From the Sector

Hologenix’s CELLIANT® infrared technology, an ingredient in textiles across many categories including bedding, is now offered in a new line of sustainable dog beds. The first performance fabric product from AVANTI, RESPOND is a wellness collection that promotes good health not only for pets but also for the planet. It is made from 100% recycled PET and uses patented CELLIANT technology for unmatched performance.

CELLIANT transforms the body’s heat into full-spectrum infrared energy. This energy is reflected back to the body, making it possible for the tissue and muscle to absorb it, promoting local circulation and tissue oxygenation. This technology helps keep the body dry and at the appropriate temperature. CELLIANT has been demonstrated to enhance energy, endurance, strength, stamina and comfort as well as promote faster recovery and more restful sleep. The RESPOND beds’ orthopedic memory foam filler adds an extra layer of comfort and wellness.

Introduced at Interzoo in Germany in May, RESPOND dog bedding was the result of determination by AVANTI leaders Raghav and Devika Modi to become champions of pet wellness and performance products while also aligning with the New Delhi, India-based company’s focus on sustainability.  

Ideal for ailing and senior pets, RESPOND beds are made from GRS-certified 100% recycled polyester CELLIANT yarns and orthopedic memory foam and have natural latex-coated bases for extra skid-resistance. AVANTI pet bed covers are removable and washable.

RESPOND dog beds are offered in nine SKUs, three different shapes and three colorways of each shape: grey, blue/grey and green/grey in shades that are associated with wellness.

adidas is adjusting its outlook for the financial year 2022. While second quarter results were somewhat ahead of expectations reflecting continued strong momentum in Western markets and a return to growth in Asia-Pacific, the company has been experiencing a slower-than-expected recovery in its business in Greater China since the start of the third quarter. Previously, the company had assumed that in absence of any major lockdowns as of Q3, currency-neutral revenues in the region would be flat during the second half of the year versus the prior year level. However, given the continued widespread covid-19-related restrictions, adidas now expects revenues in Greater China to decline at a double-digit rate during the remainder of the year.

As a result, adidas now expects currency-neutral revenues for the total company to grow at a mid- to high-single-digit rate in 2022 (previously: at the lower end of the 11% – 13% range). Because of the less favorable market mix due to lower-than-expected revenues in Greater China as well as the impact from initiatives to clear excess inventories in this market until the end of the year, the company’s gross margin is now expected to be around 49.0% in 2022 (previously: around 50.7%). Consequently, the company’s operating margin is now forecasted to be around 7.0% in 2022 (previously: around 9.4%) and net income from continuing operations is expected to reach a level of around € 1.3 billion (previously: at the lower end of the € 1.8 billion – € 1.9 billion range).

So far, the company did not experience a meaningful slowdown in the sell-through of its products or significant cancellations of wholesale orders in any other market. Nevertheless, the adjusted guidance also accounts for a potential slowdown of consumer spending in these markets during the second half of the year as a result of the more challenging macroeconomic conditions.

Despite these headwinds, adidas continues to expect double-digit revenue growth during the second half of the year for the total company. In addition to easier prior year comparables, the acceleration will be driven by adidas’ strong product pipeline, the restocking opportunity with its wholesale customers given unconstrained supply as well as the support from major sporting events.

Based on preliminary numbers, adidas’ currency-neutral revenues grew 4% during the second quarter. This increase was driven by strong double-digit growth in North America and Latin America, high-single-digit growth in EMEA (also double-digit growth excluding negative Russia/CIS impact) as well as a return to growth in Asia-Pacific. In euro terms, sales increased 10% to € 5.596 billion. The company’s gross margin declined 1.5 percentage points to a level of 50.3% and operating margin reached 7.0% during the second quarter (2021: 10.7%). Net income from continuing operations was € 360 million in Q2 (2021: € 387 million) supported by a one-time tax benefit of more than € 100 million due to the reversal of a prior year provision.

• Exceptional achievement of research work on the use of Nuclear Magnetic Resonance (NMR) spectroscopy for understanding PET depolymerization enzymes

Carbios (Euronext Growth Paris: ALCRB), a pioneer in the development of enzymatic solutions dedicated to the end-of-life of plastic and textile polymers, announces the publication of an article entitled “An NMR look at an engineered PET depolymerase” in the scientific journal Biophysical Journal.

