From the Sector

INDA, the Association of the Nonwovens Fabrics Industry, announces the publication of a new study, North American Nonwoven Materials Annual Study 2022.

Based on actual surveys and interviews with producers, enhancing the accuracy and relevance, this study tracks machine additions, closures, and productivity improvements. This study is the industry benchmark for capacity and production information for North America and provides an estimate of operating rates, based on nameplate machine capacity, through the year 2022. The 72-page study contains 43 figures and 11 tables.

Findings from this year’s study include:

• North American capacity continues to increase with investments being made across all the processes and for a variety of end-uses. The industry’s nameplate capacity utilization has increased year-over-year, for the fifth consecutive year.
• In 2022, capacity of nonwovens in North America reached 5.565 million tonnes, an increase from the previous year of 2.4% (net growth of 128,700 tonnes) and an improvement over the previous year’s growth rate of 1.8%.
• North American imports, in tonnage, decreased 24.3% in 2022 and exports decreased 16.3% due to market stabilization after COVID. Nonwoven production tends to stay within the region, so the net trade balance (imports less exports) accounted for less than 5.5% of the region’s capacity.

• Revenue rose to EUR 2.57 bn, while EBITDA declined to EUR 241.9 mn
• Implementation of EUR 70 mn cost reduction program proceeding according to plan
• Largest investment program in the company’s history including the lyocell plant in Thailand and the pulp mill in Brazil implemented on time and within budget
• Outlook: Lenzing expects EBITDA in 2023 to be in a range of EUR 320 mn to EUR 420 mn

The Lenzing Group was increasingly affected by extreme developments on the global energy and raw material markets in the 2022 financial year, in tandem with most of manufacturing industry in Europe. The market environment also deteriorated significantly in the third and fourth quarters, while worsening consumer sentiment placed an additional burden on Lenzing’s business growth.

In the year under review, revenue increased by 16.9 percent year-on-year to reach EUR 2.57 bn, primarily as a result of higher fiber prices. The quantity of fiber sold decreased, while the quantity of pulp sold rose. In addition to lower demand, the earnings trend particularly reflects the increase in energy and raw material costs. Earnings before interest, tax, depreciation and amortization (EBITDA) decreased by 33.3 percent year-on-year to EUR 241.9 mn in 2022. The net result for the year was minus EUR 37.2 mn (compared with EUR 127.7 mn in the 2021 financial year), while earnings per share stood at minus EUR 2.75 (compared with EUR 4.16 in the 2021 financial year).

Outlook
The war in Ukraine and the tighter monetary policy pursued by many central banks to combat inflation will continue to exert pressure on the global economy. The easing of China’s zero-Covid policy could lead to an unexpectedly rapid recovery. However, the IMF has warned that risks remain high overall and projects growth of 2.9 percent in 2023. Exchange rate volatility looks set to continue in regions that are important to Lenzing.

These challenging market conditions are also continuing to weigh on consumer confidence and sentiment in the sectors relevant to Lenzing. The outlook has improved slightly of late, with inventory levels returning to normal across the value chain. Nonetheless, subdued demand remains a source of concern for market players.

Inventories in the bellwether cotton market have diminished recently, although they remain above pre-pandemic levels. A decline in crops is foreseeable in the current 2022/2023 harvest season. The sharp rise in prices on the energy and raw material markets will continue to pose significant challenges for the market.

Overall, earnings visibility remains restricted.

In structural terms, Lenzing expects a continued rise in demand for environmentally friendly fibers in the textile and clothing industry, as well as in the hygiene and medical sectors. Thus, with its “Better Growth” strategy, Lenzing is very well positioned and will continue to drive growth in specialty products, while pursuing its sustainability targets including the transformation from a linear to a circular economy model.

In light of these factors and assuming a further market recovery in the current financial year, the Lenzing Group expects EBITDA in 2023 to be in a range of EUR 320 mn to EUR 420 mn.

With many trade fairs restarting their event schedules worldwide, and China notably relaxing border restrictions for travellers entering the country, global industry players are looking forward to the return of the Asian home textile show.

The Autumn Edition, which is more targeted towards international participants, will take place at the National Exhibition and Convention Center (Shanghai) from 16 – 18 August 2023. Due to easing travel restrictions and the promising home textiles market, the organisers expect to welcome more overseas exhibitors and visitors to the upcoming show.  

