From the Sector

Sappi Europe received a platinum score in the latest EcoVadis rating. On of the leading global providers of sustainable woodfibre products and solutions retained its top position from the previous year among the leading one per cent of all companies assessed which exhibit high activity and responsibility with regard to corporate social responsibility (CSR).

• Sappi Europe receives top rating for sustainability
• Unlocking the power of renewable resources to benefit people, communities and the planet

As part of its clear strategic goals in relation to sustainability and environmental protection, Sappi reached a new milestone. A market leader in environmentally friendly packaging and graphic papers received a platinum score in this year’s sustainability rating from EcoVadis, establishing itself as one of the top performers, with a score well above the overall average. The EcoVadis rating covers a total of 21 criteria, which in turn are divided into four general areas: environment, labour and human rights, ethics and sustainable procurement.

Encouraging sustainable operations across the entire value chain have been a key part of Sappi’s corporate strategy for many years. Sappi’s entire business model and investments in research and development are based on the use of renewable materials. The environment management approach of the global company includes a variety of strategies designed to improve its ecological footprint. For 2025, Sappi has linked its sustainability targets to the United Nations’ Sustainable Development Goals. Sappi has long held principles based around People, Planet and Prosperity and with  a heightened focus on seven of the SDG’s they believe they can deliver  real impact and contribute to the global sustainable development agenda.

The platinum rating from EcoVadis demonstrates that Sappi not only talks about sustainability, but actively works towards ensuring it in a very practical way. The whole world is talking about sustainable solutions and looking for alternatives to fossil fuels. Sappi is focused on providing product solutions to the market. A few weeks ago, the market leader presented a number of solutions relating to functional paper packaging as part of its ‘Pro Planet Paper Packaging’ campaign to enable sustainable, high-quality packaging for food and non-food products.

Sappi Europe is extremely proud to have obtained the EcoVadis Platinum rating and while certification and recognition go a long way to helping our work we also acknowledge at Sappi Europe that we are part of a global community that need to continue to strive in all our business areas to create the change needed to help our customers become truly sustainable. The recyclable nature of products derived from woodfibre are essential to creating a more circular economy, where the world’s resources are kept in use longer and more creatively. By responsibly sourcing materials, reducing material waste and emissions , carefully considering product end-of-life, and aiming to use the full potential of trees, we actively promote more sustainable systems explains Sarah Price, Sappi Europe’s Sustainability Manager

• Fiber prices and demand under pressure
• Measures to protect employees, customers and suppliers and to keep plants operational implemented successfully
• Joint venture Hygiene Austria established for industrial production of protective masks in the fight against the COVID-19 pandemic – new distribution channel via shop.hygiene-austria.at
• Strategic investment projects progress according to plan – financing agreements for construction of pulp plant in Brazil concluded as planned
• Revenue and operating result in the remaining quarters of 2020 expected to exceed that of the second quarter

Lenzing – In the first half of 2020, the Lenzing Group faced a historically difficult market environment with increased pressure on prices and volumes resulting from the COVID-19 crisis. To counteract that, Lenzing intensified its cooperation with partners along the value chains and adjusted its production volumes and sales prices to market reality. The disciplined implementation of the sCore TEN corporate strategy and the focus on specialty fibers continued to have a positive impact.*

*Please read the attached document for more information

For the third time in a row, the Lenzing Group was awarded gold status in the EcoVadis CSR rating. The assessment is further evidence that the company is one of the top performers in the field of sustainability worldwide.

Lenzing is thus one of the leading two percent of all assessed companies in its industry.
The assessment covers the four most important CSR (Corporate Social Responsibility) practices:

• environment
• fair working conditions and human rights
• ethics and sustainable procurement

“This award makes us very proud and encourages us to continue on our path to becoming a provider of environmentally friendly specialty fibers. At Lenzing, we look beyond fibers and take responsibility for our children and grandchildren by
standing up resolutely against the shortcomings of our time. This attitude is part of our strategic principles and we will continue to work hard to make a sustainable contribution to the environment and society”, says Stefan Doboczky, CEO of the Lenzing Group.

Lenzing’s ambitious climate target represents an important component of the company’s strategy and the responsibility towards future generations. In the 2019 financial year, Lenzing became the world’s first producer of wood-based cellulosic fibers to strategically commit to a climate-neutral production. This vision is to be put into practice by 2050. By 2030, the company aims to achieve an interim goal of reducing emissions by 50 percent per ton of product compared to 2017.

In 2019, Lenzing was once again rated number one in the world in the “Hot Button Report” of the Canadian NGO Canopy, another highly regarded ranking. In this ranking, Canopy grades the world’s 32 largest producers of wood-based fibers with respect to their success in achieving sustainable wood and pulp sourcing.

