From the Sector

adidas unveils the new Real Madrid CF home kit for the 2024/25 campaign, a predominantly white look with subtle detailing.

A crisp white kit has been a trademark look of the club throughout its decorated history; a look adored by the Madridista and worn by some of the greatest players to ever step onto a football pitch. The 2024/25 design is stripped back to the roots of the club, with a minimalistic look and the colour white.

The crafting of the jersey further binds the new kit to the club's DNA, by incorporating a bespoke houndstooth pattern using the initials ‘RM’ throughout the design. adidas utilised a 3D engineering method to construct the jersey in three levels, subtly imbuing the shirt with a layered RM pattern, creating a textured look and feel to add depth and intrigue.

Rounding off the design is a seasonal V-neck collar and minimal black detailing woven through the adidas logo on the shirt, shorts, socks, shirt sponsor and the famous three stripes, which run down the shoulders of the shirt.

The on-field version of the jersey is constructed with HEAT.RDY technology, using advanced materials to maximize air flow to keep players feeling cool, while the fan version features AEROREADY technology, which uses sweat-wicking or absorbent materials to keep the body feeling dry.

Stratasys Ltd., a company in polymer 3D printing solutions, announced their financial results for the first quarter 2024.

First Quarter 2024 Financial Results Compared to First Quarter 2023:

• Revenue of $144.1 million compared to $149.4 million.
• GAAP gross margin of 44.4%, compared to 43.8%.
• Non-GAAP gross margin of 48.6%, compared to 47.3%.
• GAAP operating loss of $24.5 million, compared to an operating loss of $16.8 million.
• Non-GAAP operating loss of $1.2 million, compared to non-GAAP operating income of $1.5 million.
• GAAP net loss of $26.0 million, or $0.37 per diluted share, compared to a net loss of $22.2 million, or $0.33 per diluted share.
• Non-GAAP net loss of $1.7 million, or $0.02 per diluted share, compared to non-GAAP net income of $1.1 million, or $0.02 per diluted share.
• Adjusted EBITDA of $4.1 million, compared to $7.0 million.
• Cash generated by operating activities of $7.3 million, compared to cash used by operating activities of $17.9 million in the year-ago quarter.

2024 Financial Outlook:
Based on current market conditions and assuming that the impacts of global inflationary pressures, relatively high interest rates and supply chain costs do not impede economic activity further, the Company is reiterating its outlook for 2024 as follows:

• Full-year revenue of $630 million to $645 million.
• Compare to 2023 revenue of approximately $616 million excluding divestments and annualizing Covestro.
• Full-year non-GAAP gross margins of 49.0% to 49.5%, improving sequentially throughout the year.
• Full-year operating expenses in the range of $292 million to $297 million.
• Full-year non-GAAP operating margins in a range of 2.5% to 3.5%.
• GAAP net loss of $88 million to $72 million, or ($1.24) to ($1.01) per diluted share.
• Includes one-time extraordinary costs associated with Stratasys’ strategic alternatives process.
• Non-GAAP net income of $9 million to $14 million, or $0.12 to $0.19 per diluted share.
• Adjusted EBITDA of $40 million to $45 million.
• Capital expenditures of $20 million to $25 million.
• Positive cash flow from operating activities.

Non-GAAP earnings guidance excludes $29 million to $31 million of share-based compensation expense, $26 million to $28 million of projected amortization of intangible assets, and reorganization and other expenses of $29 million to $35 million. Non-GAAP guidance includes tax adjustments of $2 million to $3 million on the above non-GAAP items.

