From the Sector

• Sales up 1.9% year-on-year to €560.5 million with stable adjusted EBITDA of €88.0 million
• Strong business performance of the Graphite Solutions, Process Technology and Composite Solutions businesses
• Sales and earnings decline at Carbon Fibers due to weakness of wind market
• Impairment at Carbon Fibers of €44.7 million

Despite the increasingly difficult economic environment, SGL Carbon was able to increase sales in H1 2023 from €549.8 million in the previous year to €560.5 million. Adjusted EBITDA (EBITDApre) remained almost unchanged at €88.0 million (H1 2022: €87.9 million). The expected good business performance of the Graphite Solutions business unit and the better-than-expected sales and earnings development of Process Technology and Composite Solutions compensated the drop in demand in Carbon Fibers.

In particular, the Graphite Solutions (GS) business unit contributed to the stable development of the Company with a 15.3% increase in sales to €280.6 million (H1 2022: €243.4 million) and a 20.6% improvement in adjusted EBITDA to €65.1 million (H1 2022: €54.0 million). GS benefited especially from the high demand of the semiconductor industry. The semiconductor and LED market segment now accounts for around 45% of GS revenue (H1 2022: around 35%).

With a 30.9% increase in sales to €64.4 million (H1 2022: €49.2 million) and a significant rise in adjusted EBITDA from €4.1 million to €11.9 million, the business performance of Process Technology (PT) was significantly above the original planning. Composite Solutions (CS) also reported a higher-than-forecast sales increase of 14.4% to €79.6 million in H1 2023 (H1 2022: €69.6 million) and an improvement in adjusted EBITDA of 26.8% to €12.3 million (H1 2022: €9.7 million). By contrast, the business performance of the Carbon Fibers (CF) unit was not in line with expectations, with a 28.9% decline in sales to €125.1 million (H1 2022: €176.0 million) and a 78.4% drop in earnings to €6.1 million (H1 2022: €28.2 million).

An important market segment for the Carbon Fibers business unit is the wind industry. Demand for carbon fibers for the wind industry has declined sharply since the beginning of the year. According to current estimates, the expected recovery in demand in H2 2023 will not materialize. SGL Carbon expects customer demand from the wind industry to pick up in 2024.

As already announced in the ad hoc release of July 24, 2023, an impairment loss of €44.7 million was recognized on the assets of Carbon Fibers as of June 30, 2023.

Results situation
SGL Carbon's adjusted EBITDA (EBITDApre) remained almost stable in a half-year comparison at €88.0 million (H1 2022: €87.9 million). Due to the lack of demand from wind industry, CF's production capacity utilization decreased and idle capacity costs weighed on adjusted EBITDA. By contrast, higher margins from product mix and volume effects in the other three business units had a positive impact on adjusted EBITDA.

Non-recurring items and one-off effects not included in adjusted EBITDA totaled minus €46.9 million in the first half of 2023, of which €44.7 million resulted from an impairment loss in the CF business unit.

In addition to the above-mentioned effects and nearly unchanged depreciation and amortization of €29.1 million (H1 2022: €28.9 million), the decline in EBIT resulted in particular from the impairment loss already described (€44.7 million). After €69.6 million in H1 2022, EBIT amounted to €12.0 million in the reporting period.

Taking into account the slightly improved financial result of minus €15.8 million (H1 2022: minus €16.6 million), consolidated net income for the first six months of the current financial year amounted to minus €10.0 million, compared to €48.8 million in the first half of the previous year.

Net financial debt and equity
To complete its refinancing, SGL Carbon issued convertible bonds with a volume of €118.7 million in June 2023 and drew an existing term loan facility of €75 million in July 2023, which was used together with cash of the Company on July 28, 2023 to repay the corporate bond (outstanding as of June 30, 2023: €237.4 million). Accordingly, cash and cash equivalents increased to €310.5 million as of June 30, 2023 (€227.3 million as of December 31, 2022) and financial debt temporarily increased to €480.4 million (€398.1 million as of December 31, 2022). Net financial debt remained nearly unchanged at €169.9 million as of June 30, 2023 (Dec. 31, 2022: € 170.8 million).

