From the Sector

Spinnova has decided to evaluate its existing strategy to prioritise areas that in the short- to medium-term deliver the fastest time to positive cashflow generation and that create the most value for the company’s stakeholders.
 

The company expects to conclude the assessment of its strategy in the coming months, after which the results will be presented in more detail including key actions and any changes to medium- and long-term business targets. Financial guidance for full year 2023 is unchanged.

Spinnova’s unique sustainable technology is a key differentiator. To recognize the value of its technology offering, the company has decided to review opportunities to expand the licensing of its technology to new customers. In the future, Spinnova sees great potential in developing circular raw materials such as textile waste and agricultural waste, as well as recycled SPINNOVA® fibre. Initial tests show that refining these raw materials into micro fibrillated cellulose (MFC) may be more efficient than refining other raw materials Spinnova has worked with. The company has received significant interest from customers wanting to build plants that convert multiple circular raw materials into SPINNOVA® fibre.

Together with Suzano, Spinnova is gathering the learnings from the first Woodspin plant to support the decision making for the next Woodspin factory investment. At the same time Spinnova continues to further develop the technology concept to reduce capital expenditure per tonne of fibre produced compared to the first Woodspin plant. While Suzano develops its MFC process it is expected that the first Woodspin facility will mainly be used for R&D to test new MFC batches and that commercial production volumes will be limited in the short term. The market opportunity and ambition level with Suzano to scale Woodspin’s production capacity remains unchanged

Spinnova will continue to have the option to invest into all future Woodspin and Respin plants, as per the respective joint venture agreements. The company will evaluate whether it participates in these investments based on the value it creates for Spinnova’s shareholders compared to other opportunities to invest Spinnova’s capital. Regardless of whether Spinnova invests its own capital into future plants, Spinnova will continue to be the exclusive technology provider to Woodspin and Respin, and they will continue to be important technology customers of Spinnova.

adidas revealed the Official Match Balls for the 2023/24 UEFA Champions League and the UEFA Women’s Champions League.

Set on a metallic silver background, the men’s iteration of the Official Match Ball integrates a single letter from the instantly recognisable chorus lyric – ‘THE CHAMPIONS’ - onto each of the 12 stars, in an opulent calligraphy style. Visual representations of the musical tones of the song interject the stars, in striking royal purple, red and blue - colours specifically chosen to represent the footballing royalty competing for the coveted UEFA Champions League trophy.

The introduction of a bespoke anthem for the UEFA Women’s Champions League in the 2021/22 season, marked the start of a new dawn for the tournament. In honour of that moment, the new design incorporates the lyrics of the song in two of the ball’s eye-catching star panels – creating a unique circular text pattern in bright orange. The remaining ten stars feature a wavy purple and pink print, curated using the same words from the anthem, but significantly enlarged to create an abstract and attention-grabbing look.

The balls are optimised to cope with the demands of the modern game, incorporating a range of adidas performance technology – including a PRISMA surface texture which offers Europe’s finest players precision on the ball. The outer texture coating, found on all UEFA Champions League and UEFA Women’s Champions League Official Match Balls, offers secure grip and control on the ball while the thermally bonded seamless construction ensures the balls retain optimum shape to deliver ultimate performance on the pitch.

• Currency-neutral revenues flat versus the prior-year level
• Top-line development reflects improved sell-out trends and conservative sell-in strategy
• Gross margin up 0.6pp to 50.9%; strong improvement compared to Q1 reflecting better sell-through and less discounting
• Operating profit of € 176 million includes extraordinary expenses of around € 160 million related to one-off costs, donations and accruals for future donations
• Inventory position improves substantially versus Q1 level to € 5.5 billion; now up only 1% year-over-year

In the second quarter of 2023, currency-neutral revenues were flat versus the prior-year level. The top-line development continued to be impacted by the company’s conservative sell-in approach in order to reduce high inventory levels, particularly in North America and Greater China. At the same time, adidas second quarter revenues benefited from the first sale of some of its Yeezy inventory. The initial product drop in June generated revenues of around € 400 million in Q2, which is largely in line with the Yeezy sales generated in the prior year’s quarter.

Footwear revenues grew 1% during the quarter, reflecting strong growth in football, basketball, tennis and US sports. Apparel sales declined 3% in the second quarter. As the apparel market continues to be particularly overstocked, the company continued its conservative sell-in strategy to improve sell-through and margins in the medium term. Accessories grew 8% during the quarter driven by growth in football.  