The article describes the use of Nuclear Magnetic Resonance (NMR) spectroscopy to study the thermal stability of PET depolymerization enzymes and the mechanism of adsorption of the enzyme on the polymer. This innovative approach, which required months of development, is a world first and opens up new ways of improving these enzymes. This publication confirms Carbios' international lead in the development of the most efficient enzymes for the depolymerization and recycling of plastics.

Prof. Alain Marty, Chief Scientific Officer of Carbios and co-author of the article, explains: “ Nearly 25 researchers are currently working on our unique enzymatic technology. It is based on academic collaborations with the world's leading experts in their fields..”

Dr. Guy Lippens, CNRS Research Director and co-author of the artcle, adds: “Nuclear Magnetic Resonance (NMR) is an extraordinary biophysical technique for visualizing an enzyme directly in solution. Our study is the first to use NMR as a complementary technique to crystallography and molecular modeling to observe a PETase. This gives new perspectives to better understand the functioning of these enzymes and it makes it possible to imagine new ways of improving these enzymes. ”

• China Penalty Tariffs on Finished Textiles & Apparel Give U.S. Companies a Chance to Compete and are a Powerful Trade-Negotiation Tool, NCTO Tells U.S. International Trade Commission

Section 301 penalty tariffs on finished Chinese textile and apparel imports give American manufacturers a chance to compete and provide trade officials with an essential trade negotiation tool, the National Council of Textile Organizations (NCTO) told a key government panel today in a formal written submission. Removing them, the association said, would reward China, put U.S. manufacturers at a competitive disadvantage and do nothing to reduce inflation.

Those were among the key points outlined by NCTO President and CEO Kim Glas in a written testimony submitted to the U.S. International Trade Commission during three days of hearings on the economic impact of Section 301 China tariffs and Section 232 steel tariffs on U.S. industries.

The 301 penalty tariffs should be maintained “absent substantive improvements in China’s pervasive, predatory trade practices,” Glas said in her testimony.  China’s illegal actions “have put U.S. companies at a serious disadvantage, and tariffs give American manufacturers a chance to compete.” Glas noted that U.S. trade officials have “stressed that the penalty tariffs also create leverage and are a ‘significant tool’ in ongoing negotiations with China.”
 
While some advocates for lifting the tariffs point to concerns about inflation, Glas said, “canceling these penalty duties would do little to ease Americans’ inflationary pains.” She also noted that “apparel prices out of China continue to hit rock bottom even with the Section 301 tariffs in place. As detailed in an economic study recently released by Werner International, U.S. import prices for apparel from China have dropped 25 percent since 2019 and 50 percent since 2011.”

Glas also warned that lifting the tariffs would have “a substantial negative ripple effect” on U.S. free-trade agreements, including undermining those with Western Hemisphere partners that have established shorter coproduction supply chains and serve other U.S. and regional interests.

The Section 301 tariffs were first imposed in 2018 in response to China’s persistent violations of intellectual property rules. By law, they are now under review.

Tata Communications, a global digital ecosystem enabler, announces its financial results for the quarter ended 30th June 2022.

Consolidated financial highlights

• Consolidated revenue stood at INR 4,311 crore (USD 558.9 Mn); increasing +5.1% YoY. Sequentially, growth in revenue followed upsides in the Data business
• Consolidated EBITDA came in at INR 1,077 crore (USD 139.7 Mn); enhanced +9.2% YoY, where margins stood at 25%, growing by 95 Bps YoY
• Consolidated PAT stood at INR 544 crore (USD 70.5 Mn) from INR 296 crore (USD 40.1 Mn) in Q1 FY22, marking an increase of +83.6% YoY
• Cash CAPEX for this quarter stood at USD 42.7 Mn relative to USD 46.2 Mn in Q1 FY22

Data services portfolio

• Data business revenues came in at INR 3,340 crore (USD 433.1 Mn), recording an increase of +7.6% YoY. Digital Platforms and Services delivered robust growth of +12.3% YoY
• EBITDA stood at INR 969 crore (USD 125.7 Mn), up +4% YoY backed by consistent delivery in Core Connectivity and Digital Platforms and Services
• The Core Connectivity portfolio reported growth of +3.6% YoY in revenue; EBITDA enhanced by +2.6% YoY, with margins coming in at 42.5%

ISKO teams up with Paolo Gnutti, to break new ground in the world of premium, luxury denim. Combining ISKO’s advanced denim technologies with PG’s creative vision, the result is a special ISKO™ Luxury collection by PG, characterized by a unique high-end appeal.

