From the Sector

After the success of the two first editions, JEC World organizes the third edition of Startup Booster, the leading startup competition in Composites, where ten startups will present their innovation in front of a jury of experts.

EC Group launched Startup Booster programme in 2017 to get closer to the startup world, to attract the new generation of composites entrepreneurs and put them at the forefront of the industry.

The program gives the floor to 10 startups, each of them having five minutes to present their innovation, on March 12, 2019, from 10.30 AM in Agora Stage (Hall 5) in front of a jury of experts from the composites industry.

These 10 startups will be also showcasing within the Startup Booster Village, during the three days, and will benefit from a dedicated program, including workshops with Startup Booster Main Innovation partners’ Airbus & Daimler, and Innovation partner’s Altair.

“Daimler being one of the main Innovation Partner of the Startup Booster, we are looking for innovations, in particular sustainable technologies and processes”, said Dr. Karl-Heinz FUELLER, Responsible for material innovations and BIW concept development, Daimler AG.

“As a main Innovation Partner of the Startup Booster competition we get fantastic direct engagement with the innovators who are defining solutions for the future”, said Jelle BLOEMHOF, Head of Manufacturing Technologies of Composite at Airbus.

Driven by its natural inclination for the implementation of smart and innovative solutions fully in line with the latest global fashion trends, Iluna Group with ROICA™ by Asahi Kasei join the latest edition of the Parisian tradeshow for lingerie, and activewear materials and accessories.

Experts in the production of stretch lace since 1985, ILUNA today represents the largest European producer. Thanks to the effectiveness of their approach and to their solid and continued commitment, Iluna Group has been the very first lace producer to have gained the GRS (Global Recycled Standard) for their transformed products, together with the company certification STeP (Sustainable Textile Production by Oeko –Tex®).
A relevant achievement for the firm that, thanks to the Green Label collection (a peculiar range that features a 360-degree responsible approach) make responsible innovation an asset for production that focuses on smart ingredients as ROICA Eco-Smart™ family, Tencel™ Lyocell and Q-Nova® by Fulgar.

Of major interest is the fact that the Iluna fashion R&D based its strategic choice for the S/S2020 on the extension of Textronic offer, that belongs to Ultralight series, enriched with new multicolor galloons and raschel allovers. The change of the color of thread in the background as well as in the design gives the green to the reinvention of the same article now perceived in a completely different and impactful way.

• Performance Days - November 28 and 29, 2018 – Hall C1 Booth B18
• Two of TINTEX’s fabrics have made it into the PERFORMANCE FORUM Jury’s Pick Category that represents fabrics which are a valuable contribution to this season Performance Days Focus Topic “WATER – OUR RESPONSIBILITY”

See, touch and experience the latest collection from TINTEX as they reveal a wonderful range of innovative fabrics that redefine fashion, inspire creativity, spark emotion and optimize responsible solutions. TINTEX, being an ingenious leader in textile and research innovation for over twenty years, transforms a new generation of cotton and other natural based materials. Established in the Porto region as authorities in superior dyeing and finishing techniques making TINTEX Textiles the perfect choice for fashion.

All the recent awards bestowed, demonstrate TINTEX continue research and commitment. They have been awarded for the Best product of the Base Layer Category by ISPO jury, moreover they have just received the prestigious German Design Awards 2019 and last but not least, they are selected as finalists for the Future Textile Awards in the category Best Innovation for Sustainable Textiles.
TINTEX continues to lead the way, as they proudly take part in the Make Fashion Circular initiative, by the Ellen MacArthur Foundation and activate change industry wide. This initiative aims to collaborate and innovate towards a new textile economy based on the principles of a Circular Economy.

In addition, since this November, TINTEX is a bluesign® system partner, thus means that they are responsibly acting parties of the textile value chain committed to applying the bluesign® system, continuously improving their environmental performance and always been focused on a sustainable future.