Lifestyle revenues were down during the quarter despite extraordinary demand for the company’s Samba, Gazelle and Campus franchises. While adidas slowly started to scale its offering for these product families during the second quarter, the total volume still only represents a small portion of the company’s overall business. Sales in the adidas Performance categories continued to show positive momentum. This reflects strong demand for new product introductions such as the latest iterations of its Predator, X and Copa football boots, as well as jerseys for both the FIFA Women’s World Cup 2023 and the company’s unique portfolio of football teams ahead of the start of the European club season. In addition, the Adizero product family in running continued to gain a lot of attention around marathon races across the world, translating into higher demand. At the same time, the brand’s Barricade tennis franchise grew strongly, leveraging the excitement around major tournaments.

In euro terms, the company’s revenues declined 5% to € 5.343 billion in the second quarter (2022: € 5.596 billion).

Stronger sell-out trends and conservative sell-in
As a result of the company’s initiatives to reduce high inventory levels, currency-neutral sales in wholesale declined 10% despite double-digit growth in Greater China and Latin America. At the same time, direct-to-consumer (DTC) revenues grew 16% versus the prior year. This development was driven by strong growth in both the company’s e-commerce business (+14%) as well as own retail stores (+19%), reflecting continued strong sell-out trends across most regions. The outperformance of the company’s DTC channel versus the wholesale business was also related to the first sale of the Yeezy inventory, which was done exclusively through adidas’ own e-commerce channel.

Double-digit growth in Greater China and Latin America
Currency-neutral sales in North America declined 16% during the quarter. The region is particularly affected by elevated inventory levels in the market and – in response to this – the company’s significantly reduced sell-in. Revenues in Greater China grew 16% in Q2, reflecting double-digit sell-out growth in both wholesale and own retail. Sales in EMEA were down slightly (-1%) despite double-digit DTC growth. While the company’s initiatives to reduce inventory levels and discounting weighed on the overall top-line development in the region, adidas recorded significantly improving full-price trends during the quarter. Revenues in Asia-Pacific increased 7% during the quarter, driven by strong double-digit growth in DTC. Latin America continued to increase at a double-digit rate (+30%), reflecting strong growth in both wholesale and DTC.

Gross margin improves to 50.9%
The company’s second quarter gross margin increased 0.6 percentage points to 50.9% (2022: 50.3%). This improvement was mainly driven by price increases the company has implemented as well as by an improved channel mix. At the same time, higher supply chain costs and unfavorable currency movements continued to strongly weigh on the gross margin development. While still adversely impacting the company’s gross margin in the quarter, discounting levels significantly improved compared to the first quarter of the year.  

Operating profit of € 176 million, resulting in an operating margin of 3.3%
Other operating expenses were up 3% to € 2.582 billion (2022: € 2.501 billion). As a percentage of sales, other operating expenses increased 3.6 percentage points to 48.3% (2022: 44.7%). Marketing and point-of-sale expenses decreased 7% to € 617 million (2022: € 663 million). As a percentage of sales, marketing and point-of-sale expenses slightly decreased by 0.3 percentage points to 11.5% (2022: 11.8%). Operating overhead expenses were up 7% to € 1.965 billion (2022: € 1.838 billion), reflecting higher logistics expenses. In addition, the company recorded one-off costs of around € 50 million related to the strategic review the company is currently conducting as well as donations and accruals for further donations in an amount of around € 110 million. As a percentage of sales, operating overhead expenses increased 3.9 percentage points to 36.8% (2022: 32.8%). The company’s operating profit amounted to € 176 million (2022: € 392 million) in the quarter. This amount includes the extraordinary expenses of in total around € 160 million reflecting the one-off costs related to the strategic review as well as the donations and accruals for further donations. The sale of the Yeezy product positively impacted adidas’ operating profit by an incremental amount of around € 150 million in Q2. The operating margin reached 3.3% in the quarter (2022: 7.0%).

Net income from continuing operations of € 96 million
After taxes, the company’s net income from continuing operations amounted to € 96 million (2022: € 360 million), while basic EPS from continuing operations decreased to € 0.48 (2022: € 1.88).