With China’s reopened borders the latest step in the global home textiles industry getting back on track, international suppliers have been actively seeking ways to reinvigorate business growth stunted by the pandemic, and participating in reputable trade fairs is a common choice.

According to TexPro, the global home textiles market is expected to grow at an annual rate of 3.5% between 2020 and 2025, with the market size to reach over USD 151 billion by the end of the forecast period. Regionally, China is expected to remain the world’s largest home textiles market with a share of over 28%.

As an important sector for the home textiles industry and the global economy in general, China has announced several policies to facilitate business and trading activities that involve foreign companies. One of the most important is the ease of the travel regulations when entering the country.

735 exhibitors and over 20,000 buyers joined the previous edition, and participants can expect a comprehensive platform in autumn. The fair will comprise a wide range of home textile products, including bedding & towelling, rugs, table & kitchen linen, upholstery & curtain fabrics, editors, home textile technologies and textile design. Intertextile Shanghai Home Textiles – Autumn Edition is organised by Messe Frankfurt (HK) Ltd; the Sub-Council of Textile Industry, CCPIT; and the China Home Textile Association (CHTA).

With China easing its pandemic restrictions, foreign exhibitors and buyers can look forward to quarantine-free travel when participating at this year’s industry showcase in Shanghai. The technical textile and nonwovens fair is scheduled to take place from 19 – 21 September 2023 at the Shanghai New International Expo Centre, amid positive market forecasts for both sectors. The organisers are anticipating a strong showing and the conclusion of an inconsistent period for in-person textile business.

“The industry has demonstrated incredible patience and resilience over the course of the pandemic,” said Ms Wilmet Shea, General Manager of Messe Frankfurt (HK) Ltd. “With both markets growing and China opening its borders, we are excited at the prospect of providing participants with an international, business-friendly platform and expect to welcome a healthy number of exhibitors later this year.”

The global technical textile and nonwovens markets are both set to perform strongly over the next few years. According to Grand View Research, the technical textile market is forecast to expand at a CAGR of 4.7% from 2022 to 2030^[1]. The nonwoven fabrics market is anticipated to display an even stronger CAGR of 5.6% during the same period^[2], with Asia-Pacific to maintain its position as the biggest regional market.

As one of Asia’s leading trade fairs for the abovementioned sectors, Cinte Techtextil China is the preferred platform for multiple industry players. Speaking at the previous edition in 2021, Mr Seven Shen, Sales Manager at Libero Trading (Shanghai) Co Ltd, China, said: “We have been exhibiting at this fair for years, and know we will meet our target customers at every edition. The buyers here are all highly specialised.”

During his interview at the same edition, Mr Eric Ni, Senior Manager, China Supply Chain Marketing for Cotton Council International, USA, commented: “We hope to use this platform to meet more companies and brands in the nonwovens industry who are interested in US cotton, and to meet up with old friends to discuss the current situation and industry trends. The fair’s buyers are quality, and we have found some new potential clients at this edition.”

Many buyers at the previous edition also gave positive appraisals. “As a professional trade fair for technical textile and nonwoven products, Cinte Techtextil China is not only a platform to gather qualified industry players, but also the best place to showcase new products and innovations,” said Mr Lin Bin, Technical Director at Zhejiang Xinna Medical Device Technology Co Ltd, China. “Specific and high quality products enhance sourcing efficiency for buyers, and exposure to new trends and market developments ensures my company visits here regularly.”

The fair’s product categories cover 12 application areas, which comprehensively span a full range of potential uses in modern technical textiles and nonwovens. These categories also cover the entire industry, from upstream technology and raw materials providers to finished fabrics, chemicals and other solutions. This scope of product groups and application areas ensures that the fair is an effective business platform for the entire industry.

^[1] “Technical Textile Market Size, Share & Trends Analysis Report 2022-2030”, 2022, Grand View Research, https://bit.ly/3IAxQIK, (Retrieved: January 2023)
^[2] “Nonwoven Fabrics Market Size”, 7 September 2022, GlobeNewswire, https://bit.ly/3CxPE3u, (Retrieved: January 2023)

In view of the easing of pandemic restriction policies in China, the Spring Editions of Intertextile Shanghai Apparel Fabrics, Yarn Expo and Intertextile Shanghai Home Textiles have been moved to the new timeslot of 28 – 30 March 2023. This will allow both local and international fairgoers more time to prepare for their participation, with a higher industry turnout now expected at the three fairs. The fairs will still be located at the National Exhibition and Convention Center in Shanghai where they were originally due to be held from 8 – 10 March.