Despite the impairment loss of €44.7 million in Carbon Fibers, shareholders' equity amounted to €565.2 million as of June 30, 2023, only slightly lower than at the end of 2022 (Dec. 31, 2022: €569.3 million). This corresponds to an equity ratio of 36.1% (Dec. 31, 2022: 38.5%).

• Revenue of EUR 1.25 bn and EBITDA of EUR 136.5 mn in the first half of 2023
• EBITDA and net result for the period significantly improved compared with the first quarter of 2023
• Cost-cutting program and measures to strengthen sales activities being implemented as planned
• Liquidity position strengthened by successful capital increase and extension of credit terms
• Production of TENCEL™ brand modal fibers successfully launched in China

The business performance of the Lenzing Group, a leading global supplier of specialty fibers for the textile and nonwoven industries, largely reflected the subdued market trends in the first half of 2023. After the market environment deteriorated significantly in the second half of 2022, signs of recovery were evident during the first and second quarters of 2023 in terms of both raw material and energy costs as well as demand. Textile fibers recorded improving demand, and business with nonwoven fibers and with dissolving wood pulp proved to be very stable.

Outlook
The war in Ukraine and the more restrictive monetary policy pursued by many central banks in order to combat inflation are expected to continue to influence global economic activity. The IMF warns that risks remain elevated overall and forecasts growth of 3 percent for both 2023 and 2024. The currency environment is expected to remain volatile in the regions of relevance to Lenzing.

This market environment continues to weigh on the consumer climate and on sentiment in the industries relevant to Lenzing. Recently, however, the outlook brightened somewhat according to a global survey by the ITMF.*

In the trend-setting market for cotton, signs are emerging of a further buildup of stocks in the current 2022/23 crop season. Initial forecasts also see a further buildup of stocks in 2023/24, albeit to a lesser extent.

However, despite signs of recovery in both demand and raw material and energy costs, earnings visibility remains limited overall.

Lenzing is fully on track with the implementation of its reorganization and cost-cutting program. These and further measures are aimed at positioning Lenzing in the best possible way for the expected market recovery.

In structural terms, Lenzing continues to anticipate growth in demand for environmentally responsible fibers for the textile and clothing industry as well as the hygiene and medical sectors. As a consequence, Lenzing is very well positioned with its “Better Growth” strategy and plans to continue driving growth with specialty fibers as well as its sustainability goals, including the transformation from a linear to a circular economy model.

The successful implementation of the key projects in Thailand and Brazil as well as the investment projects in China and Indonesia will further strengthen Lenzing’s positioning in this respect.

Taking into consideration the aforementioned factors and assuming a further market recovery in the current financial year, the Lenzing Group continues to expect EBITDA in a range between EUR 320 mn and EUR 420 mn for 2023.

*Source: ITMF, 21st Global Textile Industry Survey, July 2023

Highlights Q2 2023 (compared with Q2 2022)

• Revenue 4% down on unfavorable exchange rates, 3% up in constant currencies1
• Pricing up 5%, volumes 1% lower
• Operating income up 36% at €279 million (2022: €205 million)
• Adjusted operating income2 up 25% at €311 million; ROS3 11.3% (2022: €249 million and 8.7%)
• Net cash from operating activities positive €305 million (2022: negative €52 million)

2023 Outlook
AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on organic volume growth. The company will focus on margin management, cost reduction, working capital normalization and de-leveraging.
Cost reduction programs are expected to partly mitigate higher than expected inflationary pressure on operating expenses for 2023. AkzoNobel expects declining raw material costs to have a favorable impact on profitability.
Based on current market conditions, AkzoNobel targets to deliver €1.40 to €1.55 billion adjusted EBITDA.
The company aims to lower its leverage ratio to less than 3.4 times net debt/EBITDA, including the impact of the Kansai Paint Africa acquisition, by the end of 2023 and return to around 2 times post-2023.

