales prices were 2.6% lower, as expected, reflecting raw material index decreases and investments in increased competitiveness. Forex fluctuations were supportive, adding 0.7%, bringing total growth at 2.4%.
• Adjusted EBITDA was €56 million, up 29% year on year, thanks to volume and mix growth and the cost transformation program delivery, contributing €8 million and €14 million respectively. The operational efficiency improved further by 3.7%, driving stronger profitability and competitiveness. Index-driven lower raw material costs more than compensated for lower sales prices, leading to a €4 million positive net impact. The increase of other operating and SG&A costs had a €(12) million effect, mostly due to continued inflation. Forex fluctuations had an adverse effect of €(2) million. The adjusted EBITDA margin thereby rose to 12.0%, up 2.4pp year on year.
• Operating profit was €8 million, compared to €29 million in 2023. The decrease relates to the transformation of the Belgian operating footprint and reflects the additional one-time provisions taken following the recent successful conclusion of the social plan negotiations.
• Discontinued operations generated a €14 million operating profit, compared to €12 million in 2023. While revenue was 3.0% lower like for like and the adjusted EBITDA margin dropped to 7.6%, reflecting more challenging market conditions, this was compensated by a net gain on disposal, that was triggered by the agreement to divest the Brazilian business.
• Net financial debt for the Total Group dropped €9 million to €579 million over the quarter. Combined with the adjusted EBITDA improvement, the leverage ratio thereby fell from 2.5x at the end of June to 2.4x at the end of September.

2024 outlook

Ontex’s management confirms its guidance for adjusted EBITDA margin, free cash flow and leverage for the full year. While new customers are on-boarded in North America, the ramp-up is phased more gradually over the third quarter and the coming months, leading management to review its revenue growth guidance, now expecting:

• Revenue [1] to grow between 2% and 3% like for like;
• Adjusted EBITDA margin [1] of 12%;
• Free cash flow higher than €20 million;
• Leverage ratio below 2.5x at year end.

adidas announced preliminary results for the third quarter of 2024. In Q3, currency-neutral revenues increased 10% versus the prior year. In euro terms, the company’s revenues grew 7% to € 6.438 billion (2023: € 5.999 billion). Excluding Yeezy sales in both years, currency-neutral revenues increased 14% during the quarter.

The company’s gross margin increased 2.0 percentage points to 51.3% in Q3 (2023: 49.3%). The year-over-year increase of the underlying adidas gross margin was even stronger. The company’s third quarter operating profit increased to € 598 million (2023: € 409 million), including a contribution of around € 50 million from the sale of parts of the remaining Yeezy inventory.

The company has increased its full-year guidance to reflect the better-than-expected performance during the quarter and the current brand momentum. adidas now expects currency-neutral revenues to increase at a rate of around 10% in 2024 (previously: increase at a high-single-digit rate). The company’s operating profit is now expected to reach a level of around € 1.2 billion (previously: to reach a level of around € 1.0 billion).

Within 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 € 50 million and no further profit contribution in the fourth quarter.

Monforts recently celebrated its 140th anniversary at a special event for staff and their families at its headquarters in Mönchengladbach, Germany. Building on a rich history since its foundation by August Monforts in 1884, the company remains 100% dedicated to the development of technologies that will ensure the future success of its textile industry customers.

Under the motto, ‘140 Years of Performance, Innovation and Partners’, Monforts is looking forward to further celebrating this milestone with its representatives and customers at the forthcoming ITMA Asia + CITME exhibition in Shanghai from October 14-18, in Hall 5 at stand C09.

The first Monforts machines were mechanical napping units for raising the surfaces of cotton fabrics, providing softness and warmth and adding value. By 1893, Monforts 24-roller napping machines were drawing appreciative crowds at the World Fair in Chicago – establishing international trade networks was paramount to the company from the outset.

In 1897, August Monforts established an iron foundry equipped with hydraulic casting machines, by which time the company employed 1,200 people. This was followed by the introduction of semi-automatic manufacturing tools – an area in which Monforts achieved a number of firsts, such as the single-spindle lathe which became a big export hit in the late 1930s due to its unique and unmatched precision.

Overseen by successive four generations of the Monforts family, the company’s range of textile machines has been significantly expanded based on decades of accumulated know-how and a dominant position in fabric finishing technologies has been established.

Since 2013, Monforts has been a member of the CHTC Fong’s Group, today one of the world’s largest textile machinery manufacturers.

Since its opening in 2013, the Monforts Advanced Technology Centre (ATC) in Mönchengladbach has proved a valuable resource to customers for achieving new standards in fabric finishing.

Over an area of 1,200 square metres, it houses two full finishing lines, engineered to accommodate an extremely diverse range of processes, in addition to a Thermex range for the continuous dyeing of denim and other woven fabrics, a full colour kitchen and a number of lab-scale systems for smaller batch trials.