A milestone for TINTEX and fashion, as they launch Naturally Clean - an exceptional smart finishing process that is uniquely responsible. Naturally Clean enhances the natural beauty of cotton, takes a cost effective modern approach to eliminate aggressive treatments and optimizes clean surfaces, vivid colors, providing an exquisitely smooth handfeel. Naturally Clean achieves this by using Novozymes technology, a company that is indeed the world leader in biological solutions. Second, using textile chemicals with the lowest possible environmental impact, without compromising performance, from Beyond Surface Technologies AG. Naturally Clean maintains the original characteristics for an extended period of time. All materials are Oeko-Tex and soon bluesign® certified, thus eliminating harmful substances.
TINTEX’ Autumn/Winter 2019/2020 collection includes vibrant tones, refreshing turquoise and electric green, light and warm copper with chocolate browns that connect the natural and spiritual in an extra-sensorial universe. Infused with a stunning palette of nostalgic and multicultural colors - warm yellow with darkened reds, dynamic purple with urban greys - that express globalization and human connection.
Key smart ingredients of the season are:

• A New Generation of Cotton: GOTS certified organic cotton, Supima® cotton, and ECOTEC® by Marchi & Fildi the smart cotton that saves up to 77.9% water consumption and introduces the concept of a circular economy.
• SeaCell™ and Smartcel™: produced using the Lyocell process in a closed loop with no chemicals released as waste. The patented process of SeaCell™ allows that the positive properties of the seaweed are permanently preserved within the fiber, even after multiple washing cycles. Smartcel™ includes the essential trace element zinc providing anti-inflammatory capabilities.
• REFIBRA™ by Lenzing technology involves upcycling a substantial proportion of cotton scraps e.g. from garment production, in addition to wood pulp, where the raw material is transformed to produce new TENCEL™ Lyocell fiber to make fabrics and garments.
• Bemberg™ by Asahi Kasei: A new generation GRS Certified material, made from cotton linters, with a biodegradability certification by Innovhub. A matchless, high tech natural material, with a special handfeel and aesthetics.
• ROICA™ by Asahi Kasei
  - ROICA™ EF has a percentage of pre-consumer recycled content that is more than 50%, and thanks to this it has been GRS (Global Recycled Standard) certified.
  - ROICA™ V550 a premium stretch innovative yarn boasting the Cradle to Cradle Certified™ Gold Level for Material Health product and ingredients as it was evaluated throughout the supply chain for lower impacts on human and environmental health. Striving toward eliminating all toxic and unidentified chemicals for a safe continuous cycle. Hohenstein Environment Compatibility Certificate - ROICA™ proudly breaks down without releasing harmful substances.

Of special interest this season, the two TINTEX’s fabrics that made it into the PERFORMANCE FORUM Jury’s Pick Category for their contribution to this season Topic “WATER – OUR RESPONSIBILITY”.

A smart rib developed to reduce the water usage as most as possible, from cultivation of raw materials until fabric finishing. A blend of TENCEL™ Modal, cellulosic & biodegradable material treated with no hazardous chemicals, pesticides nor fertilizers, and European hemp, a fast-growing plant that requires very little water and no herbicides, pesticides, synthetic fertilizers or GMO seeds. Both fibres are biodegradable.

The second selected article is a 100% Merino Wool jersey made unique thanks to Colorau® by TINTEX, a patented natural dyeing process technique that uses vegetable herbs and extracts. A great amount of water was saved by avoiding subsequent washing steps. Also, lower water pollution is achieved by avoiding synthetic dyestuffs.

Decline in revenue due to lower prices for standard viscose, less favorable currencies and lower production volume

• Pressure on prices for key raw materials remains high
• Positive impact due to focus on specialty fibers and further optimization of the product mix
• Expansion project in Mobile temporarily mothballed
• Acquisition of the remaining 30 percent of Lenzing (Nanjing) Fibers Co. Ltd.

The Lenzing Group recorded a solid business development in the first three quarters of 2018. The decline in revenue and earnings compared with the same period of the previous year was essentially based on a mix of lower prices for standard viscose, more unfavorable exchange rates and price increases for key raw materials. The Lenzing Group’s strategic orientation with a focus on specialty fibers had a positive impact in this environment.