According to preliminary figures for H1 2023, SGL Carbon's Group sales increased year-on-year from €549.8 million to €560.5 million, with EBITDApre¹ almost unchanged at €88.0 million (H1 2022: €87.9 million). The expected good business performance of the Business Unit Graphite Solutions and the better-than-expected sales and earnings development of the segments Process Technology and Composite Solutions compensated the drop in demand in the Business Unit Carbon Fibers.

Graphite Solutions (GS) increased sales by 15.3% year-on-year to €280.6 million and EBITDApre by 20.6% to €65.1 million. With a 30.9% rise in sales (€64.4 million) and a significant improvement in EBITDApre from €4.1 million to €11.9 million, the business performance of Process Technology (PT) was significantly ahead of the original budget. Composite Solutions (CS) also reported a higher-than-expected sales increase of 14.4% to €79.6 million in H1 2023 and an increase in EBITDApre of 26.8% to €12.3 million compared to H1 last year. By contrast, the business performance of the Carbon Fibers (CF) unit was not in line with expectations, with a 28.9% decline in sales to €125.1 million and an EBITDApre contribution of €6.1 million (-78.4% compared to the 1st half of the previous year).

An important market segment of the Carbon Fibers Business Unit is the wind industry. Demand for carbon fibers for the wind industry has declined sharply since the beginning of the year. According to current estimates, the expected recovery in demand in H2 2023 will not materialize for the time being. SGL Carbon expects customer demand from the wind industry to pick up in 2024.

Based on this, an impairment loss of between €40-50 million will be recognized on the assets of the Carbon Fibers Business Unit as of June 30, 2023. The impairment relates exclusively to Carbon Fibers, the operating business of the other Business Units is not affected.

SGL Carbon's equity ratio after the impairment as of June 30, 2023 is approximately 36% (December 31, 2022: 38.5%).

Further information on the first six months of fiscal year 2023 can be obtained from the half-year report, which will be published on August 3, 2023.

¹The definition of key figures used in this release is aligned to the Annual Report 2022.

‘Best of Bangladesh’ -- the first ever sole ‘Made in Bangladesh’ show in Europe -- aims to open the doors for Europe to experience what the Bangladeshi industries has to offer.

As Bangladesh celebrates five decades of strong ties with Europe, in order to further strengthen the ties and deepen collaborations with the partners across Europe, Bangladesh Apparel Exchange, supported by the Bangladesh Embassy in the Netherlands, is organizing the event in Amsterdam, Netherlands on September 4th and 5th, 2023.

The ‘Best of Bangladesh’ aims to serve as a dynamic platform to showcase the progress and potential across diverse sectors of Bangladesh economy, especially manufacturing.

A total of 40 Bangladeshi companies each of which is the country’s best from apparel, textile, leather, Agro, jute, handicrafts, pharmaceutical, light engineering, digital industry, FMCG and bicycle will showcase their sustainable and innovative products in the Best of Bangladesh.  

Bangladesh economy ranks as the world’s 37th largest now and it’s rapidly-expanding. The ‘Best of Bangladesh’ is being organized to accelerate interests and burgeoning engagements between the entrepreneurs and private sector entities on both European and Bangladeshi sides. The event has been structured to serve as a platform to showcase the multifaceted progress made and potential across diverse sectors of Bangladesh’s economy.

There will be an inaugural and 7 interactive panel sessions at the Best of Bangladesh on the topics ‘Bangladesh – Perspectives From An Emerging Economy’, ‘Bangladesh - Your Sustainable Sourcing Destination’, ‘Empowering the Future: Advancing Safety & Well-being for Garments Workforce in Bangladesh’, ‘Bangladesh Agro-Food: A Next Opportunity for Collaboration’, ‘Impact Investing - The Next Frontier’, ‘Sustainable Synergy: Circular Economy, Climate Action & Bangladesh’s Future’, and ‘Digitization and Digital Economy in Bangladesh’.