“The ATC allows our customers to test their own textiles and technical fabrics on Monforts dyeing and finishing machines under fully confidential, real production conditions,” says Monforts Technologist Saskia Kuhlen. “Using the results from these trials, we are also able to make recommendations for improving many fabric finishes.”

A collaboration that unites Monforts’ dyeing and finishing equipment, BW Converting’s Baldwin TexCoat G4™ digital spray technology and Archroma’s chemistries towards sustainable solutions is charting the course for the future of sustainable textile finishing.

Together, the three companies will support dyeing and finishing manufacturers, a critical part of the textile supply chain, in their development projects, boosting the quality and performance of their finished products, while at the same time maximizing the productivity and resource utilization of the finishing application process.  

Kicking off the partnership in the second half of this year, Monforts will install BW Converting’s full-width Baldwin TexCoat digital spray unit on a stenter frame at its Advanced Technology Center (ATC) at its headquarters in Mönchengladbach, Germany.

“Our ATC already houses two full Montex stenter finishing lines engineered to accommodate an extremely diverse range of processes, in addition to a Thermex range for the continuous dyeing of denim and other woven fabrics, a full color kitchen and a number of lab-scale systems for smaller batch trials,” explained Monforts Junior Technologist Saskia Kuhlen. “It enables our customers to test their own textiles and technical fabrics under fully confidential, real production conditions and using the results from these trials we are also able to make recommendations for improving many fabric finishes. The new TexCoat installation will make an important contribution to what we can achieve.”
 
TexCoat G4 revolutionizes the traditional water- and energy-intensive pad-dry-cure finishing process by precisely applying chemistry including softeners, antimicrobials, durable water repellents, flame retardants, resins and most other water-based chemicals across the textile surface only where it is required, on one or both sides of the fabric. The system can therefore reduce water, chemistry and energy consumption by up to 50% compared to traditional pad application processes.

The TexCoat G4 installation brings together the surface functions, fabric transport and thermal processing technology of Monforts stenter frames with Archroma’s specialty chemicals, applied with TexCoat’s contactless precision, to achieve optimum absorption and maximum efficacy, exceeding the performance of traditional pad applications.

“Archroma’s commitment to advancing sustainability solutions for technical textiles has led to a pivotal partnership with Baldwin, where the benefits of contactless precision spray combined with our innovative solutions have helped textile manufacturers achieve greater energy and water savings,” said Michael Schuhmann, Global Marketing Segment Manager for Technical Textiles, Archroma Textile Effects. “We are thrilled to take the partnership to the next level with the integration of a renowned equipment expert. Together, we will bring the best of our expertise in sustainable technologies to our customers around the world.”

“Baldwin has enjoyed a great relationship with Monforts and Archroma over the last few years,” added Rick Stanford, Baldwin’s Vice-President of Business Development for Textiles “Individually, we are working hard to assist our customers to achieve their sustainability and environmental targets but this is the first time the three companies have committed to working together with a focus on bringing transformative change to the dyeing and finishing space. It will result in significantly lower energy, chemical and water consumption with increased productivity and higher quality.  We strongly believe that this partnership will be greater than the sum of its parts.”

Beyond textile finishing, Monforts, Baldwin and Archroma will work together to develop a versatile offering that will include coloration concepts and in the not-too-distant future the partners additionally plan to expand their collaboration to continuous spray dye applications developed by Baldwin.

Ontex Group NV, an international developer and producer of personal care products, announces the commercial launch of its newest baby pants, featuring its Dreamshield® 360º innovation. The Dreamshield® 360° technology - designed with a pee & poo back barrier and a 360 fit for all-around protection and comfort – is available in-stores in Germany. The launch will soon expand to other markets as production ramps up across Ontex plants.

Dreamshield® 360º pants have demonstrated great performance in multiple consumer panels versus competitor products. Consumers have expressed their preference for Dreamshield® 360º, particularly related to absorption capacity, absence of leaks, dryness and fit. In a recent French study, 65% of consumers considered absorption capacity in baby products to be extremely important, while 55% emphasized the need to keep skin dry, and 62% rated comfort as a crucial factor.

The new range of baby pants features triple leakage barriers and continues to use Ontex’s patented SeconDRY® technology, ensuring anti-leak fit and dryness.

Ontex saw strong growth in its baby pants sales last year and this trend continues in 2024. The rollout of the baby pant technology has started in Europe with room for expansion to other regions. The production follows the demand of retailers across Europe, who saw the results of Dreamshield® 360º in the German consumer panel¹ and see how their consumers shift to baby pants over traditional diapers, both in Europe and North America.