• Revenue up 5.7 percent year-on-year to EUR 658.4 million
• EBITDA more than doubles year-on-year to EUR 71.4 million
• Free cash flow of EUR 87.3 million (compared with minus EUR 132.3 million in the first quarter of 2023) and thereby positive for the third consecutive quarter
• Performance program shows positive effect on revenue, EDITDA, and free cash flow
• Lenzing confirms EBITDA guidance for 2024

The Lenzing Group, a leading supplier of regenerated cellulose for the textile and nonwovens industries, recorded a further improvement in fiber sales volumes in the first quarter of 2024. An expected recovery in markets relevant for Lenzing has to date failed to materialize. Fiber prices remained at a low level. Although the costs of raw materials and energy continued to decrease, they remained higher than in the pre-crisis 2019 year.

Outlook
Even though the IMF has upgraded its growth forecast for 2024 from 3.1 percent to 3.2 percent, a number of risks remain for the global economy: potential geopolitical shocks, persistently higher inflation and key interest rates, as well as market risks emanating from the Chinese real estate market are currently considered to be the most relevant.

General inflation and falling incomes in real terms are continuing to exert a negative impact on consumer sentiment. A recovery in the consumer clothing market, which is important for Lenzing, will also depend on a further normalization of stock levels.

The currency environment is expected to remain volatile in regions relevant to Lenzing.

In the trend-setting market for cotton, a stable price trend is expected for the 2023/2024 harvest season.

Earnings visibility remains limited overall.

Revenue and earnings in the first quarter exceeded Lenzing’s expectations, despite the persistently difficult market. Lenzing is ahead of schedule with the implementation of its performance program. By appointing a separate Managing Board member, the projects identified to date are to be implemented even more rapidly, and new potentials are to be leveraged. Lenzing expects that these measures will increasingly contribute to further earnings improvement over the coming quarters compared to the first quarter of 2024.

Taking the aforementioned factors into consideration, the Lenzing Group confirms its guidance for the 2024 financial year of year-on-year higher EBITDA.

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 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.

Global apparel retailer UNIQLO announces that it has signed a partnership agreement with the Singapore National Paralympic Council (SNPC) where UNIQLO becomes the Official Clothing Partner for the Singapore Paralympics team. Under the partnership, UNIQLO will provide LifeWear apparel to Singapore's delegations and officials at the coming major summer sports tournament in France. This comprises apparel to be worn for the opening and closing ceremonies, athlete village, and travel during the Games.

This is the first time that UNIQLO is providing apparel for a national team in Southeast Asia. The Singapore team clothing for the 2024 Summer games will largely comprise LifeWear items available at UNIQLO stores.

UNIQLO worked closely with SNPC to thoughtfully curate a selection of LifeWear apparel that emphasises function and comfort, while featuring modern looks that represent Singapore and blend seamlessly with the cityscape of Paris.

A red accent is applied to the accessories and lining as a tribute to the Singapore national colours. Touches of Singapore icons such as the orchid and the Singapore Lion Head symbol are reflected in the women's scarf and men's tie alongside a colour application of red, white and blue to represent Singapore and France.

UNIQLO'S commitment to diversity and inclusion
As part of the partnership, UNIQLO will also undertake community contribution activities with the council and athletes.

UNIQLO will be taking part in the inaugural Singapore Paralympic Fiesta to support Singapore's Para Athletes. Held at Our Tampines Hub from 4 - 7 May 2024, a UNIQLO Singapore team of over 100 staff and family will be participating in the Walkathon.

In line with UNIQLO's Next Generation Development Program, an initiative to inspire children and youth to discover a love of sport, UNIQLO will also join SNPC on their schools outreach efforts to raise awareness on Diversity and Inclusion and disability inclusion with programmes such as UNIQLO Access.