Revenue decreased by 5.2 percent to EUR 1,636.2 mn over the comparative period of the previous year. Apart from the high starting base, this was primarily attributable to the expected challenging market environment for standard viscose, less favorable exchange rates and lower production volume. EBITDA (earnings before interest, tax, depreciation and amortization) recorded a decline by 26.8 percent to EUR 290.6 mn due to price increases for key raw materials and higher energy and dissolving wood pulp prices. The EBITDA margin dropped from 23 percent in the first three quarters of the previous year to 17.8 percent. EBIT (earnings before interest and tax) fell by 36.2 percent to EUR 190.3 mn, leading to a lower EBIT margin of 11.6 percent (01-09/2017: 17.3 percent). Net profit for the period dropped by 39 percent from EUR 219.3 mn in the previous year to EUR 133.8 mn. Earnings per share equaled EUR 5.06 (01-09/2017: EUR 8.12).

“The Lenzing Group is currently operating in a challenging environment. Against this background, we are satisfied with the solid business development and the corporate strategy sCore TEN has a positive impact. The new production line in Heiligenkreuz started up successfully and customers’ feedback has been positive,” says Stefan Doboczky, Chief Executive Officer of the Lenzing Group. “While many viscose producers are faced with a very tense profit situation, we are well positioned due to our specialty strategy and still expect a satisfactory full year”, Doboczky adds.

Key strategic measures were implemented during the first three quarters of 2018 in line with the sCore TEN strategy. The start-up of new capacities for lyocell fibers in Heiligenkreuz, the production start of LENZING™ ECOVERO™ fibers at the Nanjing site and the investment in another pilot line for TENCEL™ Luxe filaments are important steps to accomplish the goal of increasing the share of specialty fibers in total revenue.

Project in Mobile temporarily mothballed
Due to the decision to temporarily mothball the lyocell expansion project in Mobile, Alabama (USA), in view of the buoyant US labor market and trade tensions between the major trading blocks, the implementation of the expansion plan for specialty staple fibers will be slowed down. The Lenzing Group will put all its effort to readjust the execution of its growth plan to meet strong market demand for its lyocell fibers. This includes an increased focus on the lyocell expansion project in Prachinburi (Thailand).

Advancing forward solutions
Regarding the capacity expansion for specialty products such as TENCEL™ Luxe filaments and LENZING™ ECOVERO™ viscose fibers, Lenzing is still on track. After the introduction of TENCEL™ Luxe branded lyocell filament yarns in the previous year, Lenzing continues to drive innovations in the area of the value chain. In September, the company also announced the successful development of the LENZING™ Web Technology, a new technology platform focusing on sustainable nonwoven products, which will lead to new market opportunities for the industry. Following several years of research and development work and investments totaling EUR 26 mn, the pilot plant at the headquarters in Lenzing has been successfully put into operation.

Largest dissolving wood pulp line worldwide
At the end of 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 single line dissolving wood pulp plant in the state of Minas Gerais (Brazil). This decision supports the self-supply with dissolving wood pulp and the growth in specialty fibers. The joint venture is investigating 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 decisionto build the dissolving wood pulp plant is subject to the outcome of the basic engineering studies and the approval by the respective supervisory boards.

Acquisition of Chinese operation
At the beginning of November the takeover by the Lenzing Group of the remaining 30 percent of its Chinese subsidiary Lenzing (Nanjing) Fibers Co. Ltd. (LNF) from its state-owned joint venture partner NCFC was completed. After closing of the transaction, the Lenzing Group will hold 100 percent of LNF. The acquisition will have a negative impact on net profit of approx. EUR 21 mn for the fiscal year 2018. The purchase of the shares supports Lenzing’s strategic growth as a producer of specialty fibers from the renewable raw material wood in China and worldwide. It paves the way to setting up further production lines for specialty fibers. Lenzing wants to convert LNF into a specialty fibers hub over time.

Expansion of capacities
CAPEX (investments in intangible assets and property, plant and equipment) rose by 35.5 percent year-on-year to EUR 174.1 mn in the first three quarters of 2018. This is primarily attributable to capacity expansions in Heiligenkreuz and the expansion of the existing dissolving wood pulp plant in Lenzing as well as the investments made so far in Mobile.

Outlook
Demand development on the global fiber market remains positive. Lenzing expects wood-based cellulosic fibers to continue to grow at a higher rate than the overall fiber market. In a challenging market environment the Lenzing Group expects solid results for 2018, albeit lower than in the outstanding last two years.

For 2019, Lenzing expects standard viscose markets to remain under pressure because of an ongoing oversupply and very high raw material prices. Lenzing’s specialty fiber business is expected to continue the very positive development.