¹ Lab and panel test by independent Hytec lab in Germany, Q4 2023

Fashion for Good and its footwear partners adidas, Inditex, ON Running, PVH Corp., Reformation, Target, and Zalando announce a new initiative aimed at accelerating and validating the next generation of footwear innovations. This builds on the organisation’s existing work leveraging their expertise in scouting, validation, innovation and collaboration. This initiative will address the key intervention points needed to drive footwear circularity spanning four work streams across the supply chain from materials to end of use. Industry wide collaboration will be vital to overcome the various roadblocks we face in this space. Therefore, Fashion for Good is launching a call for action, asking all relevant innovators to apply and collaborators to join in the movement.

Around 23.9Bn shoes are produced globally each year, they are often made using over 40 different components from a range of different materials including TPU, EVA, PU and rubber. The industry faces significant challenges due to this high complexity of shoe construction. This combined with a low collection rate, results in a vast majority of discarded footwear ending up in landfills. Fashion for Good sees the need to address this challenge and focus on laying the foundation for footwear circularity as well as accelerating innovation.

Therefore, Fashion for Good will double down their work in this space, building on their existing projects including the Fast Feet Grinded pilot, which tests and validates Fast Feet Grinded's footwear recycling process. Expanding on existing workstreams Fashion for Good will collaborate with our footwear focused partners, including adidas, Inditex, ON Running, PVH Corp., Reformation, Target, and Zalando

To effectively address the challenges in footwear sustainability, Fashion for Good has identified the key intervention points across the shoe lifecycle and structured work into four core workstreams:

1. Materials - Scouting and validating sustainable alternatives for footwear materials including TPU, PU, EVA, leather, and rubber
2. Design - Defining circular design in the footwear space and collectively driving guidelines to build a circular infrastructure
3. End of Use: Sorting, Disassembly, & Recycling - Developing a comprehensive data set on post-consumer footwear waste flows, including (non-)rewearable fractions, volumes, construction and composition. As well as scouting and validating solutions for repair,  end of use, disassembly and recycling of footwear
4. Traceability - Laying the foundation by amalgamating a footwear traceability data protocol to build traceability for evidence to substantiate sustainability claims

CALL FOR INNOVATIONS
Fashion for Good is on the lookout for breakthrough sustainable solutions in the footwear sector that maintain performance and durability. If you have a relevant technology, whether you're an innovator, university, or established company, can apply by 20th September 2024 here.

Highlights

• Net sales in Q2 2024 stabilized sequentially reaching €1,194 million.
• Net Sales were down -6.7% organically versus Q2 2023, with a positive impact from volumes for the second consecutive quarter, while prices were down year over year.
• Underlying EBITDA in Q2 2024 increased sequentially by 2.6% reaching €272 million while the EBITDA margin improved sequentially for the second quarter in a row reaching 22.8%.
• Underlying EBITDA in Q2 was -17.2% lower organically compared to a record Q2 2023, with negative Net pricing partially offset by positive volume impact and further fixed costs improvements.
• Structural cost savings initiatives delivered solid results, with €46 million in H1 2024, and are expected to reach €80 million for the full year.
• Underlying net profit from continuing operations was €116 million in Q2 2024 vs. €211 million in Q2 2023.
• Free Cash Flow1 was strong at €120 million in Q2 2024, from solid EBITDA performance combined with continued prudence on Capex and discipline on working capital.
• ROCE was 17.6% in Q2 2024.
• Underlying Net Debt at €1.6 billion, implying a leverage ratio of 1.5x.

2024 outlook
Solvay expects demand to remain broadly flat in the second half. Following the good performance in the first half and the accelerated delivery of cost savings, Solvay tightens its guidance of underlying EBITDA to -10% to -15% organic growth (previously -10% to -20%), which means circa €975 million to €1,040 million, at a 1.10 EUR/USD exchange rate. This is supported by €80 million expected cost savings for the full year.
Solvay upgrades its guidance of Free Cash Flow, which is now expected to be higher than €300 million. That includes an acceleration of the Capex in the second half, which is expected to be between €300 million and €350 million in 2024.

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.

Highlights Q2 2024 (compared with Q2 2023)

• Organic sales up 2%, with volumes up 1%; Revenue up 2%
• Operating income €270 million (2023: €279 million)
• Adjusted EBITDA €400 million (2023: €397 million); Adjusted EBITDA margin 14.4% (2023: 14.5%)
• Net cash from operating activities positive €151 million (2023: positive €305 million)

Highlights half-year 2024 (compared with half-year 2023)

• Organic sales up 2%, driven by higher volumes and positive price/mix; revenue flat
• Operating income €531 million (2023: €461 million)
• Adjusted EBITDA €763 million (2023: €702 million); Adjusted EBITDA margin 14.1% (2023: 13.0%)
• Net cash from operating activities negative €19 million (2023: positive €255 million)

Outlook
Based on current market conditions and constant currencies, AkzoNobel expects to deliver 2024 adjusted EBITDA towards the lower end of its full-year guidance range of €1.5 to €1.65 billion.