From the Sector

INDA, the Association of the Nonwoven Fabrics Industry, announced three recipients for the INDA Lifetime Service Award and Lifetime Technical Achievement Awards. David Powling, Paul Latten, and Arnold Wilkie are being recognized for their key contributions to the advancement of the nonwovens industry and INDA.

David Powling and Paul Latten will receive their awards at the World of Wipes® (WOW) International Conference, June 18th beginning at 4:30 pm
Arnold Wilkie will receive his award at the RISE® Conference, October 1st at 4:30 pm.

The Award recipients are:

David Powling
David Powling has worked for Kimberly-Clark Corporation for nearly 25 years and has been a contributor to the Wipes Task Force and Technical Committees at INDA and EDANA for over 15 years. Powling served as Chairman of the INDA Wipes Task Force from 2009-2013. His work on these committees include developing the first and second edition of the Flushability Guidance Document (GD) and he was later instrumental in the roll out of the third and fourth edition GDs. Throughout this time, Powling coordinated activities with Kimberly-Clark Corporation to provide critical supporting data, as these flushability test protocols were developed.

Powling has been actively involved in collection studies where he was key in framing the work packages of those studies, collating and analyzing the data, and drafting reports. These collection studies include: Moraga, CA (advisor); Maine – Part #1 and Part #2 (hands-on); Jacksonville (hands-on); and the Northern and Southern California studies in 2023, which combined, was the largest study to date. Powling led the charge in the California study and was personally involved in identifying 1,745 samples.

Powling has been a key technical contributor to the INDA Government Relation efforts that has resulted in labelling regulations in multiple U.S. states. He has also been an active participant in efforts to develop an ISO standard for flushable products.  In this effort, he was a test method sub-team leader during the preparation of the proposed ISO standard responsible for organizing appendices of existing flushability methodologies. Additionally, Powling has been awarded, or has pending, 25+ U.S. patents, including many covering the development of dispersible wet wipes.

Paul Latten
Paul Latten has been an active member of the nonwoven and fiber industries for over 35 years. Most recently he has led innovation at Southeast Nonwovens, commercializing more than 75 new nonwoven products per year. Prior to joining Southeast Nonwovens, Latten held senior leadership positions with Basofil, Consolidated Fibers, Invista, and KoSa (and Trevira and Hoechst Celanese precursors to KoSa.)

Latten has a successful career of reinvigorating company R&D efforts by instilling a focus on customer-centric innovation. He is an inventor of record for a number of patents and pending applications. Latten has given numerous presentations on innovative nonwoven materials, at events such as INDA’s World of Wipes® (WOW) International Conference, RISE® (Research, Innovation & Science for Engineered Fabrics), the VISION International Conference, and the Converting and Bonding (CAB) Conference.

His recent innovations have been diverse in scope and include nonwovens for use in hydrogen fuel cells, moisture detection media, proprietary wipe designs, and natural fiber-based packaging. Aside from new fiber and nonwoven products, Latten has championed process innovation that has resulted in tangible output gains that broadened the market opportunity for his current and prior companies.

Latten’s portfolio of innovations has spanned across the nonwoven markets, often involving wetlaid and drylaid nonwovens. These include materials for moisture detection, synthetic papers, fuel cell cathodes, protective covers for treats, melamine nonwovens for surface treatment, and the development of binder fibers. His work also touched upon disposable hygiene applications entailing dry-laid web containing hollow synthetic fibers to improve absorbent core fluid uptake.

Latten has been a board member of INDA for multiple terms and served as Chairman in 2008-2010. Additionally, he has contributed to many INDA conference planning committees, helping drive the success of these events.

Arnold Wilkie
Arnold Wilkie has a distinguished career in advancing yarn, fiber, and nonwoven technologies since 1970. Since 1988, he has been President and Owner of Hills, Inc. where he has sustained their innovative culture. Wilkie has over 40 patents and applications covering yarns, bicomponent fibers, ultra-fine fibers, nanofibers, dissolvable filaments, meltblown nonwovens, and polymer processing innovations. He established Hills as a leading innovator in bicomponent fiber nonwovens and in the equipment to produce these materials. During Wilkie’s time leading Hills, their pilot capabilities have become well-known and highly regarded for enabling material innovations.

Many of his patents pertain to the development of equipment solutions that enable the production of complex bi- and multi-component fiber structures. These solutions include the method of forming a continuous filament spun-laid web, the method and apparatus for producing polymer fibers and fabrics including multiple polymer components, the method and apparatus for controlling airflow in a fiber extrusion system, and controlling the dissolution of dissolvable polymer components in plural component fibers.