Major developments:

• Currency-neutral sales up 8% driven by growth in all regions except North America
• Double-digit DTC growth reflects strong adidas sell-through
• Gross margin improves 6.4pp to 51.2%, reflecting healthier inventory levels, reduced discounting, lower sourcing costs and a more favorable business mix
• Operating profit of € 336 million compared to € 60 million in the prior-year period
• Inventories down more than € 1.2 billion versus the prior year to € 4.4 billion
• Top- and bottom-line guidance upgraded on April 16 due to successful start to the year

Full-year outlook
adidas expects revenues to increase at a mid- to high-single-digit rate in 2024
On April 16, adidas upgraded its full-year financial guidance as a result of the better-than-expected performance in the first quarter. adidas now expects currency-neutral revenues to increase at a mid- to high-single-digit rate in 2024 (previously: increase at a mid-single-digit rate). Within this guidance, it is assumed that the remaining Yeezy inventory will be sold on average at cost, resulting in sales of around € 200 million throughout the remainder of the year. This corresponds to a projected total amount of Yeezy-related sales of around € 350 million in FY 2024 (previously: around € 250 million), of which around € 150 million were generated in the first quarter. For its underlying business, adidas remains focused on scaling its successful franchises, introducing new ones, and leveraging its significantly better, broader, and deeper product range. Improved retailer relationships, more impactful marketing initiatives, and the company’s activities around major sports events are also expected to contribute to sales increases throughout 2024.

Outlook impacted by significant currency headwinds
Unfavorable currency effects are projected to weigh significantly on the company’s profitability in 2024. They are expected to continue to adversely impact both reported revenues and the gross margin development in the remainder of the year.

Operating profit of around € 700 million projected
Following the better-than-expected performance in the first quarter, the company also increased its full-year profit guidance on April 16. The company’s operating profit is now expected to reach a level of around € 700 million (previously: to reach a level of around € 500 million). The improved bottom-line guidance includes a contribution of around € 50 million from Yeezy (previously: no Yeezy contribution) related to the drop in Q1. The sale of the remaining Yeezy inventory is assumed to result in no further profit contribution during the remainder of the year.

As the 2024 edition of Techtextil, the leading international trade fair for technical textiles and nonwovens, gets underway in Frankfurt, Beaulieu Fibres International is introducing its Sustainable Fibres Program to help reshape fibres for sustainable solutions.

Through the initiative the company is looking to gain deeper insights into the challenges encountered by customers across the value chain to identify opportunities to leverage its expertise to deliver impactful products and services.

Beaulieu has identified several conversation triggers for Techtextil 2024, including recyclable, high performance, renewable, bio-circular, co-developed and made in Europe fibres, to find out what matters most to customers in terms of targets, green initiatives and sustainability expectations.
The Sustainable Fibres Program serves as a charter to help Beaulieu Fibres International accelerate its ‘fibres that build futures’ campaign, by educating on existing solutions, reshaping products and creating partnerships to facilitate market cooperation on shared challenges.

In addition to leading the market within the framework of the European Green Deal, and alignment with the objectives of the proposed Ecodesign for Sustainable Products Regulation, Beaulieu Fibres International is committed to achieving its own sustainability targets outlined in its roadmap known as ROUTE 2030.

For the second chapter of their Spring/Summer 2024 collection, adidas and Yohji Yamamoto continue to explore the concept of Contra-Natural. The collection highlights the tensions at the heart of Y-3: sport and boundary pushing design, organic and synthetic, linear perfection and natural imperfection.

For Chapter 2, Y-3 introduces a selection of dynamic apparel looks with a focus on refined cotton twill workwear inspired garments and reimagined sporting classics. Subtle yet bold overshirts, cargo pants, and tops are constructed with utility pockets and adjustable hems, while updated takes on the iconic adidas Superstar Tracksuit are elevated with topographical map piping. A selection of garments inspired adidas’ Teamgeist soccer jerseys rounds out the apparel collection, with each piece bearing a digital rust print inspired by the natural process of oxidation. Accompanying the apparel offering is a suite of accessories including nylon backpacks, totes, and holdalls.

From apparel to footwear, the second seasonal chapter plays host to an expressive selection of silhouettes as adidas performance Running technology is recontextualized through the lens of Y-3. Moving boldly into tomorrow, Yohji Yamamoto’s take on adidas’ pinnacle running silhouette takes the form of the Y-3 PRIME X 2 STRUNG, while the Y-3 ADIOS PRO 3.0 arrives in three colorways.