Shanghai – Sateri has unveiled FinexTM as its new product brand for recycled fibre. FinexTM, short for ‘Fibre Next’, is an innovative next-generation cellulosic fibre containing recycled content. Internationally known outdoor brand Lafuma has produced FinexTM apparel ahead of 618, China’s major mid-year online shopping festival, while independent China designer Rico Lee will launch his FinexTM apparel next month.

Since its announcement in March this year of a breakthrough in commercial production of viscose using recycled textile waste, Sateri has worked closely with its downstream yarn and garment manufacturing partners to bring the recycled fibre product to the consumer market.

“We’re pleased to collaborate with Sateri as one of their first brand partners for FinexTM. Sateri’s dedication to this partnership made it possible for Lafuma to produce T-shirts with this fine quality fibre in a short time. T-shirts made with FinexTM will be among the offerings Lafuma has in store for the 618 festival as we look to support environmentally-friendly and excellent performance solutions to strengthen our position as a leading outdoor apparel brand,” said Wu Qian, General Manager of Lafuma China.

Echoing similar sentiments is Rico Lee who established his own independent label in 2014, “I jumped at the opportunity to collaborate with Sateri when they approached me because FinexTM encapsulates what my brand stands for – Beautiful Technology that combines function and fashion.”

Tom Liu, Sateri’s Commercial Vice President said, “Like our flagship brand EcoCosy®, FinexTM is made from bio-based natural fibres. Innovation and technology has made cellulosic textile fibre recycling possible and FinexTM represents how nature not only renews itself but that products made from nature can also be regenerated. This, at its heart, is what circular fashion looks like. Our brand promise to customers remains constant– Sateri’s products are sustainable, high quality, efficient, and cost-effective. The FinexTM tagline ‘Together For A Better Next’ expresses our aspiration to be the partner of choice for next-generation fibre - we thank Lafuma and Rico Lee for pioneering with us on this quest.”

Last month, Sateri announced its entry into China’s Lyocell fibre market. The recent string of product portfolio expansion announcements is underpinned by Sateri’s business strategy to capture value. Allen Zhang, President of Sateri said, “Being the world’s largest viscose producer gives us the advantages that come with volume, but value is what we hope differentiates us. By this, we don’t only mean higher value products like Lyocell or FinexTM but also the value we bring to communities, country, climate and customers.”

Globally, less than 1% of material used to produce clothing is recycled into new clothing. This presents a big opportunity for textile fibre recycling, particularly in China which is the largest textile producing country in the world. Last month, Sateri became a council member of the China Association of Circular Economy (CACE). The company will work closely with CACE’s Textile Waste Comprehensive Utilisation Committee to establish standards and promote industrial-scale textile waste recycling. Sateri is part of the Singapore-based RGE group of companies which has committed USD200 million into next-generation textile fibre innovation and technology.

• Since the end of March 2020, COVID-19 has led to very low demand in all Business Groups
• Comprehensive crisis management implemented
• Loss in the mid double-digit million range expected in the first half of 2020
• Plans to introduce short-time working to adjust capacity in Switzerland and Germany
• Strategy will continue to be implemented

Due to COVID-19, a large number of spinning mills have stopped production worldwide. Since the end of March 2020, this has led to low demand for spare parts and wear & tear parts and delays in testing programs during the development of new machines. Customers are postponing investment projects or unable to implement them due to restrictions imposed by national governments. This results in low demand for new machines.

Comprehensive crisis management
Rieter has implemented comprehensive crisis management. Priorities are being given to protecting employees, fulfilling customer commitments and ensuring liquidity. The necessary measures to protect employees have been implemented worldwide.
The order backlog of well in excess of CHF 500 million is being processed largely according to plan, despite the existing bottlenecks in the supply chains. Less than 5% of the orders in the order backlog have been canceled.
Rieter has already implemented measures to ensure liquidity and reduce costs. The company has good net liquidity and undrawn credit lines in the mid three-digit million range.
Loss expected in the first half of 2020
As already reported, Rieter expects sales and earnings in the first half of 2020 to be significantly below the prior year level.

Loss expected in the first half of 2020
As already reported, Rieter expects sales and earnings in the first half of 2020 to be significantly below the prior year level. The effects of COVID-19 will place an additional burden on the first half of 2020. Rieter therefore expects sales in the first half of 2020 to be less than CHF 300 million. Despite the countermeasures implemented at the net profit level, this will lead to a loss in the mid double-digit million range.

Plans to introduce short-time working to adjust capacity
Rieter plans to apply for short-time working for the areas with forecasted low capacity utilization at the locations in Switzerland and Germany. The application will be for 40% short-time working in the third quarter of 2020. Talks with staff representatives will begin next week.
As a sign of solidarity, Rieter’s Board of Directors, Group Executive Committee and the senior management will waive 10%-20% of their salaries temporarily.