Arnold Wilkie, President, Hills, Inc., earned his bachelor’s degree in Mechanical Engineering from the University of Tennessee and an MBA from the University of West Florida. He is a licensed Professional Engineer in Florida, and has been engaged in the synthetic fibers industry since 1970. The first 17 years were with the Monsanto Company, where he held positions in Fiber Process Engineering, Fiber Product R&D, and Product Management. Since 1988, he has been a majority Owner and President of Hills, Inc., a 52-year-old company located in West Melbourne, Florida, specializing in the development, manufacture, and supply of advanced custom fiber extrusion equipment. Wilkie has been involved with and supported The Nonwovens Institute, since its founding in 1991 as the Nonwovens Cooperative Research Center (NCRC), with Hills joining as a Member in 2001

SGL Carbon SE is currently evaluating various strategic options for the Business Unit Carbon Fibers (CF). These include a possible partial or complete divestment of the Business Unit. In a first step, potential interested parties shall be approached with the general data of the Business Unit to determine their interest in an acquisition. If there is sufficient interest, a structured transaction process will be carried out in a second step. Overall, a share of sales amounting to around € 179.6 million after nine months in 2023 (9M 2022: € 269.0 million) is therefore under review. The CF sales share corresponded to 21.9% of SGL Carbon's consolidated sales after nine months in 2023 (9M 2022: 31.5%). Adjusted EBITDA of the Business Unit excluding the result from joint ventures amounted to minus € 10,9 million after nine months in 2023 (9M 2022: € 27,9 million). Despite the operating loss of CF after nine months in 2023, SGL Carbon maintains its guidance for fiscal year 2023. This shows the positive development of the three other business units and the resilience of SGL Carbon's business model.

Carbon Fibers manufactures textile, acrylic and carbon fibers as well as composite materials at seven locations in Europe and North America. Following the temporary drop in demand for carbon fibers from the important wind industry market, the Business Unit's sales and earnings fell significantly in the course of fiscal year 2023. Due to the importance of the wind industry for the European Green Deal, SGL Carbon and many experts assumed that the wind industry recovers quickly. Unfortunately, this is currently not the case. Even if demand picks up, the company assumes that Carbon Fibers will need additional resources to remain competitive in the international market environment and to exploit market opportunities in the best possible way. Against this background, SGL Carbon is reviewing all possibilities to support a positive further development of the Carbon Fibers Business Unit.

Adient, a leader in automotive seating, has been certified for the second time by the Top Employers Institute as a European Top Employer for several of its EMEA locations.
 
23 of the automotive supplier’s locations in the Czech Republic, Hungary, North Macedonia, Poland, Romania, and Serbia underwent an extensive assessment by the institute and were evaluated in categories such as People Strategy, Work Environment, Talent Acquisition, Learning, Diversity & Inclusion, Wellbeing and more. All six assessed markets obtained the certification, having already done so in last year’s edition.
 
While the organization’s overall score improved by 4.5% compared to 2023, Adient stands out the most from its competitors in the areas of People Strategy and DE&I practices, at 11% and 7%, respectively.

The Top Employers Certification Program has been created to provide guidance on people practices of employers in a wide range of industries. It evaluates companies worldwide and provides feedback on their working culture based on a best practice survey.

Global Fashion Agenda (GFA) released the 2023 edition of The GFA Monitor — a report to guide fashion leaders towards a net-positive fashion industry. The second GFA Monitor has been updated to include the latest guidance and insights from over 25 industry organisations in one cohesive publication. For the first time, the report includes new data insights from the Fashion Industry Target Consultation - drawn from over 900 industry participants in 90 countries.

The GFA Monitor is an extensive resource that presents expert insights on the status of the industry, clear actions to take, and proven best practices. In a time of poly crisis when the implementation of sustainable practices is challenged, GFA is supporting the industry by consolidating an abundance of available solutions that can be applied today.  

The tool is grounded by the sustainability framework laid out in the Fashion CEO Agenda, featuring in-depth guidance according to the five sustainability priorities: Respectful and Secure Work Environments, Better Wage Systems, Circular Systems, Resource Stewardship, and Smart Materials Choices. Embracing additional expert knowledge from other industry organisations, each priority includes insights from GFA’s Impact Partners: Fair Labor Association, Social & Labor Convergence Program (SLCP), Ellen MacArthur Foundation, Apparel Impact Institute, and Textile Exchange, respectively.