From the past, reborn, to the future, the Y-3 Spring/Summer 2024 Chapter 2 collection is then punctuated by the Y-3 WATER SLIDE, the Y-3 SANDAL, and an update to the instantly recognizable Y-3 ITOGO which sees the silhouette’s straps swapped out for an engineered print.

• Three out of four business units with record sales and results
• Carbon Fibers business weighs on the Group's profitability
• Group sales of €1,089.1 million (-4.1%) and adjusted EBITDA of €168.4 million (-2.5%) in a difficult market environment
• Sales and earnings forecast for 2023 achieved despite drop in demand from key market
• 2024 further capacity expansion in graphite components for silicon carbide-based semiconductors

In fiscal year 2023, SGL Carbon achieved the sales and earnings targets set at the beginning of the year despite the drop in demand from the important wind market and an increasingly challenging economic environment. Group sales decreased slightly by €46.8 million (minus 4.1%) to €1,089.1 million (previous year: €1,135.9 million). At € 168.4 million, adjusted EBITDA, a key performance indicator for the Group, was also down slightly (minus 2.5%) compared to the previous year (€172.8 million) but was clearly within the forecast range for 2023 of €160 to 180 million.

While the positive sales development of the Graphite Solutions (+€53.5 million to €565.7 million), Process Technology (+€21.6 million to €127.9 million) and Composite Solutions (+€0.8 million to €153.9 million) business units had a positive effect, the Carbon Fibers business unit had a negative impact on Group sales with a sales decline of €122.3 million to €224.9 million.

Outlook
The global economy will continue to face comparatively high interest rates and subdued growth prospects in 2024. Tighter financing conditions, weak trade growth and a decline in business and consumer confidence are also weighing on the economic outlook. In addition, heightened geopolitical tensions are contributing to increased uncertainty.

SGL Carbon expects different developments in our key sales markets in 2024. The most important sales and earnings driver will be demand for specialty graphite components for the semiconductor industry. In contrast, all indicators currently suggest that demand for carbon fibers for the wind industry will remain weak in 2024 and that the Carbon Fibers (CF) business unit will therefore continue to record operating losses. Even if demand picks up, SGL Carbon assumes that Carbon Fibers will require additional resources to make the most of market opportunities. With this in mind, teh company announced on February 23, 2024, that they are reviewing all strategic options for Carbon Fibers. These also include a possible partial or complete sale of the business unit.

SGL Carbon's sales forecast for the financial year 2024 takes all four operating business units into account, as the company is only at the beginning of evaluating the strategic options for CF. In line with the assumptions outlined, SGL Carbon is therefore expecting Group sales at the previous year's level (2023: €1,089.1 million).

In the earnings forecast, SGL Carbon has taken into account underutilization of production capacity in the Carbon Fibers business unit and the associated high idle capacity costs. The projected operating loss of CF will have a negative impact on the adjusted EBITDA of the SGL Carbon Group in 2024. Due to the expected positive development of Graphite Solutions, SGL Carbon anticipates an adjusted EBITDA of between €160 million and €170 million for fiscal year 2024, taking into account all four operating business units. Should the process of reviewing all strategic options for the CF business unit result in a sale, the forecast of adjusted EBITDA in 2024 would be between €180 - 190 million.