Implementation of the strategy
In recent years, Rieter has consistently implemented the strategy based on innovation leadership, strengthening the business in components, spare parts and services and the adjustment of cost structures. The company intends to forge ahead with the implementation of the strategy in the coming months, thus strengthening its market position for the time after the COVID-19 pandemic.
The next information on the course of business is planned with the publication of the half-year results on July 16, 2020
 

• Fiber prices and demand under pressure due to COVID-19 crisis
• Measures to maintain operations and to protect employees, customers and suppliers implemented successfully
• Hygiene competence center established to produce personal protective equipment in the fight against COVID-19 pandemic
• Strategic investment projects in Brazil and Thailand progressing according to plan
• Management Board proposes not to distribute a dividend for 2019 – AGM rescheduled for June 18, 2020

In a historically difficult market environment with increased pressure on prices and volumes resulting from the COVID-19 crisis, the Lenzing Group held its ground well in the first quarter of 2020. Thanks to a diversified business model and its global footprint on the one hand, and the disciplined implementation of the sCore TEN corporate strategy on the other, the effect on the revenue and earnings development was partially offset.

In the first quarter of 2020, revenue declined by 16.7 percent in comparison with the prior-year quarter and amounted to EUR 466.3 mn. The main reason was the development of prices for standard viscose (due to significant overcapacity in the market) and other standard fibers. The impact of the COVID-19 crisis further increased pressure on prices and volumes. The prices for standard viscose dropped to a new all-time low of 9,150 RMB/ton by March 31 – up to 33 percent lower than in the prior-year quarter. The comparatively positive development of the specialty fiber business and slightly higher demand for fibers in the medical and hygiene segments partially offset the decline in revenue. The share of specialty fibers increased from 47.3 percent in the first quarter of the previous year to 60.9 percent. The earnings development reflects the decline in revenue: EBITDA (earnings before interest, tax, depreciation and amortization) decreased by 24.3 percent to EUR 69.6 mn. The EBITDA margin declined from 16.4 percent to 14.9 percent. Net profit for the period was down 58.6 percent to EUR 17.7 mn. Earnings per share amounted to EUR 0.84 compared with EUR 1.65 in the first quarter of the previous year.

Effective from April 1st, 2020 Andreas Tobisch takes over the position “Head of sales” of the PFAFF Industriesysteme und Maschinen GmbH. The 60-year-old assumes the responsibility for sales activities at the PFAFF location in Kaiserslautern/Germany.

Andreas Tobisch started his career at PFAFF in 1981, where he worked in sales at various locations in Germany. In the mid-1990s, he switched to an international sewing machine dealer as sales manager for almost 10 years before he started successfully his own business in the sewing machine industry together with a partner (both managing directors). At the end of 2014, PFAFF Industriesysteme und Maschinen GmbH was able to win him back for a position in the growth area of "welding technology", where he was most recently the responsible segment manager.

Together with the management and his sales team, Andreas Tobisch will consistently and successfully implement the sales, product and marketing strategy of PFAFF Industriesysteme und Maschinen GmbH. One focus of his work is to expand and strengthen the sales activities of industrial sewing machines, welding machines and automatic sewing units from PFAFF INDUSTRIAL in Kaiserslautern/Germany.

• Move is in line with global growth strategy with a strong focus in the Asia Pacific region
• Zhejiang plant will be able to produce 50,000 tons of nylon compounds annually in the longer term
• Plant will be located in the convenient transportation port area of DuShan Pinghu city

DOMO Chemicals, a leading producer of high - quality engineering materials for a diverse range of markets, has announced plans for a new state - of - the - art plant in Zhejiang, China. The new plant will be capable of producing 50,000 tons of sustainable and innovative engineered nylon compounds each year. The company signed a new factory project through “cloud contract” with PingHu DuShan port Economic Development District on February 20, 2020. Production is expected to commence in the fourth quarter of this year.

DOMO Chemicals will invest €12 million in the new plant, which will have more than 11,500 m 2-floor space. The company plans to install multiple production lines at the first stage of development, which would offer an estimated capacity of 25,000 tons/year. There will be enough additional space available to cope with future demand requirements. The move is in line with the company’s global growth strategy with a strong focus on the Asia Pacific (APAC) region.

