From the Sector

• Decline in revenue due to volatile standard viscose prices and currencies
• Prices for key raw materials still high
• New production line in Heiligenkreuz in start-up phase
• Backward integration into dissolving wood pulp to be strengthened via joint venture in Brazil

Lenzing – The Lenzing Group generated solid results in a challenging market environment in the first half of 2018. The decline in revenue and earnings compared with the first half of the previous year, which was the best half-year in the company’s history, was based on a mix of volatile prices for standard viscose and price increases for key raw materials, coupled with currency effects. The Lenzing Group’s strategic orientation with a focus on specialty fibers had a positive impact in this environment and is increasingly bearing fruit. The corporate strategy sCore TEN is being implemented with great discipline in order to expand the company’s offering of specialty fibers and even more extensively support customers and business partners.

Revenue declined by 6.4 percent compared with the first half of the previous year to EUR 1,075.4 mn. This decrease is primarily attributable to less favorable currency exchange rates. EBITDA (earnings before interest, tax, depreciation and amortization) decreased by 28.1 percent to EUR 194.8 mn, especially due to price increases for key raw materials and higher energy prices. The EBITDA margin fell from 23.6 percent in the first half of 2017 to 18.1 percent in the first half of 2018. EBIT (earnings before interest and tax) declined by 37 percent to EUR 128.7 mn, leading to a lower EBIT margin of 12 percent (H1 2017: 17.8 percent). The net profit for the period dropped by 39.3 percent from EUR 150.3 mn in the previous year to EUR 91.3 mn. Earnings per share equaled EUR 3.44 (H1 2017: EUR 5.55).

“So far, the financial year 2018 proved to be as challenging as expected, and market headwinds were clearly noticeable. In this market environment, we are satisfied with the solid results we report. We are proud that with our corporate strategy sCore TEN and the focus on growth with specialty fibers we show big steps in the right direction. The recently announced joint venture with Duratex is another important step in executing this corporate strategy,” says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “We will continue to implement our strategy with great discipline and are convinced that this will steadily improve the long-term profitability of Lenzing,” Doboczky adds.

Largest dissolving wood pulp line worldwide

In June, the Lenzing Group and Duratex, the largest producer of industrialized wood panels of the southern hemisphere, announced that they had agreed on the terms and conditions to form a joint venture to investigate building the largest dissolving wood pulp plant (single line concept) in the state of Minas Gerais, (Brazil). This decision supports the self-supply with dissolving wood pulp and the growth in specialty fibers, defined in Lenzing’s sCore TEN strategy. The joint venture will investigate the construction of a 450,000 t dissolving wood pulp plant, which is expected to become the largest and most competitive single line dissolving wood pulp plant in the world. The final investment decision to build the dissolving wood pulp plant is subject to the outcome of the basic engineering studies and the approval by the respective supervisory boards.

Even stronger focus on sustainable products

As a pioneer in sustainable fiber solutions, the Lenzing Group is committed to higher standards in the textile and nonwoven sectors. More than EUR 100 mn will be invested in sustainable manufacturing technologies and production facilities by 2022 in order to realize this vision. In line with the Group’s specialty strategy, another two milestones were set in the first half of 2018: Lenzing announced an investment of up to EUR 30 mn in another pilot line for the production of TENCEL™ Luxe filaments at the Lenzing site. In addition, the company also introduced the environmentally friendly process for the production of LENZING™ ECOVERO™ branded viscose fibers at its Chinese site. Both decisions contribute to better meeting the strong demand for environmentally compatible products.

Expansion of capacities

CAPEX (investments in intangible assets and property, plant and equipment) rose by 60.8 percent year-on-year to EUR 117.2 mn in the first half of 2018. This is primarily attributable to the capacity expansions in Heiligenkreuz (Austria) and Mobile, Alabama (USA) and the expansion of the existing dissolving wood pulp plant in Lenzing. The company is pressing ahead with these projects as well as with planning work on the construction of the next state-of-the-art lyocell production facility in Prachinburi (Thailand).