The 2023 publication presents new findings from the Fashion Industry Target Consultation (FITC), launched by GFA and the United Nations Environment Programme (UNEP) in November 2022, which invited stakeholders from across the global value chain to share their thoughts on the performance indicators and milestones that the industry must strive to meet. The FITC indicates a very positive sentiment from participants, but action and positive impact from that action is yet to be measured. Overall, the data reveals that the majority of the 900 participants supported industry alignment on the 27 action areas proposed in the consultation and remarked that they are actively engaging with the industry to drive progress in the respective areas. The report further illuminates the level of industry ambitions per priority and the areas where more aligned action areas are needed.

Highlights Q3 2023 (compared with Q3 2022)

• Revenue in constant currencies up 5% on pricing, despite flat volumes; reported revenue 4% down on unfavorable exchange rates
• Operating income improved to €354 million (2022: €168 million)
• Adjusted operating income at €324 million (2022: €184 million); ROS 11.8% (2022: 6.4%)
• Net cash from operating activities positive €297 million (2022: €126 million)
• Net debt to EBITDA leverage ratio improved sequentially to 3.2x

2023 Outlook
AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on organic volume growth. The company will focus on margin management, cost reduction, working capital normalization and de-leveraging.

Cost reduction programs are expected to partly mitigate higher than expected inflationary pressure on operating expenses for 2023. AkzoNobel expects declining raw material costs to have a favorable impact on profitability.

Based on current market conditions, AkzoNobel targets to deliver around €1.45 billion adjusted EBITDA.

Leverage guidance remains unchanged at less than 3 times net debt/EBITDA by the end of 2023, excluding the Kansai Paint Africa acquisition which is not expected to close before year end.

adidas announced preliminary results for the third quarter of 2023. In Q3, currency-neutral revenues increased 1% versus the prior year level. In euro terms, the company’s revenues declined 6% to € 5.999 billion (2022: € 6.408 billion). The company’s gross margin improved 0.2 percentage points to 49.3% in Q3 (2022: 49.1%). Operating profit reached € 409 million during the quarter (2022: € 564 million), reflecting an operating margin of 6.8% (2022: 8.8%). While the company’s performance in the quarter was again positively impacted by the sale of parts of its remaining Yeezy inventory, the underlying adidas business also developed better than expected.

Consequently, the company has updated its full year guidance: adidas now expects currency-neutral revenues to decline at a low-single-digit rate in 2023 (previously: decline at a mid-single-digit rate). At the same time, the company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is now anticipated to reach a level of around €100 million in 2023 (previously: around break-even level).

Including the positive impact from the two Yeezy drops in Q2 and Q3, the potential write-off of the remaining Yeezy inventory of now around € 300 million (previously: € 400 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), adidas now expects to report an operating loss of around € 100 million in 2023 (previously: loss of € 450 million).

Spinnova has decided to evaluate its existing strategy to prioritise areas that in the short- to medium-term deliver the fastest time to positive cashflow generation and that create the most value for the company’s stakeholders.
 

The company expects to conclude the assessment of its strategy in the coming months, after which the results will be presented in more detail including key actions and any changes to medium- and long-term business targets. Financial guidance for full year 2023 is unchanged.

Spinnova’s unique sustainable technology is a key differentiator. To recognize the value of its technology offering, the company has decided to review opportunities to expand the licensing of its technology to new customers. In the future, Spinnova sees great potential in developing circular raw materials such as textile waste and agricultural waste, as well as recycled SPINNOVA® fibre. Initial tests show that refining these raw materials into micro fibrillated cellulose (MFC) may be more efficient than refining other raw materials Spinnova has worked with. The company has received significant interest from customers wanting to build plants that convert multiple circular raw materials into SPINNOVA® fibre.

Together with Suzano, Spinnova is gathering the learnings from the first Woodspin plant to support the decision making for the next Woodspin factory investment. At the same time Spinnova continues to further develop the technology concept to reduce capital expenditure per tonne of fibre produced compared to the first Woodspin plant. While Suzano develops its MFC process it is expected that the first Woodspin facility will mainly be used for R&D to test new MFC batches and that commercial production volumes will be limited in the short term. The market opportunity and ambition level with Suzano to scale Woodspin’s production capacity remains unchanged

Spinnova will continue to have the option to invest into all future Woodspin and Respin plants, as per the respective joint venture agreements. The company will evaluate whether it participates in these investments based on the value it creates for Spinnova’s shareholders compared to other opportunities to invest Spinnova’s capital. Regardless of whether Spinnova invests its own capital into future plants, Spinnova will continue to be the exclusive technology provider to Woodspin and Respin, and they will continue to be important technology customers of Spinnova.