Discussing the change of dates, Ms Wilmet Shea, Deputy General Manager of Messe Frankfurt (HK) Ltd explained: “After talking to our stakeholders, we believe adjusting the spring show dates to the end of March is the right move. It provides enough time for exhibitors and visitors from local and abroad to plan for the fairs and capitalise on the ample international business opportunities brought by the reopening of China’s border.”

and textile technology company Infinited Fiber Company’s work to build the world’s first commercial-scale Infinna™ textile fiber factory in Kemi, Finland, has progressed largely according to plan since the announcement of the factory site in June 2022. The company is increasing its focus on scaling Infinna™ production volume further as quickly as possible. This is in response to the continued and growing customer demand for the company’s high-quality regenerated textile fiber Infinna™. The market impacts of the ongoing war in Ukraine – including the increased uncertainty on the global utility, commodity and financial markets – have highlighted the need to proceed rapidly with technology scaling on multiple fronts.
 
“We are not immune to the global market context in which we operate. The supply chain issues stemming from the Covid-19 pandemic are still wreaking havoc, and the ongoing war in Ukraine has dealt a heavy blow to the global utility, commodity, and financial markets – and to us. We are satisfied with the progress at the site of our planned commercial-scale factory and the opening of the factory remains our key priority. The current, unstable market environment has highlighted the need for us to also accelerate efforts to simultaneously pursue other avenues for scaling production, with the ultimate aim of serving our customers in the best possible way in the long run,” said Infinited Fiber Company CEO and cofounder Petri Alava.
 
Infinited Fiber Company said in June that it planned to build a factory to produce Infinna™, a textile fiber that can be created 100% from cotton-rich textile waste, at the site of a discontinued paper mill in Kemi, Finland. The factory is expected to create around 270 jobs in the area and to have an annual production capacity of 30,000 metric tons, equivalent to the fiber needed for about 100 million T-shirts. The future factory’s customer-base includes several of the world’s leading apparel companies, with most of the future production capacity already sold out for several years.
 
Since June, Infinited Fiber Company has advanced the site-specific basic engineering, recruitment planning, vendor selection, and permit processes according to plan. The limited component availability caused by the continuing impacts of the Covid-19 pandemic and the war in Ukraine have, however, prolonged significantly the delivery times for some of the key equipment and machinery needed for the factory. As a result of these developments, Infinited Fiber Company has re-evaluated its overall factory project timeline. The first commercial fiber deliveries from Kemi are now expected to begin in January 2026. The scope of the project remains unchanged and construction work at the site is expected begin during 2023 as previously communicated.
 
In addition, the European energy crisis sparked by the war in Ukraine has caused the electricity prices in Finland to roughly triple, and the prices of some of the key chemicals needed in the fiber regeneration process have risen by some 200-300% since the start of the war.
 
“We of course don’t have a crystal ball. But according to our advisors and other experts, utility and commodity prices are forecast to normalize before 2026, when we now expect the first commercial fiber deliveries from Kemi to be shipped. In addition to the likely normalization of the market, the extended timeline enables us to undertake the necessary measures to develop the profitability of the future factory. The growing demand for Infinna™, despite the general turbulence, is an encouraging and clear indication of the fashion industry’s commitment to circularity,” said Petri Alava.

North Carolina textile executives spanning the fiber, yarn, fabric, and finished product textile industries participated in a roundtable discussion with Rep. Kathy Manning (D-NC), at which they discussed the innovative achievements and competitiveness of the domestic industry and outlined priority issues in Washington that impact their daily operations.

The roundtable discussion, hosted by Unifi Inc. and sponsored by the National Council of Textile Organizations (NCTO), was held at Unifi’s headquarters in Greensboro, North Carolina.

North Carolina is the second largest state employer of textile-related jobs, employing more than 30,000 jobs in 2021, according to U.S. government data. The state’s $2.7 billion in textile-related exports leads the nation, according to U.S. government data.