New brand identity

With the new positioning of its master brand and its product brands, the Lenzing Group started a new phase of branding and brand communication in the first half of 2018. Lenzing decided to carry out a new brand strategy in order to sharpen its company and product profile as a sustainable innovation leader for customers and partners along the value chain as well as for consumers. The most important pillar of this new brand strategy is a brand architecture with a focus on fewer brands and a strong message to consumers. With the TENCEL™ brand as an umbrella brand for all specialty products in the textile segment and the VEOCEL™ brand as the umbrella brand for all specialty fibers in the nonwoven segment as well as the new master brand, which was presented in March, Lenzing showcases its strengths in a targeted manner.

Outlook

The International Monetary Fund expects a further acceleration in global economic growth to 3.9 percent for 2018. However, growing protectionist tendencies in the political arena represent a source of uncertainty. Export-oriented companies in the Eurozone are faced with additional challenges from the currency environment.

Developments on the fiber markets should remain positive, but with continuing volatility. The rising demand for cotton should support prices despite the increase in production. Polyester fiber prices have stabilized after the increase in previous years.

The wood-based cellulosic fiber segment, which is relevant for Lenzing, should see further strong demand. After years of moderate capacity expansion in the viscose sector, significant additional volumes will enter the market in 2018 and 2019. As a result, standard viscose prices will remain under pressure. The Lenzing Group is very well positioned in this market environment with its corporate strategy sCore TEN and will continue its consistent focus on growth with specialty fibers.

The Lenzing Group still sees challenging market conditions for the second half of 2018. In addition to the price pressure on standard viscose, the prices of some key raw materials such as caustic soda are still at a very high level and exchange rates continue to be volatile. Our specialty fibers are expected to continue their very positive development. In this context, the Lenzing Group is satisfied with the earnings development to date, but underlines its estimate that the results for the year 2018 will be lower than the outstanding results in the last two years.

• Market success above expectations
• Product and market development accelerated
• Investment up to EUR 30 mn

Lenzing – The Lenzing Group is setting another milestone as a specialist for extremely high-quality products made of the renewable raw material wood. Capacities will be significantly expanded due to strong demand for Lenzing’s TENCELTM Luxe filament yarn which was first launched on the market just a few months ago. Lenzing will invest up to EUR 30 mn in a further pilot line at the Lenzing site. Basic engineering for construction of the new facility has already been initiated.

“Thanks to TENCELTM Luxe, Lenzing is currently positioning itself in the premium luxury market and is embedding the issue of sustainability there in combination with superior aesthetics”, says Robert van de Kerkhof, Chief Commercial Officer of the Lenzing Group. “The fine filament yarn is comparable to natural silk due to its airy feeling on the skin and the matte finish. It is perfectly suited for very fine fabrics made exclusively from this yarn and as a blending partner with silk, cashmere and wool”, he adds.

“On the occasion of the launch of TENCELTM Luxe filaments, the luxury brands already realized what opportunities they would have by using this yarn made of the renewable raw material wood. For this reason, demand is already so high that we have decided to take an intermediate step to expand capacities before building a large commercial production plant. The decision to construct a new line will serve as the basis for generating a three-fold increase in capacity compared to the previous volume. The additional capacity will be available to customers at the end of next year”, states Stefan Doboczky, Chief Executive Officer and Chairman of the Management Board of the Lenzing Group. “The Lenzing site was selected because research and technological know-how in plant construction are connected in a special way, which will in turn enable us to further develop this special product”, Doboczky adds.

The new capacities will enable Lenzing to more effectively fulfil the needs of customers for TENCELTM Luxe filament yarn than in the past. At the same time, Lenzing will press ahead with technical planning for a large-scale commercial line at the Lenzing site.

This strong level of demand is further evidence of the Lenzing Group’s innovative strength. The yarn is opening up new markets for the company in the eco-couture segment, thus contributing to the successful implementation of the sCore TEN strategy.