• Historically difficult market environment – trade tensions put textile value chain under pressure in 2019
• Prices for standard viscose at a historic low
• Positive development of the specialty fiber business with a revenue share of already 51.6 percent
• Strategic investment projects are progressing according to plan
• sCore TEN targets for 2024 defined – EBITDA of EUR 800 mn

Despite a generally difficult demand environment for textile fibers and a drastic drop in prices for standard viscose, the Lenzing Group recorded a solid business development in 2019. The disciplined implementation of the sCore TEN corporate strategy and the accompanying focus on specialty fibers once again helped to mitigate the effect of unprecedentedly low standard viscose prices.
As a result, revenue dropped by 3.3 percent from EUR 2.18 bn to EUR 2.11 bn in 2019, driven by lower selling prices as well as standard fiber volumes. Due to positive mix effects and more resilient specialty fiber prices, the share of specialty fibers increased from 45.5 percent to 51.6 percent of revenue.
The earnings development was largely influenced by the decline in revenue, but also by negative currency effects on material and personnel costs. EBITDA (earnings before interest, tax, depreciation and amortization) fell by 14.4 percent from EUR 382 mn to EUR 326.9 mn. The EBITDA margin declined from 17.6 percent to 15.5 percent. Net profit, at EUR 114.9 mn, was 22.4 percent lower than in the previous year at EUR 148.2 mn. Earnings per share amounted to EUR 4.63 (2018: EUR 5.61).

Focus on Sustainability and Climate Change

Passion for Cotton: The 35th International Cotton Conference Bremen starts on 25 March in the Hanseatic city’s historic Town Hall. But before subject-specific questions are discussed in depth in the individual sessions, the concise and inspiring keynotes by leading business experts from science and industry will draw attention to the current trends and challenges in the industry at the start of the conference. A large part of the presentations is shaped by the current discussion on environmental and sustainability issues and the resulting consequences for the global economy.

Climate Change and Sustainability

“Climate change - a storm in a teacup?” asks Kai Hughes, Executive Director of the International Cotton Advisory Committee, Washington D.C., USA, in a provocative speech. The aim of his presentation is to work out the challenges of climate change especially for agriculture and cotton production. This should form the basis for later discussion on concrete approaches and solutions within the cotton community.

With his lecture “The HUGO BOSS sustainability programme ... and what our customer has to do with it” Andreas Streubig, Director of Global Sustainability at Hugo Boss AG, Metzingen, Germany, rolls up the textile value chain from a different angle, starting at the consumer level. As a representative of a premium brand for women's and men's clothing, Streubig discusses sustainability as a strategic element of the corporate strategy and provides information on how elements of the strategy are being implemented at Hugo Boss.

Rüdiger Senft, Head of Sustainability at Commerzbank, Frankfurt am Main, Germany, looks at the changing role of banks in financing the cotton market. In addition to a general introduction to the topic of sustainability and banking regulation, Senft's presentation deals with the financing of the cotton trade from a social and ecological point of view.
The opening session on 25 March is hosted by Bill Ballenden, founder and owner of Dragontree, Swindon, UK, an online auction platform for the cotton trade. As a former cotton manager for Louis Dreyfus in Europe and Asia, Bill Ballenden has many years of experience in the industry.

Cross-Cutting Issues: Digitalisation, Gender, Value Chains

The subsequent session in the conference programme with the headline “A Wider View” is devoted to currently defining trends and important cross-cutting issues in the industry. This goes far beyond classic cotton themes.

A lecture by Mark Messura, Senior Vice President, Global Supply Chain Marketing for Cotton Incorporated, Cary, North Carolina, deals with the role of cotton in an increasingly digitally controlled supply chain. Significant keywords here are faster delivery times, vertical integration, transparency and traceability.

The presentation by Roger Gilmartin, Managing Director of Tri-Blend Consulting, Charlotte, USA, entitled “The secret recipe for timely, cost-optimised and high-quality cotton clothing” promises exciting and enlightening insights. Tri-Blend Consulting conducts studies on the performance of different cotton varieties during the entire consumption process to the finished yarn and evaluates them from an economic point of view.

Amy Jackson, from the Better Cotton Initiative, London, UK, presents ICA Liverpool's “Women in Cotton” initiative. With this commitment, the initiative aims to increase the influence of women in the cotton industry and give them a stronger voice, for example by building networks in cooperation.

Navdeep Singh Sodhi, International Strategic Management Consultant at the Gherzi Textile Organisation, Switzerland, gives an insight into the current development of the value chain for cotton, textiles and clothing in Africa. Looking ahead to the coming decades, also in view of population growth, Africa is seen as having a high potential for building economic structures to improve income and prosperity.

Thomas Schneider, Professor at the University of Applied Sciences in Berlin and active in the field of production planning and control, textile materials and materials testing will host the session. A leading light in his field, Thomas Schneider has more than 30 years of experience in scientific and application-oriented research in the textile and fibre sector, including at the Fibre Institute Bremen e.V.