Outlook

adidas expects revenues to decline at a mid-single-digit rate
On July 24, adidas had adjusted its full year financial guidance to reflect the positive impact of the first sale of some of its Yeezy inventory and a slightly better-than-expected development of the adidas business in the first half of the year. At the same time, macroeconomic challenges and geopolitical tensions persist. Elevated recession risks in North America and Europe as well as uncertainty around the recovery in Greater China continue to exist. In addition, the company’s revenue development will continue to be impacted by the initiatives to significantly reduce high inventory levels. As a result, adidas now expects currency-neutral revenues to decline at a mid-single-digit rate in 2023 (previously: decline at a high-single-digit rate).

Underlying operating profit anticipated to be around the break-even level
The company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is still anticipated to be around the break-even level. Including the positive impact from the first Yeezy drop of around € 150 million, the potential write-off of the remaining Yeezy inventory of now € 400 million (previously: € 500 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), the company now expects to report an operating loss of € 450 million in 2023 (previously: loss of € 700 million).

On August 2, the company launched a second drop of Yeezy inventory. Throughout the month of August, adidas is making a range of existing products available through both its own e-commerce channel as well as the digital platforms of selected wholesale partners. If successful, this second drop would further improve the company’s results. However, as the results of this drop are yet unknown, it is not accounted for in the company’s current top- and bottom-line outlook for 2023.

PrimaLoft, Inc., a leader in advanced material technology, is expanding its  Active Insulation Range by adding four new Active Evolve styles, reaffirming its commitment to providing cutting-edge solutions that meet the evolving needs of consumers.

Originally launched in 2018, PrimaLoft Active Evolve is a line of insulating fabrics that is designed to evolve performance, design, and sustainability. Combining the lightweight warmth of insulation with the breathability of fabric, this technology is developed to perform in a wide range of activities, regardless of intensity or season. From pushing yourself during a cross country ski tour, to working up a sweat hiking to the next peak, PrimaLoft Active Evolve keeps you in your comfort zone – even when you’re pushing yourself out of it.

Several products in the Active Evolve line can be used as a next-to-skin fabric. This enables brands to forego liner fabrics, which means heat and moisture are more efficiently managed, breathability is supported, and user comfort is maintained. In addition to achieving optimal performance during aerobic activity, this yields a wider utility and year-round use, all while allowing brands to use less overall material when designing a garment, reducing footprint and waste.

PrimaLoft Active Evolve offers several advantages to designers. It enables them to utilize the full spectrum of color, incorporate unique patterns, and provides greater flexibility in fabric selection. Additionally, Active Evolve eliminates the need for quilting in the design process. Products within the Active Evolve line are made from up to 100% post-consumer recycled content, including three of the four new styles.

With more than a dozen brand adoptions thus far, PrimaLoft Active Evolve’s adaptability for the user, range of use across activities, and seasonal timing, is quickly making this one of the most versatile products in the PrimaLoft portfolio. For Fall/Winter 2023-2024, key partner brands beside Sitka and Löffler will include CP Company, Eddie Bauer, Endura, Martini Sportswear, OMM, Quiksilver, Ziener and more.

Indorama Ventures, in partnership with Polymateria, has been honoured with the INDA Innovation Award for their collaboration in developing pioneering Biotransformation technology to create wipes, which totally biodegrade, leaving no harmful substance or microplastics behind.

The award was presented at the recent World of Wipes International Conference in Atlanta, USA, and recognizes the level of technical innovation and investment that led to developing wipes that both deliver against the sustainability challenges of today while meeting the demands of Indorama Ventures’ customers worldwide.

Through its 10-year partnership agreement with technology innovator Polymateria, Indorama Ventures is applying Polymateria’s unique biotransformation technology to fibers and spunmelt nonwovens. Biotransformation is the world's first biodegradation technology that is capable of delivering full biological consumption of Polyolefin products in the open terrestrial environment. Polyolefin-based materials produced by this technology are especially useful for applications where materials may be leaked into the environment as unmanaged waste.

“We are constantly innovating to live up to our responsibility to optimize the Earth’s resources, as we combine nature and science in our Biotransformation PP - designed to be recycled or returned to nature,” he said. “By bringing Biotransformation technology to Hygiene markets, we hope to offer a real-world solution to waste management. We particularly hope to address aspects of the creation of fugitive waste and remove this from the environment without causing additional, and potentially more dangerous, problems.”

OETI – a member of the internationally active TESTEX Group – has bought the German company ECS to expand its service portfolio in the field of personal protective equipment (PPE).