The above-mentioned development reassures the Lenzing Group in its chosen corporate strategy sCore TEN. Lenzing is very well positioned in this market environment and will continue its consistent focus on growth with specialty fibers.

A new important partnership marks the path of Itema towards a greener future for the whole denim production chain. Prosperity Textile, one of the main denim producers worldwide, has chosen for its new facility one of the most interesting and sustainable-oriented Itema technologies, iSAVER™ equipped on the Itema R95002denim. Prosperity Textiles is, in fact, one of the early adopters of this new technology chosen for the new plant that the world-famous indigo fabrics producer will open in Vietnam, and that will be exclusively equipped with the latest Itema weaving machine model, demonstrating once again its green, future-oriented approach.

Thanks to its partnership with Itema, Prosperity Textiles makes again a step forward in terms of sustainable innovation, as one of the first denim producers able to successfully turn - even the weaving production - green. A partnership that is planned to be showcased in some of the most important textiles exhibitions worldwide focusing on Asian and denim markets. A path that starts with KingpinsShow, Amsterdam (October 24-25) where the Chinese denim producer will put into the spotlight this brand-new solution aimed at further increasing the eco-driven approach of the company; an important appointment is also in the Itema calendar: the ITMA Asia + CITME 2018 exhibition, Shanghai (October 15-19) where the Italian company showcased the important green step-forward in denim weaving processes and the full range of its innovations.

iSAVER™: the ideal green tool for denim weaving
This new technology, developed by ItemaLab™, the Itema Advanced Innovation Department, isable to completely eliminate the left-hand weft waste, allowing to insert the weft yarns in the fabric without the need of additional yarns. iSAVER™ significantly reduces raw material waste, leading to tangible benefits in terms of machine’s efficiency, cost reduction and energy saving.

Just consider that the weaver will gain a minimum saving of € 2.000 per year per machine, and our planet will gain even more. In fact, for the first time in the weaving industry, a sustainable approach when choosing the weaving equipment is now possible. Thanks to iSAVER™, 1.000 Kg of cotton per machine per year – the 3% of the total raw materials - will be saved, thus avoiding the waste of 20 million liters of water, equivalent to 400.000 showers.

Numbers are clear: the introduction of iSAVER™ clearly sets a new benchmark in terms of sustainability within denim fabric production. Furthermore, the iSAVER™ is one of the key features of the Itema R95002denim, the rapier weaving machine born and designed to weave denim guaranteeing to weavers superior textile quality, outstanding user-friendliness and tangible energy and raw materials saving.

A joint eco-driven path
Itema, understanding very well the importance of saving resources and energy to drive the textile production in the direction of a more conscious manufacturing, focused its attention to develop breakthrough weaving solutions and in 2018 introduced to the market the iSAVER™, a revolutionary device dedicated specifically to denim fabrics able to eliminate the waste selvedge on the left-hand side of the fabric.

This is one of the reasons-why Prosperity Textiles has chosen to adopt this extraordinary technology for its new facility. Today Prosperity Textiles is one of the main denim producers worldwide, counting 1,300 employees and 20 offices worldwide. Moreover, a second state-of-theart denim mill will be inaugurated in Vietnam by the end of 2018.
What makes Prosperity able to stand out on a global scale, is not simply its products high quality but the ability to conciliate flawless denim fabric production with a sustainability-oriented mindset that permeates every stage of their textile supply chain.

Prosperity, indeed, adopted innovative green manufacturing concepts through all stages of the company’s operations, from product development, raw materials procurement and processing, to natural resources and energy utilization including waste management. Prosperity’s denim production is based on the employment of best quality yarns available on the market, while still targeting the most sustainable sources, from BCI to organic, recycled cotton, and from Tencel™ Lyocell to Sustans™, in 2017, more than 20 million yards fabric sales from Prosperity are with sustainable fibers inside.
The introduction of eco-friendly dyeing and finishing practices allows the company to create beautiful indigo shades and performance denims, with less water and energy consumption compared to the traditional systems. Last year, Prosperity produced 20% more fabrics than 2016, yet the water and electricity use and greenhouse gas emission was down by 11.5%, 7.9% and 5.4% respectively.