At the crosswinds of China’s 14^th Five-Year Plan for the Development of the Marine Economy and its 14^th Five-Year Guidance for the Development of the Technical Textiles Industry lies the marine textile sub-sector. Following the government’s directive, the Marine Textile Zone will be unfurled at this year’s fair, taking place from 19 – 21 September 2023 at the Shanghai New International Expo Centre. Multiple exhibitors from across China have confirmed their participation within the zone, which will be comprised of three main parts: green marine science and nautical rope netting innovation display area, the Technology Exchange Forum, and the awards ceremony of the Top 10 Suppliers in the China Rope Net Industry.
 
The global rope market is predicted to experience a CAGR of 5.6% and grow by over USD 4 billion between 2022 - 2027[1], and suppliers are eager for the chance to meet buyers face to face. In fact, many will use the new zone at Asia’s leading technical textiles and nonwovens fair to do so.

In the green marine and rope netting category, exhibitors will showcase the latest innovations along the marine textile industry chain, anchored by application areas such as marine engineering, marine economy, marine fencing, marine rescue, deep-sea fishing, deep-sea aquaculture, and many more.

Featured exhibitors include:

• Ropenet Group: covering 36 application areas, such as aerospace, marine fisheries, safety protection, and emergency rescue, the Shandong-based company has exported to over 110 countries and regions. Products include ropes, nets, threads, and belts, with new materials and high-performance synthetic fibre spinning ropes forming the core of its business.
• Hunan Xinhai: with its Hunan factory covering 200,000 sqm, its industry-leading rope net production scale ensures it can service multiple sectors such as fisheries, sports, military industry, marine engineering, life-saving protection, and many more. Its extensive network spans Asia, Africa, Europe, and beyond.
• Zhejiang Four Brothers Rope: located in Zhejiang Toumen Port Economic Development Zone, the special chemical fibre rope manufacturer integrates R&D, manufacturing, sales, and after-sales service. After nearly 60 years of operation, the company now has a yearly production capacity of over 15,000 tons.

Other notable exhibitors in this zone include Xuzhou Henghui Braiding Machine; Shandong Jinguan Netting; Jiuli Rope; and Zhejiang Hailun Rope Net.

Meanwhile, the Technology Exchange Forum will focus on policies and regulations, strategic development opportunities, market analysis, product and process innovation, and the promotion and application of marine textiles. A range of well-known international and domestic experts have been invited to deliver comprehensive industry analysis, and unveil oceanic green textile initiatives onsite.

Designed to expand the influence of the rope net industry, the Top 10 Suppliers in the China Rope Net Industry awards will highlight enterprises currently making key contributions. Other fringe events related to this textile sub-sector include the Conference on Textile Applications for Marine Engineering and Fisheries, and the China Nonwovens & Industrial Textiles Association (CNITA) Rope Net Branch Council Meeting.

Lastly, the Marine Textile Zone will also encompass a business negotiation area to facilitate negotiations between key players onsite, set against the backdrop of the innovation display area’s award-winning and patented rope net products. As a whole, the zone is expected to encourage independent innovation in marine science and technology, coordinate the protection and development of marine resources, and help build a modern maritime industrial system.

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.

The fair is organised by Messe Frankfurt (HK) Ltd; the Sub-Council of Textile Industry, CCPIT; and the China Nonwovens & Industrial Textiles Association (CNITA).

• Sales up 1.9% year-on-year to €560.5 million with stable adjusted EBITDA of €88.0 million
• Strong business performance of the Graphite Solutions, Process Technology and Composite Solutions businesses
• Sales and earnings decline at Carbon Fibers due to weakness of wind market
• Impairment at Carbon Fibers of €44.7 million

Despite the increasingly difficult economic environment, SGL Carbon was able to increase sales in H1 2023 from €549.8 million in the previous year to €560.5 million. Adjusted EBITDA (EBITDApre) remained almost unchanged at €88.0 million (H1 2022: €87.9 million). The expected good business performance of the Graphite Solutions business unit and the better-than-expected sales and earnings development of Process Technology and Composite Solutions compensated the drop in demand in Carbon Fibers.

In particular, the Graphite Solutions (GS) business unit contributed to the stable development of the Company with a 15.3% increase in sales to €280.6 million (H1 2022: €243.4 million) and a 20.6% improvement in adjusted EBITDA to €65.1 million (H1 2022: €54.0 million). GS benefited especially from the high demand of the semiconductor industry. The semiconductor and LED market segment now accounts for around 45% of GS revenue (H1 2022: around 35%).