Congresswoman Manning’s visit comes at a pivotal time for the U.S. textile supply chain, which produced $65.2 billion in output in 2021 and employed nearly 535,000 workers. The industry has been at the forefront of domestic manufacturing of over 1 billion personal protective equipment (PPE) items during the COVID-19 pandemic.

During the roundtable, North Carolina executives showcased the industry’s important contribution to the state and the U.S. economy as well as its advanced sustainability initiatives, while outlining critical policies, such as the importance of Buy American and Berry Amendment government procurement policies, maintaining strong rules of origins in free trade agreements, supporting a domestic PPE production sector, and the need to address larger systemic trade issues with China.

“In North Carolina, the textile industry is woven into the very fabric of our state and economy, with more than 33,000 workers employed in over 600 textile manufacturing facilities across the state. In Congress, I am committed to supporting our homegrown industry by making PPE in America, protecting the yarn forward rule of origin in our trade agreements, and cracking down on China’s unfair trade practices. I am thrilled to engage with industry leaders in my district, as we discuss ways to grow the U.S. textile industry and the critical role that textile manufacturers play in our local, state, and national economy,” said Congresswoman Kathy Manning.

• Order intake of CHF 869.4 million, order backlog of more than CHF 2 100 million
• Sales of CHF 620.6 million, preproduced deliveries in the three-digit million range had to be postponed until the second half of 2022
• EBIT of CHF -10.2 million, net result of CHF -25.2 million due to significant cost increases, additional costs, and acquisition-related expenses
• Action plan to increase sales and profitability
• Rieter site Winterthur
• Outlook

Rieter continued to be successful in the market in the first half of 2022. Based on the company’s technology leadership, innovative product portfolio and the completion of the ring- and compact-spinning system, a high order intake and a significant increase in sales were generated. The increase in sales was achieved even though preproduced deliveries in the three-digit million range had to be postponed until the second half of 2022. The order backlog is at a record level. Despite higher sales, the significant increase in material and logistics costs, additional costs for compensation of the material shortages and the expenditure incurred for the acquisition in the years 2021/2022 resulted in a loss. Rieter is implementing an action plan to increase sales and profitability. The sales process for the remaining land owned by Rieter was initiated.

Order Intake and Order Backlog
Rieter posted an order intake of CHF 869.4 million, which included CHF 176.6 million from the businesses acquired in the years 2021/2022. As expected, demand has thus returned to normal compared with the exceptionally high figure for the prior-year period, but remains well above the average figure for the last five years of around CHF 570 million (first half 2021: CHF 975.3 million, first half 2022 excluding acquisition effect CHF 692.8 million).

The regional shift in demand with investments in additional spinning capacity outside China along with investments in the competitiveness of Chinese spinning mills continues. Rieter benefits from its technology leadership, the innovative product portfolio and the completion of the ring- and compact-spinning system through the acquisition of the automatic winding machine business. The largest order intakes came from India, Turkey, China, Uzbekistan, and Pakistan.

On June 30, 2022, the company had an order backlog of more than CHF 2 100 million (June 30, 2021: CHF 1 135 million). Cancellations in the reporting period amounted to around 5% of the order backlog.

Sales
The Rieter Group posted sales of CHF 620.6 million, which included CHF 68.9 million from the businesses acquired in the years 2021/2022 (first half 2021: CHF 400.5 million).

As a result, sales were significantly higher than in the prior-year period, although preproduced deliveries, which mainly affected the Business Group Machines & Systems, in the three-digit million range had to be postponed until the second half of 2022. The reasons for the postponements were the COVID lockdown in China and supply chain bottlenecks.

EBIT, Net Result and Free Cash Flow
Rieter posted a loss of CHF -10.2 million at the EBIT level in the first half of 2022.

Earnings were impacted by significantly higher material and logistics costs. The price increases already implemented are having a delayed effect, mainly in the Business Group Machines & Systems, and were therefore unable to compensate for the high increase in costs. In addition, costs in connection with material shortages negatively impacted profitability. The result also includes acquisition-related expenses of CHF -11.2 million.

The loss at the net result level was CHF -25.2 million, of which CHF -17.6 million was due to the acquisition.

Free cash flow was CHF -57.1 million, attributable to the build-up of inventories in connection with the high order backlog and postponed deliveries.