• Solvay’s FY 2023 financial statements reflect the Partial Demerger completed on December 9, 2023, with the Specialty businesses transferred to Syensqo classified as discontinued operations for 2023.
• New Solvay leadership team committed to drive the transformation of the company.
• Net sales for the full year 2023 at €4,880 million were down -12.6% organically versus 2022, driven primarily by volume declines. In Q4, net sales decreased organically by -18.9% from both lower volumes and prices.
• Underlying EBITDA of €1,246 million for the full year 2023 was stable (+0.2%) on an organic basis compared to a record 2022, with positive Net Pricing and lower fixed costs offsetting the drop in volumes. EBITDA in the fourth quarter was down -24.5% organically vs Q4 2022, fully driven by lower volumes, with variable costs reduction offsetting price erosion, while fixed costs decreased slightly.
• Underlying net profit from continuing operations was €588 million in 2023 compared to €740 million in 2022.
• Free Cash Flow of €561 million in 2023 (+17.3% vs. €479 million in 2022) resulting in a record FCF conversion ratio of 45.4%, thanks to the strong EBITDA performance and to the positive impact from working capital variation.
• ROCE was 20.4% in 2023, -2.5pp compared to 2022 as a result of lower profit.
• Solid balance sheet at the end of December 2023, in line with the target capital structure announced in November 2023, with an underlying net debt of €1.5 billion, which translates into a leverage ratio of 1.2x.
• Total proposed gross dividend of €2.43 per share, subject to shareholders’ approval during the next Ordinary General Meeting of May 28, 2024.
• Solvay continues to reduce its GHG emissions (-19% vs 2021, scope 1 and 2).
• 2024 Outlook: Organic growth of the underlying EBITDA of -10% to -20% compared to restated 2023; Free cash flow of minimum €260 million

2024 outlook
Across its product portfolio, Solvay expects current demand levels to continue over the next few months and, as such, expects H1 2024 volumes to be broadly in line with H2 2023. At this point, there is little visibility on the second half of the year, however there are signs that the trend in the second half could improve. Solvay expects Soda Ash prices over FY 2024 to be lower than FY 2023, consistent with the current market environment, which will affect the business margin in 2024. Pricing trends across Solvay’s other businesses are forecasted to be more resilient year on year.

Lower energy and raw materials prices should offset some of the negative pressure on the topline. More importantly, Solvay has started to implement cost savings initiatives that will start to deliver results in 2024.

For full year 2024, Solvay expects an organic growth of the underlying EBITDA by -10% to -20% versus a high comparison base in 2023, especially in H1. This translates into a range of €925 million to €1,040 million at a 1.10 EUR/USD exchange rate.

The organic growth of the underlying EBITDA is calculated from a 2023 restated figure of €1,154 million (vs a reported figure of €1,246 million).

Free cash flow to Solvay shareholders from continuing operations is expected to be greater than €260 million, in line with the cash usage prioritization presented during the Capital Market Day in November 2023. It is supported by Solvay’s ability to manage its capex and working capital to ensure the financing of its businesses and the payment of dividends while keeping the strength of its balance sheet intact.

Solvay remains committed to implement its strategic roadmap and reconfirms its 2028 targets as communicated at the Capital Markets Day of November 2023.

• Sales of CHF 1 418.6 million in the 2023 financial year
• Order intake of CHF 541.8 million in the 2023 financial year; order backlog of around CHF 650 million as of December 31, 2023
• EBIT margin of 7.2%
• “Next Level” performance program on track
• Proposed dividend of CHF 3.00 per share
• Outlook 2024 with sales of around CHF 1 billion

The Rieter Group closed the 2023 financial year with slightly lower sales of CHF 1 418.6 million (2022: CHF 1 510.9 million), down 6% on the previous year. In line with expectations, the order intake of CHF 541.8 million was considerably below the prior year period (2022: CHF 1 157.3 million). In a challenging business environment, Rieter generated an EBIT margin of 7.2%. Implementation of the “Next Level” performance program to increase profitability is proceeding according to plan.

Outlook 2024
Markets remain under pressure from the economic slowdown, high inflation rates and noticeably dampened consumer sentiment. Customers are reluctant to place orders due to financing challenges. The first signs of a recovery in the 2024 financial year have emerged in the key markets of China and India. Rieter expects demand to increase in the coming months.
For the full year 2024, Rieter anticipates sales in the region of CHF 1 billion and a positive EBIT margin of up to 4%.