The collection embodies ISKO’s most revolutionary technological innovations combined with the long-standing expertise of Paolo Gnutti, who explored aesthetics highly profiled to the unique needs of the luxury segment through 7 main moods:

1. Denim addicted, celebrating total denim looks, offering classic silhouettes mixed up with revised volumes and details;
2. Y2k, bringing back the 2000s typical style featuring exposed skin, low waist pants, micro tops, mini skirts, shrunken garments, butterfly decorations and embellishments;
3. Fanaticism, featuring bright, bold colors, intricate prints and logos combined with details that meet ample volume styles;
4. Bounder glam, all about glammed-up leather effects inspired by bikers' unapologetic style and applied to oversize fits, cutouts and lace-ups styles;
5. Moto’roll, where the iconic 60s and 70s biker style is back with a modern twist and a vast range of treatments and fabrics, offering men and women true crowdpleasers;
6. Gingham mania, an in-depth exploration of the gingham trend which finds expression through various dimensions and techniques that cater to any silhouette;
7. Rugged re-made, which celebrates workwear and historical garments creating a style that combines history with technologies, solutions and treatments to recreate that vintage look dear to the heart of lovers of denim heritage

• 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.

ANDRITZ will be presenting its innovative nonwovens production solutions at CINTE 2022 in Shanghai, China (September 6–8). ANDRITZ will show its broad product portfolio covering state-of-the-art nonwovens and textile production technologies such as air-through bonding, airlay, needlepunch, spunlace, spunbond, wetlaid/WetlaceTM, converting, textile finishing, recycling, and natural fiber processing.

SUSTAINABILITY IS KEY
ANDRITZ supports nonwovens producers in the move to sustainability with the aim of reducing or eliminating plastic components while maintaining the high quality of the desired product properties. This applies to all types of sustainable wipes, such as flushable, biodegradable, bio-sourced, carded pulp or standard carded wipes. The latest development in this field is the ANDRITZ neXline wetlace CP line, which integrates the carded-pulp (CP) process. This is a fully engineered production line combining the benefits of drylaid and wetlaid technologies to produce a new generation of biodegradable wipes.

NEXLINE WETLAID AXCESS TARGETS SMALLER AND MEDIUM PRODUCTION VOLUMES
The neXline wetlaid aXcess targets smaller and medium production volumes and has been devised for new and existing lines. The compact line provides an entrance to the growing wetlaid market, with a variety of final applications and options.

ANDRITZ AXCESS DEVELOPED FOR MEDIUM CAPACITIES IN WUXI, CHINA
The aXcess range was specially developed at ANDRITZ (China) Ltd. Wuxi Branch to handle medium capacities. The facility in Wuxi has an experienced platform for production and service specially geared to serve the Asian nonwovens industry. It designs and manufactures cutting-edge lines to complement the ANDRITZ aXcess product range, which includes complete lines and individual machines for air-through bonding, needlepunch and spunlace processes. With the aXcess range, ANDRITZ has developed a hybrid line combining European and Chinese machines, which is the ideal combination to obtain the best added value from each component in the line and be very flexible to accommodate different business cases.

The service organization was set up to provide prompt delivery and excellent customer support, even during the COVID-19 pandemic. A team of technicians and process experts can be deployed quickly to customer sites requiring full-range assistance. The ANDRITZ facilities include a roll service center with state of-the-art grinding equipment and a test stand for various types of rolls.

In addition, our aXcess range manufactured in Europe also offers technologies for spunlaid and wetlaid processes. Increasing production speeds and widths, compact and reliable design, and affordable investment costs are what customers look for in a competitive market environment. To meet these requirements ideally, we recently enhanced our nonwoven calender and dryer ranges.

SUPPLY, DEMAND, & TRADE
The latest USDA report featured reductions to figures for both world production and mill-use for both the 2021/22 and 2022/23 crop years.  For 2021/22, the global production estimate was lowered -0.7 million bales (to 116.2 million) and global consumption was lowered -1.9 million bales (to 119.8 million).  For 2022/23, the global production forecast was lowered -1.2 million bales (to 120.7 million) and global consumption was lowered -1.6 million bales (to 119.9 million).