In the first half of 2023, Rieter recorded a significant increase in sales of 22.2% to CHF 758.2 million, despite some cancellations or postponements of deliveries as a result of the earthquake in Türkiye. Cyclical market downturns in the individual market segments, which were already apparent in the second half of 2022, led to an order intake of CHF 325.0 million (-62.6%) in the reporting period, lower than in the corresponding period of the previous year.

Order intake in almost all regions was characterized by the reluctance to invest in new machines. Only in China did order intake increase due to investments by spinning mills in improving their local competitiveness. In addition, some customers held back pending investment decisions and waited for the innovations presented at ITMA in Milan in June 2023. At the same time, demand for consumables, wear & tear and spare parts declined due to the global market downturn.

On June 30, 2023, the company had a high order backlog of around CHF 1 100 million (June 30, 2022: around CHF 2 100 million). This therefore extends into the year 2024. As in the previous year, cancellations in the reporting period were around 5% of the order backlog, also impacted by the effects of the severe earthquake in Türkiye.

In the first half of 2023, Rieter posted a profit of CHF 25.2 million at the EBIT level, with an EBIT margin of 3.3% (first half of 2022: loss of CHF -10.2 million) and a net profit of CHF 13.3 million (first half of 2022: loss of CHF -25.2 million).

“Next Level” performance program planned
The challenging market situation over the past two years was marked by severe disruptions in the global supply chain in conjunction with rising material, energy, labor, and production costs. The current global demand for textile products remains at a low level. To increase long-term value for customers, employees, and shareholders, Rieter, as technology leader, is planning a performance program called “Next Level”. The goal of the program is to strengthen sales excellence, sharpen customer focus, improve cost efficiency in production and optimize fixed cost structures. The one-time cost of the program is anticipated to be around CHF 45 to 50 million, which will have an impact on the second half of 2023. Most of the program initiatives will be implemented before the end of 2023 with a view to achieving an expected impact from as early as 2024. With these measures Rieter is aiming to reduce operating costs by some CHF 80 million per year.

The program includes provisions for the net reduction of around 300 positions throughout the Group in relation to overhead functions. The possibility of further market- and volume-related adjustments in the order of 400 to 600 positions cannot be excluded. At the end of June 2023, Rieter had a global workforce of 5 555 employees.

Outlook
Given the economic situation and the ongoing cyclical market weakness, Rieter continues to expect below-average demand for new equipment in the coming months. A revival is not expected until the fourth quarter of 2023 at the earliest. Rieter also believes that demand for consumables, wear & tear and spare parts will not recover until later in 2023.

For the full year 2023, Rieter expects an EBIT margin of around 5 to 7% (including positive special effects of less than 2%) and sales at the previous year’s level of around CHF 1.5 billion.

The Premium Group, an European event and trade fair organiser for fashion and lifestyle, is entering a new chapter: founder Anita Tillmann is handing over to her business partner Jörg Arntz and the experienced management team. After almost 21 years of successful management, serial entrepreneur Anita Tillmann will retire from operating business at the end of this year. She will remain with the Premium Group as a strategic advisor.

Jörg Arntz, the long-standing managing director of Premium Group, will continue to lead the company as managing director, with the strategic support of Anita Tillmann. Operational implementation and content development will continue with the proven PREMIUM and SEEK teams in line with the formats. "I am delighted to have had Anita by my side over the past 10 years. The goal remains to strengthen the Premium Group's position as a forward-thinking and established platform in the national and international markets. We challenge traditional KPIs, develop sustainable business models hand-in-hand with the industry and share this know-how with our communities. We will continue to drive innovation and growth in close exchange with the industry. The demand for an organised industry meeting in Berlin is still very high. We are firmly convinced that the relevance of personal exchange will become even more important in the future and with it modern platforms like PREMIUM and SEEK."