•    New, sustainable, ready-to-use solutions for plastic auto parts to support China’s electric vehicle boom
•    Stronger, softer nylon polyamide fibers plus fast processing for clothes, carpets & industrial applications
•    AddWorks blends lower total cost of ownership & reduce production complexity while enhancing performance

Muttenz, May 3, 2018 – Clariant, a world leader in specialty chemicals, introduced new additive solutions for plastics materials at Chinaplas 2018.

“Our innovations focus on higher performance at better convenience for a sustainable future,” says Stephan Lynen, Head of Clariant BU Additives. “At Chinaplas 2018 we demonstrated our technical and market capabilities around the theme of e-mobility. The immense changes in mobility call for lighter, safer and smarter vehicles. We offer new additive solutions, such as AddWorks, and technical capabilities to respond to this demand. We are accompanying this with a series of investments such as new production facilities in China.”

Clariant’s new AddWorks solutions – AddWorksATR 146, AddWorks LXR 568 and AddWorks TFB 117 – are specifically aimed at improving performance and efficiency of plastics materials for compounders, polymer and fiber producers in China’s major plastics manufacturing segments. All three solutions are part of the globally available portfolio.

The full AddWorks portfolio consists of differentiated market-specific synergistic additive blends that streamline production processes and create value for customers while enhancing performance. Each solution is customized to specific market needs, underlined by broader considerations such as emission reduction, and less energy and resource usage.

Sustainability and performance for the world’s largest auto market
To support the significant investment in electric vehicles in China, Clariant launched two additive innovations that improve the lifetime of lightweight automotive parts and under-the-hood applications and reduce VOC emissions in an easy to use single solution.

AddWorks ATR 146 is a new low dosage, sulfur-free heat and light stabilizer for filled polypropylene (TPO) compounds used in interior applications. Its exceptional heat and light stability and long term color retention offers the automotive industry unmatched performance. It shows no surface cracking after 700 hours at 150°C, which enables dashboards, instrument panels, door panels and pillars to maintain their aesthetics longer than with traditional stabilizers. It also contributes to reducing blooming and VOC emissions, supporting the common effort to make automotive interiors healthier and odorless.

AddWorks LXR 568 is a high performance processing stabilizer that helps to prevent plastic resins, especially polyolefins, from degradation at high processing temperatures. For the automotive industry, this reduces the tendency of injection molded polypropylene interior car parts to turn brittle during heat exposure, enabling them to maintain a defect-free surface. It also has low migration and low fogging that support healthier in-cab environments.

AddWorks LXR 568 combines outstanding color and melt flow protection with good resistance to hydrolysis and high thermal stability. This makes it ideal for interior and under-the-hood powertrains and wider application areas such as packaging films. It is available in free-flowing pills and micro-pills which are easy and convenient to use.

Softer, stronger polyamide fibers for clothes, carpets and industrial applications
Within the next three years, China is expected to account for 40% of the world’s nylon production and more than 30% of the nylon resin consumed globally[1]. The new AddWorks TFB 117 offers a number of benefits to help stabilize and smoothen fiber production processes, protect color, and improve heat stability and mechanical properties of fibers. AddWorks TFB 117 ensures smooth spinnability with less filaments breakage, even at low processing temperatures and at high speed spinning up to 5,500 m/min.

Martin P. J. John, Head of BL Performance Additives at Clariant, comments: “AddWorks solutions are an ideal fit with China’s priority of achieving more sustainable production. They save time and reduce complexity along the production process, with easy to use formats that reduce health risk and chemical waste. Our new state-of-the-art production facility in Zhenjiang, China, which opens later this year, is dedicated to the manufacturing of AddWorks to deliver innovative solutions tailored to the needs of the market. Made for China in China.

In addition to AddWorks, Clariant presented Exolit® OP 1400, a highly stable non-halogenated flame retardant enhancing safety during the charging process. It also provides outstanding thermal stability for under the hood applications. Exolit OP 1400 has been awarded the Clariant EcoTain® label for outstanding sustainability and performance.  