With a 30.9% increase in sales to €64.4 million (H1 2022: €49.2 million) and a significant rise in adjusted EBITDA from €4.1 million to €11.9 million, the business performance of Process Technology (PT) was significantly above the original planning. Composite Solutions (CS) also reported a higher-than-forecast sales increase of 14.4% to €79.6 million in H1 2023 (H1 2022: €69.6 million) and an improvement in adjusted EBITDA of 26.8% to €12.3 million (H1 2022: €9.7 million). By contrast, the business performance of the Carbon Fibers (CF) unit was not in line with expectations, with a 28.9% decline in sales to €125.1 million (H1 2022: €176.0 million) and a 78.4% drop in earnings to €6.1 million (H1 2022: €28.2 million).

An important market segment for the Carbon Fibers business unit is the wind industry. Demand for carbon fibers for the wind industry has declined sharply since the beginning of the year. According to current estimates, the expected recovery in demand in H2 2023 will not materialize. SGL Carbon expects customer demand from the wind industry to pick up in 2024.

As already announced in the ad hoc release of July 24, 2023, an impairment loss of €44.7 million was recognized on the assets of Carbon Fibers as of June 30, 2023.

Results situation
SGL Carbon's adjusted EBITDA (EBITDApre) remained almost stable in a half-year comparison at €88.0 million (H1 2022: €87.9 million). Due to the lack of demand from wind industry, CF's production capacity utilization decreased and idle capacity costs weighed on adjusted EBITDA. By contrast, higher margins from product mix and volume effects in the other three business units had a positive impact on adjusted EBITDA.

Non-recurring items and one-off effects not included in adjusted EBITDA totaled minus €46.9 million in the first half of 2023, of which €44.7 million resulted from an impairment loss in the CF business unit.

In addition to the above-mentioned effects and nearly unchanged depreciation and amortization of €29.1 million (H1 2022: €28.9 million), the decline in EBIT resulted in particular from the impairment loss already described (€44.7 million). After €69.6 million in H1 2022, EBIT amounted to €12.0 million in the reporting period.

Taking into account the slightly improved financial result of minus €15.8 million (H1 2022: minus €16.6 million), consolidated net income for the first six months of the current financial year amounted to minus €10.0 million, compared to €48.8 million in the first half of the previous year.

Net financial debt and equity
To complete its refinancing, SGL Carbon issued convertible bonds with a volume of €118.7 million in June 2023 and drew an existing term loan facility of €75 million in July 2023, which was used together with cash of the Company on July 28, 2023 to repay the corporate bond (outstanding as of June 30, 2023: €237.4 million). Accordingly, cash and cash equivalents increased to €310.5 million as of June 30, 2023 (€227.3 million as of December 31, 2022) and financial debt temporarily increased to €480.4 million (€398.1 million as of December 31, 2022). Net financial debt remained nearly unchanged at €169.9 million as of June 30, 2023 (Dec. 31, 2022: € 170.8 million).

Despite the impairment loss of €44.7 million in Carbon Fibers, shareholders' equity amounted to €565.2 million as of June 30, 2023, only slightly lower than at the end of 2022 (Dec. 31, 2022: €569.3 million). This corresponds to an equity ratio of 36.1% (Dec. 31, 2022: 38.5%).

adidas announced preliminary results for the second quarter of 2023. In Q2, currency-neutral revenues were flat versus the prior year level. In euro terms, the company’s revenues declined 5% to € 5.343 billion (2022: € 5.596 billion). The company’s gross margin was up 0.6 percentage points to 50.9% during the quarter (2022: 50.3%). Operating profit reached € 176 million in Q2 (2022: € 392 million), reflecting an operating margin of 3.3% (2022: 7.0%). The company’s top- and bottom-line development in the quarter was positively impacted by the first sale of some of its Yeezy inventory as announced at the end of May. In addition, the underlying adidas business also developed slightly better than expected.

Consequently, the company has updated its full year guidance. adidas now expects currency-neutral revenues to decline at a mid-single-digit rate in 2023 (previously: decline at a high-single-digit rate). At the same time, the company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is still anticipated to be around the break-even level.

Including the positive impact from the first Yeezy drop, the potential write-off of the remaining Yeezy inventory of now € 400 million (previously: € 500 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), the company now expects to report an operating loss of € 450 million in 2023 (previously: loss of € 700 million).

If successful, potential future Yeezy drops would further improve the company’s results.