With the decreases in use exceeding the declines in production, figures for global ending stocks increased.  For 2021/22, the projection rose +1.1 million bales (to 84.0 million).  For 2022/23, the forecast increased +1.6 million bales (to 84.3 million).

At the country-level, the largest changes to 2021/22 production were for Brazil (-400,000 bales to 12.3 million) and Uzbekistan (-100,00 bales to 2.7 million).  The largest changes for the 2022/23 harvest were for the U.S. (-1.0 million bales to 15.5 million) and Brazil (-200,000 bales to 13.0 million).

It may be notable that there were no upward country-level revisions for mill-use in either 2021/22 or 2022/23.  The largest revisions for 2021/22 included those for China (-1.0 million to 37.0 million), Vietnam (-400,000 bales to 6.9 million), Bangladesh (-300,000 to 8.0 million), Pakistan (-100,000 bales to 10.9 million), and Uzbekistan (-100,000 bales to 2.7 million).  For 2022/23, consumption estimates were lowered for China (-500,000 bales to 37.5 million), India (-500,000 bales to 25.0 million), Bangladesh (-300,000 bales to 8.6 million), and Vietnam (-300,000 bales to 7.1 million).
The global trade forecast for 2022/23 was lowered -1.1 million bales (to 46.4 million).  The most significant changes on the import side included those for China (-500,000 bales to 10.0 million), Bangladesh (-300,000 bales to 8.5 million), and Vietnam (-300,000 bales to 7.2 million).  On the export side, the largest updates included those for the U.S. (-500,000 bales to 14.0 million) and Australia (+300,000 bales to 6.0 million).
 
PRICE OUTLOOK
Recent volatility was not limited to the cotton market.  A wide range of commodities lost significant value in June.  Between June 9th and July 5th (dates chosen unsystematically to describe the magnitude of declines), cotton fell -25% (NY/ICE December futures), corn fell -19% (Chicago Board of Trade, December contract), soybeans fell -17% (Chicago Board of Trade, November contract), wheat fell -25% (Chicago Board of Trade, December contract), copper fell -20% (London Metal Exchange, nearby), and Brent crude oil fell -12% (ICE, nearby).

The breadth of losses throughout the commodity sector suggests a sea change in investor sentiment for the entire category.  The effects of inflation, the withdrawal of stimulus, rising interest rates, and concerns about a possible recession could all be reasons explaining a reversal of speculative bets, and all could be contributors to the losses.  While the macroeconomic environment can be expected to continue to weigh on prices, there are also supportive forces for the market that are specific to cotton.

The current USDA forecast for U.S. cotton production is 15.5 million bales, and it may get smaller over time because of the severe drought in West Texas.  The current harvest figure is two million bales lower than the 2021/22 number and is equal to the five-year average for U.S. cotton exports (2017/18-2021/22).  On top of exports, the U.S. will need to supply domestic mills with 2.5 million bales.  The last time the U.S. had a severely drought-impacted crop (2020/21), the harvest was only 14.6 million bales.  In that crop year, the U.S. was able to export more than it grew because it had accumulated stocks in the previous year.  The U.S. is coming into the 2022/23 crop year with low stocks.  This suggests U.S. shipments may have been rationed.  Since the U.S. is the world’s largest exporter, this may lend some support to prices internationally.

A €20 million investment has been announced by AkzoNobel to increase and improve production at two of its sites in France. Around 30 new jobs will be created.

A total of €15 million will be spent on the company’s aerospace coatings facility in Pamiers, which was taken over following the Mapaero acquisition in 2019. Production capacity is being boosted by 50%, while the funds will also be used to reduce environmental impact and improve safety processes and working conditions.

The other €5 million will be spent on improving production flexibility at the decorative paints site in Montataire, which is one of the company’s most important manufacturing locations for wall paints in Europe.

The plans for Pamiers include the construction of two extensions, one for storage and one for cleaning and waste treatment. The project will also enable the company to relocate the production of exterior polyurethane paints for aircraft widely used in Europe from its Waukegan plant in the US.

Building work is expected to start by the end of 2023, with the new installations at both locations due to be operational in early 2025.

AkzoNobel employs nearly 1,500 people in France and operates four production facilities, in Montataire (decorative paints), Dourdan (powder coatings), Limoges (adhesive markings) and Pamiers (aerospace coatings).