From the Sector

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.

• Textile Exchange’s Sustainability Conference - Milan, October 22-24, 2018
• The theme of the 2018 conference is United by Action: Accelerating Sustainability in Textiles and Fashion.

The conference offers an opportunity to connect with industry pioneers and learn about cutting edge solutions and innovations in textile and apparel sustainability. As a result, C.L.A.S.S., headquartered in Milan, the global resource for smart material innovation, education, marketing and communication, will be on hand to support this year’s theme.

Many of the materials the C.L.A.S.S. team will showcase speak to circular economy such as Re.VerSo™, Bemberg™ and ROICA™ by Asahi Kasei, Iluna Group and TINTEX Textiles and many others that use technological breakthroughs to offer fashion materials that provide significant reductions in water during the manufacturing process, an important step toward responsible future fashion systems.

During Textile Exchange’s Sustainability Conference, Giusy Bettoni, C.L.A.S.S. CEO and Founder and her team will have a dedicated space to engage attendees in an open discussion regarding the importance of fashion business strategies. The experience in the space, that will reflect an New York event created for C.L.A.S.S. by Ginger Design, will start with the vision of a film by Cristina Picchi that represents harmony between the various phases of the textile process and the cycles of natural elements. Visitors will walk through a three-dimensional installation designed by Cécile Feilchenfeldt to inspire creativity and explore the limitless possibilities using innovative smart materials.

“We are always proud to have a presence at international events including this year’s Textile Exchange’s Sustainability Conference. It is a great way for us to share our expertise regarding responsible innovation and new business model strategies. As C.L.A.S.S. is headquartered in Milan, we are proud that they selected our city for this year’s conference. Being held in Milan provides a chance for us to support Textile Exchange regarding smart material innovation, many of them produced in Italy.” said Bettoni.

Just off their return from Première Vision in Paris, Bettoni who is also the Sustainability Consultant for Smart Creation, recognizes the importance for her company to have a strong international presence to spread C.L.A.S.S.’ message to a global audience regarding responsible creation. 

As C.L.A.S.S. enters their second decade of business, they have expanded their business activities to include e-commerce that provides an opportunity for fashion start-up to purchase up to a maximum of 50, an initiative launched to support fashion start-ups. And a new division, C.L.A.S.S. Education, an initiative Bettoni co-founded with James Mendolia, also a Professor, Fashion Institute of Technology. Mendolia has been visiting universities to speak to fashion design, business, textiles and production students in Europe, Asia and North America to encourage attendees to infuse a new way of design thinking and move from a linear to a circular business model.   

Funds advised by Alpina Capital Partners LLP ("Alpina", "Alpina Partners") and private Investor Jan Verdenhalven sold all shares in Dolan Holding GmbH and Dolan GmbH ("Dolan") to Dralon GmbH ("Dralon"), a leading producer of raw white acrylic fiber headquartered in Dormagen, Germany. Dolan is based in Kelheim, Germany and is a specialty chemicals business mainly focusing on spun-dyed acrylic fiber for outdoor textiles. The parties agreed not to disclose the terms of the transaction.

Florian Strehle, a Partner with Alpina comments on the latest exit of the pan-European technology investment firm: "After successfully exiting European Carbon Fiber GmbH to Solvay in November 2017 the trade sale of Dolan to Dralon is the second exit to a strategic acquirer for Alpina within seven months. We would like to thank Luis Puncernau, Managing Director and CEO of Dolan and the entire management team as well as our co-investor Jan Verdenhalven for the support and the very positive development of the company during the past three years. Dralon and Dolan is a perfect match."

Jan Verdenhalven, investor and former Managing Director of Dolan Holding GmbH adds: "Dralon is the ideal new owner for Dolan, its employees and customers. The businesses complement each other perfectly. We are confident that this transaction will significantly strengthen the combined acrylic fiber business activities."

Stefan Braun, Managing Director and CEO of Dralon explains: "It is a consistent move for Dralon to strengthen its position as a leading supplier of acrylic fiber. The geographical proximity, the expertise and know-how of Dolan and its employees in addition to the highquality products and distinctive customer services convinced us to acquire Dolan. The product ranges complement each other perfectly without any overlap. Going forward we will further develop Dolan and leverage its potential."

Archroma, a global leader in color and specialty chemicals, announces the appointment of Marcos Furrer to the post of President Brand & Performance Textile Specialties, and Innovation, based in Archroma's headquarters in Reinach, Switzerland.