OETI has been offering testing services for textile work clothing since 1983 – for about 40 years. Since the introduction of CE labelling for personal protective equipment and the enactment of the PPE Directive by the European Union in 1993, OETI has not only been testing textile personal protective equipment, but now on also certifies it in conformity with EU standards. In 1995, OETI was certified in Brussels as a Notified Body (0534) for type-examinations and quality assurance monitoring of personal protective equipment end products. Testing and certification is carried out in accordance with the current PPE Regulation (EU) 2016/425.

Testing and Certification Body for Eye and Face Protection, based in Aalen, was founded 15 years ago and is a globally active institution for testing and certification of eye and face protection equipment. The company is one of the leading independent testing institutions for personal protection products in laser applications and for welding work.

ECS tests and evaluates occupational health and safety goggles with and without a filter action, passive and active switching protection filters and shields for welders, and laser protection filters, goggles, and shields. The company also tests the optical properties of sunglasses, sports glasses, ski goggles, swimming goggles and motorbike goggles.

With OETI’s takeover, the ECS location in Aalen is retained, and all employees will continue working at ECS. The new Managing Director of ECS GmbH as of 1 July 2023 is Dipl.-Ing. Rolf Diebolder.

‘We are present on the European market, on the American market and, via a representative office, on the Chinese market. With the aid of the new distribution channels through OETI and TESTEX, we want to steadily advance ECS’ expansion and be present on all five continents’, says Managing Director Rolf Diebolder, explaining his strategic plans for ECS. ‘I would like OETI and ECS to develop a joint strategy in order to be able to offer existing and new customers of both companies a complete package which, when combined, will give us a unique selling point in the marketplace’, says Diebolder.

Diebolder also sees further potential in the cooperation with regard to protective laser clothing. According to him, this is where the laser laboratory commissioned by ECS could be used to make textiles laser-safe. In the future, there will be more and more ‘hand-held’ devices, i.e. laser welding devices, for which gloves and protective jackets are needed.

Kornit Digital LTD., a leader in sustainable, on-demand digital fashionx and textile production technologies, announced the Company is taking the power of digital fashion to new heights with enhancements to the Kornit Presto MAX system for digital fabric decoration on demand.

Designed with the fashion and home décor industry in mind, the enhanced solution presents innovative capabilities for transforming virtual concepts into custom fabrics, supplementing digital efficiency and quality with white printing on colored fabrics. The new NeoPigmentTM Vivido ink achieves darker, deeper blacks and colors and establish new fashion standards with a pigment-based process. Kornit’s patented solution offers a streamlined and completely dry process for the a sustainable fabric decoration.

At ITMA 2023, Kornit will also be displaying an end-to-end partner ecosystem – underscoring how integrated solutions ensure a smooth transition towards a digital infrastructure and enable long-term business growth. Highlighting the power of partnership alongside Kornit is Greentex.co, a supplier of textiles and apparel leveraging digitally enabled, eco-friendly waterless printing. The company will be showing Presto MAX with fabrics highlighting the depth of black inks. Working alongside Kornit, Zünd will demonstrate how its modular cutting systems is the foundation for an end-to-end “eco factory,” completing fashion decorated by Presto MAX with their digital cutting solutions. Pentek Textile Machinery joins to display the possibilities for inline, sustainable softening of fabrics for unique and demanding applications.

Carbios will receive grants totaling €54 million from French State via France 2030 and Grand-Est Region to finance construction of world’s first PET biorecycling plant and accelerate R&D activities

Carbios announces that its project has been selected by the French State for funding of €30 million from the French State as part of the investment plan France 2030, and €12.5 million from the Grand-Est Region.  The implementation of this funding is conditional to the European Commission’s approval of the corresponding state aid scheme, followed by the conclusion of national aid agreements. As part of the national call for projects on “Plastics Recycling” operated by ADEME^[1], Carbios’ project to finalize the industrialization of its unique PET biorecycling process has been selected. The reference plant in Longlaville in the Grand-Est region will be the world’s first PET biorecycling plant and is due for commissioning in 2025. This plant will make it possible to relocate to France the production of the two basic components of PET, PTA and MEG^[2], both derived from the Carbios process.

Carbios also announces that it has been granted total funding of €11.4 million from the French State as part of France 2030, of which €8.2 million directly for Carbios (€5 million in repayable advances) and €3.2 million for its academic partners INRAE^[3], INSA^[4] and CNRS^[5] via the TWB^[6] and TBI^[7] joint service and research units. This funding will enable to continue its research into the optimization and continuous improvement of Carbios’ enzymatic technologies.