Action Plan to Increase Sales and Profitability
Rieter is implementing a comprehensive package of measures with the aim of increasing sales and profitability in the second half of 2022.

The package focuses on two main priorities: Firstly, Rieter is continuing to systematically implement price increases while working to improve the quality of margins of the order backlog, so as to compensate for cost increases in materials and logistics.
Secondly, Rieter is working closely with key suppliers and is developing alternative solutions to eliminate material bottlenecks, as far as possible, in order to safeguard deliveries.

Rieter Site Winterthur
The Board of Directors has decided to begin the process for the sale of the remaining land at the Rieter site in Winterthur (Switzerland). In total, around 75 000 m2 of land will be sold.

Outlook
As already reported, Rieter expects demand for new systems to normalize further in the coming months. Due to the capacity utilization at spinning mills, the company anticipates that demand for consumables, wear & tear and spare parts will remain at a good level.

For the full year 2022, due to the high order backlog and the consolidation of the businesses acquired from Saurer, Rieter expects sales of around CHF 1 400 million (2021: CHF 969.2 million). The reduced sales forecast compared to early 2022 (March 2022: CHF 1 500 million) reflects the impact of global supply bottlenecks. The realization of sales revenue from the order backlog continues to be associated with risks in relation to the well-known challenges.

Despite significantly higher sales, Rieter expects EBIT and net result for 2022 to be below the previous year’s level. This is due to the considerable increases in the cost of materials and logistics, additional costs for compensation of material shortages as well expenses in connection with the acquisition in the years 2021/2022. Despite the price increases already implemented, global cost increases continue to pose a risk to the growth of profitability.

• Annual assembly of ACIMIT, the Association of Italian Textile Machinery Manufacturers

• Digitalization and Sustainability Key to Resiliency for Italian Textile Machinery Sector

The objective critical issues faced by Italy as a whole throughout the course of 2021, primarily dictated by a pandemic that upset any and all pre-existing equilibriums, have not slowed or halted the Italian textile machinery sector.

Indeed, data presented during the annual assembly of ACIMIT, the Association of Italian Textile Machinery Manufacturers, held on 1 July proved decidedly positive, showing that in 2021 the sector recovered significantly compared to 2020, to the point of returning to pre-Covid levels.

Specifically, Italian textile machinery production amounted to 2.388 billion euros (+35% over 2020 and + 5% over 2019), with total exports amounting to 2.031 billion euros (+37% over 2020 and +9% over 2019).

However, these results do not cancel the obstacles that companies are still facing. Looking to the near future, expectations are for a rather uncertain outlook, as underscored by ACIMIT President Alessandro Zucchi: “2022 remains a year replete with unknown factors, starting with the Russian-Ukrainian conflict, along with the persistence of the pandemic, which seriously risk delaying expected growth consolidation for businesses in the sector. Difficulties in finding raw materials and components negatively affect the completion and fulfilment of orders processed as far back as 2021. To boot, rising energy costs and inflationary trends affecting numerous commodities are depressing overall business confidence. So the outlook for the sector is not so good.”
As such, the two cornerstones through which ACIMIT aims to support the Italian textile machinery sector are digitilization and sustainability.

4.0: The textile machinery sector looks to the future
The road to digital transformation has already led numerous manufacturers to completely rethink their production processes, rendering them more efficient and l ess expensive. The digital world is moving ahead at a decisive rate in the textile machinery sector, where the buzzwords are increasingly, for instance, the Internet of Things connecting to a company’s ecosystem, machine learning algorithms applied to production, predictive maintenance, and the integrated cloud management of various production departments. It is no coincidence that ACIMIT has focused decisively on its Digital Ready project, through which Italian textile machinery that adopt a common set of data are certified, with the aim of facilitating integration with the operating systems of client companies (ERP, MES, CRM, etc.).

A green soul
Combining production efficiency and respect for the environment: a challenge ACIMIT has made its own and which it promotes among its members through the Sustainable Technologies project. Launched by the association as early as 2011, the project highlights the commitment of Italian textile machinery manufacturers in the area of sustainability. At the heart of the project is the Green Label, a form of certification specifically for Italian textile machinery which highlights its energy and environmental performance. An all-Italian seal of approval developed in collaboration with RINA, an international certification body.
The assembly held on 1 July provided an opportunity to take stock of the Sustainable Technologies project, more specifically, with the presentation of the Rina Consulting survey on the Green Label’s evolution and impact in recent years.