Clariant also introduced two ranges of performance waxes that smoothen the production of automotive plastics for under the hood applications, Licowax® and Licocare® RBW. The recently launched Licocare RBW is a series of multi-purpose additives based on crude rice bran wax. They offer better shaping flexibility, better mechanical properties and enhanced surface finish, which results in a reduced rejection rate and a more effective dosage.

Cost-efficient BCF yarn production for demanding processes with Sytec One from Oerlikon Neumag

Cost-efficient production of carpet yarns beyond commodity products can constitute a challenge. Highly standardized production systems must strike compromises with regard to throughput, quality or cost-efficiency. At the Domotex 2018, the world's largest trade fair for floor coverings, Oerlikon Neumag will present the Sytec One solution for demanding BCF processes.

The Sytec One is a BCF plant with only one end per position. Due to this single-end characteristic, it is particularly well suited for demanding production processes, such as recycled polyester or fine filaments. The reason: In the event of a yarn break, only one end breaks. All the other positions are not affected and continue to run. As a result, this plant has a higher efficiency compared with a multi-end technology plant. For example, with ten breaks a day, the efficiency of the Sytec One is still over 98%, while a threeend technology achieves only 92% efficiency.

Higher productivity due to the straight yarn path

The machine concept of the Sytec One with its absolutely straight yarn path in spinning and texturing also enables significantly higher process speeds compared to multi-end technologies. This results in a speed increase of up to 15%. In addition to standard processes, more demanding processes with higher break rates play an increasingly important role. "The product mix is critical to the choice of technology," said Martin Rademacher, vice president of sales Oerlikon Neumag. "We are in the comfortable position of being able to offer our customers both a single-end and a three-end technology."

Bobingen - On the 4th October 2017 a new brand was introduced at Trevira: Trevira SINFINECO®. This label may be carried by all textiles that contain sustainable Trevira products. Sustainable, innovative, high-value and responsible – these are the values the new brand stands for.

As an industrial enterprise, Trevira is conscious of its special responsibility for an intact environment and has long advocated the recycling of valuable raw materials and waste products. Trevira CEO Klaus Holz: “We at Trevira wish to preserve the environment and at the same time work to create value. These are the criteria of our sustainability concept.“

Creation of the new brand is therefore only a logical step, one that enables customers to label their sustainable Trevira products as such. Trevira is known for the high quality of its products. In every way recycled products are as good as the original materials in terms of quality and performance.

Two vital elements in Pre-Consumer Recycling and an important concept in Post-Consumer Recycling form part of the sustainability strategy of Trevira to conserve resources and maintain value. :

In the area of Pre-Consumer Recycling, on the one hand, residual materials resulting from the manufacture of polyester fibres and filaments in Bobingen and Guben, dependent on the manufacturing step, are processed in the agglomeration plant and restored to become serviceable primary material. The recyclates are then fed back to our fibre and filament spinning mills, to be made into new top-quality products.

On the other hand, in fibre production there occurs in the manufacture of tow a small proportion of tow that cannot be used for converting and has to be cut out. Instead of selling this material as waste, it is cut up, pressed into balls and then carded / combed by a partner, resulting in a 1A quality product. The GRS certification (Global Recycled Standard) is requested for this. As with converter tow from new material, the recycled tow is mostly incorporated into polyester wool blends (55 % PET / 45 % wool), which are used primarily in corporate wear and uniforms.

In the area of Post-Consumer Recycling, Trevira offers filament yarns consisting of 100 % recycled PET bottles. Our parent company Indorama manufactures very high quality recycled chips from PET bottles. Since only transparent PET bottles are used in Thailand, the flakes and chips are of a particularly good and very uniform quality. The recycled chips, fibres and filaments from Indorama bear the GRS certificates (Global Recycled Standard) and RCS-NL (Recycled Claim Standard). Trevira processes the regranulate made by Indorama from bottle flakes into filament yarns consisting 100 % of recycled material. The filament yarns are available in titres 167 and 76 dtex normal polyester. Alongside technical applications, they are used in the automotive and apparel sectors. In addition, many promising developments with the recycled material are on their way.