The plant will secure the sales of the first volumes of recycled PET produced with Carbios’ technology, and to offer its partners recycled PET of the same quality as virgin PET. Once the necessary permits have been obtained, which should be granted by the end of 2023, in line with the announced start of construction before the end of the year, the plant is scheduled to be commissioned in 2025. This will be followed by a period of ramp-up to full capacity. The plant will have a nominal processing capacity of 50,000 tonnes of PET waste per year, equivalent to 2 billion bottles or 2.5 billion food trays.

Selection for funding by the French State through France 2030 and the Grand-Est Region complements the recent announcement of an exclusive, long-term partnership with Novozymes^[8], a leader in enzyme production, one of the main aims is to ensure the supply of enzymes to Carbios’ Longlaville plant and future licensed plants. In addition, Carbios recently secured a first supply source for its future plant by winning part of the CITEO tender for the biorecycling of multilayer trays^[9].

^[1] The French Agency for Ecological Transition
^[2] PTA = purified terephthalic acid; MEG = monoethylene glycol
^[3] French National Research Institute for Agriculture, Food and the Environment
^[4] French National Institute of Applied Sciences
^[5] French National Center for Scientific Research
^[6] Toulouse White Biotechnology – UMS INRAE 1337 / UAR CNRS 3582
^[7] Toulouse Biotechnology Institute – UMR INSA/CNRS 5504 / UMR INSA/INRAE 792
^[8] Cf. press release dated 12 January 2023
^[9] Cf. press release published by Citeo dated 26 April 2023

Avgol®, a manufacturer of high-performance nonwoven fabric solutions, will use this month’s INDEXTM exhibition in Switzerland to showcase how it has a laser focus on delivering against sustainability objectives to safeguard the future.

Together with its sister companies from Indorama Ventures Limited (‘IVL’), Avgol will be presenting biotransformation capable fibers, spunbond, meltblown and SMS for diversified end-use markets at the event. Avgol will present and be available to discuss with visitors how this developing technology and the company’s other related products can help businesses achieve their 2030 sustainability goals.

Avgol will also highlight the latest solutions since recently announcing its collaboration with Algaeing™. Avgol uses patented algae bio-based formulations for colorants in its products, combining a unique environmental solution for modifying the aesthetic qualities of materials with Avgol’s ongoing commitment to sustainable polyolefin based spunbond and meltblown fabrics.

• TreeToTextile sustainable textile fibre demo plant in Sweden

TreeToTextile, owned by H&M Group, Inter IKEA Group, Stora Enso, and LSCS Invest, invested €35 million in constructing a textile fiber process technology demonstration plant in Sweden. AFRY supported TreeToTextile throughout the project in the development and implementation phases from 2016-2022. The demonstration plant is now in the start-up phase.

TreeToTextile is offering a new technology to produce bio-based textile fibers with a low environmental footprint and aims to make sustainable textile fibers available to all. The new fiber is a regenerated cellulosic fiber, produced from renewable and sustainably sourced raw materials from forests. TreeToTextile has invested €35 million in developing and constructing a new demonstration plant in Nymölla, Sweden. This investment is a crucial step prior to the scale-up and commercialization of this technology.

AFRY has been the leading consultant and engineering partner of TreeToTextile from its early stages of project development in 2016, continuing onto demo plant implementation engineering from 2020-2022 In the project development phase, AFRY’s assignment included several pre-feasibility and feasibility studies, process design, up-scaling evaluations, and supplier pilot runs planning. In the demo plant implementation phase, AFRY was responsible for the engineering, project management and site services, also providing many additional services like permit and procurement support as well as machine and IT solutions.

“AFRY and TreeToTextile have a long-lasting, mutually developing relationship that we hope to continue. Together with AFRY, we have overcome the challenges through close collaboration, flexibility, broad competence and most important of all, mutual commitment”, says Olli Ylä-Jarkko, CTO at TreeToTextile.

The commissioning of the demonstration plant started in the summer of 2022, and the project was handed over to TreeToTextile for start-up and further optimization of the process.

“I’m proud of the deep and long-lasting cooperation with TreeToTextile. This project shows AFRY’s ability and wide competence to meet various demands of customer investment projects – from early phase development to implementation. AFRY’s long experience with bio-based materials, combined with our extensive process industry and project execution experience, makes us a unique partner for industrial clients in accelerating their bio-based fibers to scalable commercial production”, says Lisa Vedin, Head of Process Industries Sweden at AFRY.