Marcos Furrer will take over from Thomas Winkler who will retire at the end of March 2018 after more than 30 years in the textile industry, among which 12 years at the helm of the business.
Announcing the appointment, Archroma CEO Alexander Wessels said: “Marcos Furrer was rather an obvious choice when we started to look for a potential successor for Thomas Winkler. He has the right combination of strong textile expertise and leadership skills that we need to drive the business in line with Archroma’s ambitious growth strategy.”

A Swiss national with a 20 years career, Mr Furrer has earned a strong reputation as a well-rounded business manager with excellent leadership skills and a taste for delivering on targets.

Biography
A Chemical Engineer from the Ingenieurschule Beider Basel, Mr Furrer started his career with Clariant in Switzerland as Product Manager Sulphur Dyes, Textile Business, in 1997. He then grew in the organization as Head of Continuous Dyeing Cellulosic (1999 to 2001); Head of Business Unit (BU) Textile Dyes and Textile Chemicals in México (2001 to 2005); Global Head for the Product Group Cellulosic Dyes (2005 to 2007), Head of BU Textile Chemicals Latin America (2007 to 2009); Head of BU Textile Chemicals Americas (2009 to 2012); Head of Emulsions (January 2012 to June 2012); and Head of Marketing and Sales Plastic and Special Applications, BU Pigments (January 2013 to 2015).

His latest role as Head of Regional Business Line Europe, BU Pigments, Strategic Plastics, brought him back to Switzerland in January 2015, with the mission to implement the new BU Pigments regional structure in Europe.

Mr Furrer speaks 5 languages: English, German, Spanish, Portuguese and French.
 

The acquisition is the fifth strategic deal finalized by Imprima Spa , holding controlled by the Italian private equity fund Wisequity IV.

IMPRIMA S.p.A., the holding company of the multinational group dedicated to textile printing and finishing, announces the acquisition of City Prints and the twin company Premier Fabrics, both American companies specialised in printed textiles. 

Imprima, controlled by Wise SGR through the Italian private equity fund Wisequity, now strengthens its strategic positioning, consolidating its global presence as a leading player in the field of printing and textile finishing for international retailers and fashion brands.

City Prints and Premier Fabrics, founded in 1997 and headquartered in New York and Los Angeles, are specialized in textile printing for the programmed collection market. The companies supply printed fabrics, based on proprietary design, to major American retailers such as Walmart, Target and Macy's, to  fashion brands such as Ralph Lauren, Calvin Klein and Tommy Hilfiger, and to online retailers such as Amazon. The companies serve retailers and brands through leading private label intermediaries, currently sourcing prints and garments mainly from China.  

As in the case of the previous acquisitions, the brothers Jason and Ryan Borg, co-founders of City Prints and Premier Fabrics, will maintain a leadership role in the management of the companies and become shareholders of IMPRIMA. 

 "Our entry into the IMPRIMA group is an excellent opportunity to consolidate and increase our commercial positioning in the market, through the introduction of IMPRIMA Group’s brands in the US market and the opening of a digital production facility within the US territory, relying on the technology know-how in digital printing and the financial support that IMPRIMA provides", said Jason and Ryan Borg co-owners of City Prints and Premier Fabrics, which currently show a consolidated turnover of over 23 million dollars.

“With this acquisition, IMPRIMA deals with the US market with the goal of becoming the first textile converter with full digital printing capability in this local market.  The current deep crisis of American apparel retailers is pushing the industry to reshape its current supply chain strategy, mainly based on sourcing from Far East, towards a European-like fast fashion model. IMPRIMA, through City Prints and Premier Fabrics, will allow local retailers to leverage the "Made in USA" banner to deliver a great creative experience through a local, reliable partner.", said President Valentina Franceschini, and Executive V.P. Gianluca Boni.

This acquisition of the US companies follows the recent acquisition of the Italian print converters SET, Guarisco and B-Blossom and of the German print converter KBC.  

• Nathalie Brunel’s role is to support Lectra’s global teams in the roll-out of its new strategy to customers

Paris – Lectra, the world leader in integrated technology solutions dedicated to industries using fabrics, leather, technical textiles and composite materials, is pleased to announce the appointment of Nathalie Brunel to the role of Vice-President Sales, Fashion & Apparel. Based at Lectra’s headquarter’s in Paris, Nathalie reports to Edouard Macquin, Chief Sales Officer, Lectra and a member of the executive committee.

Nathalie Brunel’s role is to support Lectra’s subsidiaries as they conduct the Group’s strategic roadmap through the deployment of an offer—integrating the PLM and the cutting room of the future—which is rooted in customer experience. Nathalie will notably work with six countries: United States, China, Germany, United Kingdom, France and Italy.