In this continuous process of improvement and contribution to a greener industry and planet, plays a central role the recent renewal of the historic partnership and strategic alliance with Itema – the leading manufacturer of cutting-edge weaving solutions – which represents the natural evolution of a constant process of research for partners able to support Prosperity Textiles’ growth as a sustainable company.
Up to now, all innovations and efforts done in this regard addressed the traditionally more polluting steps of the denim production. In fact, if the development of green technologies is nowadays spread in many fabric processing stages, such as finishing and dyeing, weaving was not yet capable to provide sustainable solutions to weavers.

This autumn, following the success of the first collaboration with Swizz Beatz, Bally joins forces on another unique collection with the Grammy Award-winning music producer and global entrepreneur, inviting meticulously talented pioneer of aerosol X-ray art SHOK-1 to conceptualise and direct a new capsule collection which presents a diagnostic look at contemporary culture through cutting edge expression.

A founding member of the street art movement and a scientist with a degree in Applied Chemistry, SHOK-1 selected three key icons from his back catalogue - X-ray paintings of a hand gesture, a fly and ’The Consumer’ - that symbolise subcultures from his youth that also connect to Bally’s past. The artworks are represented across shoes, accessories and ready to wear. Talking about his vision for the project, SHOK-1 explained that he wanted ‘the collection to speak to the longstanding tradition of subcultures co-opting brands that weren’t meant for them.’ ‘I strongly believe that quality and excellence are universal concepts that can transcend class and cultural boundaries. The Bally that I remember as a kid has this fantastic relationship with subculture. It’s also a brand that has the same kind of attention to detail and production values that I aspire to in my own work, so there was a synergy there.’ Familiar with SHOK-1’s work, Swizz Beatz saw the potential and contacted him to discuss the opportunity: ‘SHOK-1 is a master artist and I chose him because our focus for this capsule was on exploring the art of X-ray and he’s a legend at his craft.’

As with all Bally collaborations, the metamorphosis that naturally evolves from creative cooperation is integral to the process.  Part of the ‘Bally Collective, curated by Swizz Beatz’, this collaboration continues the brand’s commitment to creating a platform to playfully empower artistic license across emerging and established talent.

The exclusive collection will launch in Bally stores worldwide and bally.com in October 2018.

Pedex GmbH, the Wald Michelbach based Perlon Group company was named as a finalist of the ‘Großer Preis des Mittelstandes 2018’ (award for small and medium sized companies) at the gala dinner on 15th September 2018. Together with 21 other finalists from the four competing regions Baden Wurtemberg, Bavaria, Hesse and Thuringia came out on top against 2436 nominated businesses.

The motto for this year’s competition -‘Building for the future’ – is the foundation of the unity within our society.
On 24th May, the Oskar-Patzelt-Stiftung, the founder of this award for small and medium sized companies asked for nominations of excellent medium sized companies for the competition, (nominations cannot come from the company itself.) Only 1 in every 1000 German companies make it onto the list of nominations – this year Pedex GmbH made it! The prize winners meet 12 regional juries and a final jury. The focus of the jury (made up of representatives from business and education) is on the company as a whole and its multifaceted role within society. To aid evaluation, the jury asked about the establishment and safeguarding of jobs and apprenticeships, innovation and modernisation, involvement in the local area as well as service and proximity to customers.

Germany’s most sought after business accolade.
In 2018, more than 7400 institutions from the 16 counties (12 competing regions) throughout Germany nominated a total of 4,917 small and medium sized companies as well as banks and local authorities for the competition, from which a short list of 742 was selected. No other business award in Germany carries such weight (and has now for more than two decades) as the one that the Leipzig based Oskar-Patzelt-Stiftung has been awarding since 1994. The prize doesn’t offer any monetary reward. For the businesses involved, it’s simply about honour, public recognition and approval of their performance, without financial incentive.

• Huntsman Textile effects redefines dyeing of polyester including microfiber and blends with UNIVADINE® E3-3D diffusion accelerant
• Eco-friendly diffusion accelerant provides reproducible, high-speed polyester dyeing

Singapore – Huntsman Textile Effects introduces UNIVADINE® E3-3D next-generation diffusion accelerant to help mills achieve high-performance dyeing of polyester, microfibers and blends in an environment-friendly way that complies with current and anticipated industry sustainability standards.