At the association’s General Assembly held on July 4th, Marco Salvadè has been appointed to replace Alessandro Zucchi as President of ACIMIT.

Marco Salvadè began his career at Salvadè Srl, the family company specializing in the finishing machinery sector, founded by his father and uncle in 1967. After being a member of the company’s board of directors, he has been President since 2021.

Following the election of Salvadè, the General Assembly expressed its gratitude to the outgoing president, Alessandro Zucchi, who has guided the association for the past six years.

Along with the new president, the General Assembly also elected its new Vice Presidents, Chiara Bonino (Bonino Carding Machines SRL), Federico Businaro (Sperotto Rimar SRL), Ugo Ghilardi (Itema SpA) and Cristian Locatelli (Marzoli Machines Textile SRL). Marco Salvadè’s first comments as newly appointed ACIMIT president: “I wish to thank the Assembly for the trust they have placed in me, and I want to express my gratitude to the former President Alessandro Zucchi for everything he has done during the last six years to strengthen the role of the association and of Italian industry on the international scene. With the new vice-presidents and the ACIMIT Board, I will continue the work that has been done in recent years by previous presidents. It will certainly not be a simple task, but one that will no doubt prove stimulating. My primary goal is to increase the sense of belonging to ACIMIT of its member companies, with which we share the same values, and to adjust the association’s strategies to changing conditions in the economic and geopolitical context.”

Following INDEX™23, an independent market research company conducted an online survey amongst all exhibitors and visitors who attended the event between 18 and 21 April 2023.

The goal was to identify motivations for attending INDEX™23 and gauge exhibitors' and visitors' levels of satisfaction with the event to obtain insightful feedback, ensuring that subsequent editions continue to meet the desires, requirements, and issues of the industry it serves.

In the report, the information provided by the research was complemented by registration data entered by visitors when registering for the on-site event.

See the full report of survey here.

Dibella supports organic Fairtrade cotton farmers in sourcing non-GMO seeds for the next harvest.

Together with the Chetna Organic cooperative, Dibella has long supported Indian smallholder farmers, on whose fields the organic Fairtrade cotton for the company's sustainable contract textiles grows. To secure the livelihoods of the smallholders, Dibella is taking action this year with a special measure: at the beginning of the new growing season, the company pre-finances the procurement of the genetically unmodified (GMO-free) seeds.

The beginning of the monsoon season (June to September) marks the start of the cotton year in India. The small family farms where the organic Fairtrade cotton for the sustainable Dibella range is grown prepare their fields for sowing. The seeds needed this year come directly from their buyer Dibella. The company organised and co-financed the procurement of the seeds together with the Chetna Organic cooperative.

Ending the debt trap
"At the beginning of the cotton season, smallholder farmers are often forced to take out a loan to finance the seeds they need. For this, very high double-digit interest rates are charged in India, which can lead to excessive debt for families, especially when there are crop failures due to pest infestations or unfavourable weather conditions, for example," reports Simon Bartholomes, Purchasing Manager at Dibella. "We decided years ago to break this vicious circle by pre-financing the genetically unmodified seed. It is procured by our partner Chetna Organic and distributed free of charge to the farming families whose organic cotton is processed into our organic Fairtrade textiles after the harvest. This year we have allocated a sum of USD 50,000 for this purpose.

Win-win situation
This measure offers advantages for all parties involved: Through direct access to the seeds, Dibella enables the farmer families to have a more adequate livelihood. At the same time, the farmers benefit from the expertise of Chetna Organic staff, who support them in organic farming. Dibella, in turn, covers its annual demand for organic Fairtrade cotton with a right of first refusal. This gives the company full control over its entire supply chain, which starts at the cotton field.