“The fashion and apparel industry, a historic market for Lectra, is the pillar of our international presence. Our customers expect a high level of expertise and advice to meet the challenges they face due to the digitalization of their professions. Nathalie Brunel’s experience in transforming organizations and developing business for complex solutions within large groups is a valuable asset for both Lectra and our customers,” states Edouard Macquin.

“The fashion and apparel ecosystem is clearly entering the digital era. I aim to bring Lectra’s value proposition to our customers, facilitating their adoption of Industry 4.0 principles. I am proud to contribute to the integration of new technologies in their processes, from design to the finished product. It is crucial to meet the needs of companies facing a complex and fragmented market that is generating both local, and global, pressures,” underlines Nathalie Brunel.

Nathalie Brunel has over 20 years of experience in managing large accounts and management responsibility. In 1996, she joined the Altran group where she successively held the roles of Development Director, Director of a business unit, Associate Director, and Executive Director of large accounts. In 2011, Orange Business Services recruited Nathalie Brunel as Vice-President, Business Operations and Support, then Vice-President Large Accounts, Manufacturing and IT. Prior to joining Lectra, Nathalie Brunel held the position of CEO and shareholder of Okavango Energy, a consulting and industrial energy performance company.

Nathalie has a diploma from the Institut supérieur de commerce de Paris.

• Lectra contributes to Faurecia Seating Business Group Industry 4.0 readiness and “digital enterprise” transformation initiative

Paris, September 26, 2017 – Lectra, the world leader in integrated technology solutions dedicated to industries using fabrics, leather, technical textiles and composite materials, is pleased to announce the renewal of its partnership with Faurecia through the signing of a global agreement for its Seating Business Group.

The cutting process for the production of seat covers, headrests and interiors is an increasingly strategic part of Faurecia’s Seating activity. Faurecia Seating supplies vehicle complete seats, frames, mechanisms and trim covers to major carmakers worldwide, whose manufacturing processes are gradually evolving toward Industry 4.0.

Faurecia Seating aims to double the production of its existing manufacturing facilities by reinforcing operations with advanced manufacturing technologies. The company’s extended partnership with Lectra entails focusing on operational excellence initiatives across its automotive seating division.

Standardization of the Vector® fabric-cutting solution—endowed with preventive and predictive maintenance capabilities and the highest-performance cutting system available on the market to date—will be instrumental to the implementation of these initiatives throughout the division’s fabric cutting facilities. Faurecia currently has more than 60 Vector fabric cutting solutions in production worldwide.

“More than ever, we face major challenges in terms of flexibility, agility and productivity—producing more while reducing costs,” observes Hagen Wiesner, Executive Vice President, Faurecia Seating. “Our cutting processes have become strategic in reaching these goals. Faurecia’s ‘digital enterprise’ project aims to achieve operational excellence in virtually every aspect of our organization. Together with Lectra, we will make this a reality in the cutting room, with smart automation and predictive maintenance”.

“Given the profound transformations gripping manufacturing, helping our customers ready their operations for the Fourth Industrial Revolution has become without question our core mission,” remarks Daniel Harari, Lectra Chairman and CEO. “Faurecia is among the automotive suppliers at the forefront of this movement. Digital technologies and industry expertise are the business enablers that will allow manufacturers to connect inside and outside the value chain in the near future.”

Lectra achieved record financial results in 2016: €260.2 million in revenues, rising 10%, and € 26.7 million in net income, an increase of 14%. The Group consolidated its positions in automotive, and fashion and apparel, as well as acquired strong positions in furniture. Lectra has entirely transformed itself and today benefits from its bolstered technological advance, the enhanced expertise of its teams, an extended global footprint, and a refurbished campus.

Looking ahead, Lectra is in a strong position to carry out its new strategy, carefully conceived to empower its customers to step into the Industry 4.0 era. In close collaboration with global customers, Lectra has identified four mega trends that will change the business: the Millennials generation, the digitalization of companies, the emergence of Industry 4.0, and profound changes in China’s economy. Their impact, set to intensify, represents considerable challenges. Lectra’s annual report analyses the implications of these mega trends, and outlines the company’s response.
Helping customers to tackle such challenges, Lectra is gearing up to commercialize Software as a Service (SaaS), leveraged by cloud technology. Its expert knowledge of business combined with ten years’ experience in the industrial Internet of Things and rising investments in R&D, means Lectra is in a formidable position to help its customers seize opportunities in the new industrial age.