The demand for polyester and man-made fibers is booming as sports and athleisure apparel markets expand rapidly around the world. At the same time, big-name brands that set trends in the sector continue to increase focus on sustainability and performance. As such, this is putting pressure on mills since the current industry standard involves chemically active diffusion accelerants that contain unwanted chemicals and require additional leveling agents and anti-foaming products that may be hazardous to people and the environment.

Developed by Huntsman Textile Effects specifically to meet these challenges, UNIVADINE® E3-3D diffusion accelerant is low-odor, free of benzyl benzoate and other hazardous substances. Part of Huntsman’s range of innovative dyEvolution™ dyeing auxiliaries, it uses Huntsman’s Active Diffusion Technology to enable high-speed dyeing with best-in-class leveling, retarding and migration properties.

“UNIVADINE® E3-3D diffusion accelerant delivers across three key dimensions – diffusion, leveling and migration – for exceptional performance and environmental and economic sustainability. Its environmental credentials offer mills greater processing flexibility and an optimum price-performance ratio,” said Kerim Oner, Global Marketing Manager for Dyeing Auxiliaries at Huntsman Textile Effects. “We expect this latest offering to change the way that the industry dyes polyester and blends while meeting stringent environmental standards.”

UNIVADINE® E3-3D diffusion accelerant has a high affinity to polyester, causing the fiber to swell and increasing the diffusion of the disperse dye, even at lower temperatures. Multiple leveling mechanisms then slow down the exhaustion rate to ensure safe, defect-free dyeing. Finally, as the dye bath heats up, the product’s strong support for disperse dye migration ensures the dye molecules are evenly absorbed.

As a result of this cutting-edge diffusion technology, UNIVADINE® E3-3D diffusion accelerant can be used to successfully dye polyester fibers in tightly wound or high-density yarn/beam dyeing and is suitable for jet applications without the need for anti-foaming products. Reducing exposure to high heat, its Active Diffusion Technology minimizes the potential to damage the elastane in polyester-elastane blends and provides for on-tone dyeing of microfibers. The superior migration support of UNIVADINE® E3-3D diffusion accelerant also increases reproducibility, allowing mills to dispense with additional leveling agents. Polyester, microfibers and blends treated with UNIVADINE® E3-3D diffusion accelerant comply with the requirements of bluesign®, in addition to being suitable for Standard 100 by OEKO-TEX® and an approved input dyeing auxiliary chemical for GOTS (Global Organic Textile Standard) certified textile products*.

• Back to Seoul: JEC Asia gathers the composites industry in Korea for its 11th edition
• JEC Asia, November 14-16, 2018 – COEX Center, Seoul, South Korea

Paris - After the record-breaking figures of the 2017 edition, that marked the move of JEC Asia from Singapore to Seoul, the event is returning to the capital city of the Republic of Korea with a strong program, not only on the exhibition floor, but also in the conference sessions and all services at the disposal of every attendee.

“We are very grateful for the support of the industry, government bodies, and academics, regarding the evolution of JEC Asia, that has led to the success of the platform. Indeed, 90% of the show floor is already booked which bodes well for the preparation of the event.” Commented Christian STRASSBURGER, Events Director Asia for JEC Group.

“On top of that, the event is truly international, as 45% of the exhibitors are coming from outside Asia. JEC Asia will welcome pavilions from Germany, France, Italy, Japan, China and Singapore, as well as the major composite clusters in Korea.” He added.

FOCUS ON THE AUTOMOTIVE INDUSTRY

The future of mobility is a hot topic for composite materials and JEC Asia will represent, promote and provide information about the increasing integration of composites in automotive developments.
Numerous programs will be offered, such as a whole day conference on Composites in Automotive, a Leadership Composites Circle, an Auto Planet, showcasing parts, a B2B meetings program, a JEC Innovation´Award category and Composites tours (site visits of composite-related facilities).

Finally, for the second time, JEC Asia will host the International Carbon Festival, organized by KCTECH and the Jeonju region, with top-notch conferences and international speakers.

Key Figures 2017

• +230 companies
• 6,271 professional visits
• 43 speakers
• 42 countries represented
• 12 JEC Innovation Awards
• 400 B2B meetings
• 2 Composites Tour

• 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.