The results have confirmed the initiative’s extreme validity. The technological advances implemented by the association’s machinery producers participating in the project have effectively translated into benefits in terms of environmental impact (reduction of CO₂ equivalent emissions for machinery), as well as economic advantages for machinery users.

With reference to the year 2021, a total of 204,598 tons of CO₂ emissions avoided on an annual basis have been quantified, thanks to the implementation of improvements on machinery. This is a truly significant reduction which, for the sake of comparison, corresponds to the carbon dioxide emissions generated by 36,864 automobiles travelling an average of 35,000 km a year. In terms of energy savings, the use of green labeled textile machinery has provided excellent performances in allowing for a reduction of up to 84% in consumption.

A round table discussion on the Green Label’s primary purpose
The environmental and economic impact generated in production processes for Italian textile machinery through the use of Green Label technologies was the focus of the round table which concluded the ACIMIT assembly.

Moderated by Aurora Magni (professor of the Industrial Systems Sustainability course at the LIUC School of Engineering), the debate involved Gianluca Brenna (Lipomo Printing House administrator and Vice President of the Italian Fashion System for Welfare), Pietro Pin (Benetton Group consultant and President of UNI for the textile-clothing area), Giorgio Ravasio (Italy Country Manager for Vivienne Westwood), as well as ACIMIT President Alessandro Zucchi.

Called on to compare common factors in their experiences relating to environmental transition processes for their respective companies, the participants were unanimous: the future of Italian textile machinery can no longer ignore advanced technology developments capable of offering sustainable solutions with a low environmental impact while also reducing production costs. This philosophy has by now been consolidated, and has proven to lead directly to a circular economy outlook.

The upcoming ITMA 2023 exhibition
Lastly, a word on ITMA 2023, the most important international exhibition for textile machinery, to be held in Italy from 8 to 14 June 2023 at Fiera-Milano Rho. Marking the 19th edition of ITMA, this trade fair is an essential event for the entire industry worldwide, providing a global showcase for numerous innovative operational solutions on display. A marketplace that offers participants extraordinary business opportunities. The participation of Italian companies is managed by ACIMIT.

EURATEX has just released its Spring report, offering a detailed insight into trade figures for the European textile and apparel industry in 2021. The numbers are encouraging: comparing with the dramatic corona-year 2020, EU exports of textile and clothing articles increased by +10.6%, while imports dipped by -7.5%. As a result, the EU trade deficit improved, even it remains significant (- €48 billion).

Furthermore, import prices went slightly down in clothing and dropped in textiles, following a strong decrease of Chinese import prices of face masks and protective medical supplies.

The boost in exports was mainly due to strong performance on the Swiss, Chinese and US markets. On the other side, EU sales of textile & clothing to the United Kingdom fell sharply (-23%), due to Brexit new requirements, customs’ delays and shortage of truck drivers.  Imports from the EU top supplier, China, plunged by -28%, corresponding to €13 billion. Similarly, textile and clothing imports from the United Kingdom recorded a sharp decrease over the period (-48%, equal to €-3 billion).

Director General Dirk Vantyghem commented: “the 2021 export figures, presented in this Spring report, confirm that EURATEX members have gained momentum; even if energy prices are causing some serious short-term disruptions, our long-term ambition remains to be a world leader on sustainable textiles.”

The international trade dimension is indeed critical for the competitiveness of the European textile ecosystem, and needs to be fully embedded in the EU’s Strategy for Sustainable and Circular Textiles. The Commission insists that “all textile products placed on the EU market, are durable, free of hazardous substances, produced respecting social standards…” This is an essential condition to create a level playing field between all textile and apparel companies, regardless of their production base. With €100 billion of imports, and over 20 billion of “foreign” textile items put on the Single Market, this requires a dramatic upscaling of market surveillance, without however disrupting fluid supply chains.

Looking at the impact of war in Ukraine, EURATEX has strongly condemned the Russian aggression, and offered support to the Ukrainian textile industry. Ukraine offers valuable sourcing opportunities for European textile and apparel brands, as part of a broader nearshoring trend, which seems to emerge from the trade figures.