From the Sector

National Council of Textile Organizations (NCTO) Chairman David Poston delivered the trade association’s State of the U.S. textile industry overview at NCTO’s 19th Annual Meeting on March 30.

Mr. Poston’s speech highlighted the impacts of macroeconomic factors on the U.S. textile industry and the resilience of the U.S. textile industry; trade and investment data showing growth in the sector across the board; and NCTO’s policy priorities for domestic textile manufacturers.

“The U.S. textile and apparel industry faced challenging macroeconomic conditions throughout the year,” Poston states in the speech. “Despite these challenges, there were also many positive trends that helped offset some of those pressures, including softening inflation towards the latter half of the year, coupled with a surge in onshoring and nearshoring that led to historic investments, commitments and expansion in the U.S. and the Western Hemisphere.”

Click here for his full remarks.

From March 15-16, 2023, the spring edition of PERFORMANCE DAYS kicked off on the fairgrounds of Messe München. With around 2,685 visitors, the event organizers were particularly pleased with numbers up on the previous winter fair. High attendances were also evident at the Expert Talks on both days, which provided information on the latest color and fabric trends, news on developments in sustainability and new technologies from fiber manufacturers. The focal points of the show were marked by the PERFORMANCE FORUM, which showcased the fabric highlights for the spring/summer 2025 season as well as the two PERFORMANCE AWARD and ECO PERFORMANCE AWARD winners.

After the kick-off event in Munich in March, the industry now looks forward to the follow-up fairs in Portland from April 4-5, 2023 and in Shanghai, April 10-11, 2023.

New concept starting October 2023: Premiere for highlighted focus on footwear
As part of the upcoming PERFORMANCE DAYS, which will once again take place at the Messe München exhibition center on October 4-5, 2023, the event organizers will no longer focus explicitly on sustainable functional textiles and accessories, but will also focus on the footwear market.

To support the integration of the footwear market into the trade fair events in Munich, Portland, New York and Shanghai, the organizers have brought on board two industry specialists, Nina Conrad and Rucky Zambrano.

Nina Conrad has been active as a sustainability consultant in the textile and leather industry for many years, specializing in traceable and local supply chains. Her core business is the production of leather and leather goods derived from animals raised on certified organic farms. She is also a founding partner of the Sustainable Leather Foundation and co-founder of the Fibershed subsiduary DACH.

Rucky Zambrano is a industrial designer and expert. When he got to know Vibram in 1992, he shifted his career to footwear for reasons of passion. For 13 years now, Zambrana and Vibram have been a driving force in the footwear market and made the leap from performance to fashion, as witnessed with the Merrell Chameleon, the Prada Luna Rossa boat shoe sole or the latest Vibram FiveFingers models. He is currently responsible for footwear for the Finnish children’s outdoor brand Reima.

• Sales increase of 12.8% to €1,135.9 million
• EBITDApre improves by 23.4% to €172.8 million
• Net financial debt reduced from €206.3 million to €170.8 million
• Fiscal 2023 expected to be investment and stabilization year

SGL Carbon was again able to improve sales and earnings in fiscal year 2022 following 2021. All four business units contributed to this success.
Sales in fiscal 2022 increased by 12.8% year-on-year to €1,135.9 million (previous year: €1,007.0 million). The rise in sales was mainly due to both volume effects and the successful implementation of pricing initiatives to compensate higher raw material, energy and transport prices. At 23.4%, adjusted EBITDA (EBITDApre) improved at a higher rate than sales and amounted to €172.8 million in fiscal 2022 (previous year: €140.0 million). Increased sales and the associated higher capacity utilization also contributed to the improvement in earnings, as well as focusing on market segments with higher margin potential.
 
Earnings development of SGL Carbon
The increase in EBITDApre by €32.8 million to €172.8 million was mainly driven by the Graphite Solutions business unit (+€30.6 million). The Composite Solutions (+€7.9 million) and Process Technology (+€5.2 million) business units also contributed to the improvement in profitability. Although the Carbon Fibers business unit was able to offset the loss of a lucrative supply contract with an automotive customer in terms of sales with new orders from the wind energy sector, but these sales showed a significantly lower margin level. Accordingly, EBITDApre of this business unit decreased by €11.2 million to €43.2 million (previous year: €54.5 million).

Taking into account net one-off effects and non-recurring items of €8.9 million (previous year: €30.7 million) and depreciation and amortization of €60.8 million (previous year: €60.3 million), reported EBIT amounted to €120.9 million (2021: €110.4 million). This corresponds to an increase of 9.5%.
As a result of the pleasing business performance, the successes of the transformation and non-operating one-off effects and non-recurring items (€8.9 million), a positive Group’s net profit of €126.9 million (previous year: €75.4 million) was achieved in 2022. It should be noted that consolidated net income includes tax income of €31.3 million (previous year: minus €6.2 million). This development is mainly due to valuation adjustments on deferred tax assets amounting to €41.8 million, based on the good business development combined with positive earnings prospects in the USA. Current tax expenses amounted to €11.4 million in 2022 (previous year: €11.9 million).
 
Net financial debt and equity
In fiscal 2022, net financial debt was reduced significantly by 17.2% to €170.8 million compared with the end of 2021 (€206.3 million). The main reason for the decrease is the repayment of financial liabilities in the amount of €29.0 million. Free cash flow decreased from €111.5 million to €67.8 million in 2022. In this context, it should be taken into account that in the previous year, free cash flow included cash inflows of €30.6 million from the sale of land not required for operations.
After 2021, the equity ratio increased again to 38.5% at the end of 2022 (previous year: 27.0% I 2020: 17.5%). Due to the significantly improved earnings situation, the return on capital employed (ROCE) also rose from 8.0% in the previous year to 11.3% in 2022.
 
Development of the business units
As the largest business unit with a share of Group sales of around 45%, Graphite Solutions contributed €512.2 million to Group sales in 2022 (previous year: €443.6 million). The 15.5% increase in sales is based in particular on the positive development of the important market segments Semiconductor & LED and Industrial Applications. Compared to the previous year, sales to customers in the semiconductor & LED industry increased by 49.6%, driven in particular by increasing demand of materials and components for the production of silicon carbide-based high-performance semiconductors. Combined with the increase in sales, GS EBITDApre improved by 34.8% to €118.5 million (previous year: €87.9 million). Accordingly, the EBITDApre margin increased from 19.8% to 23.1%. Volume effects due to higher sales as well as margin effects from the product and customer mix had a positive impact.  Especially the higher sales with customers from the semiconductor industry should be taken into account.

In fiscal 2022, the Process Technology (PT) business unit benefited from the good order situation in recent months and increased its sales by 21.9% to €106.3 million. The main clients of the PT business unit are customers from the chemical industry. The positive development of PT is also reflected in EBITDApre which rose from €4.7 million in the same period of the previous year to €9.9 million. Higher capacity utilization and the successful passing on of increased raw material costs led to an improvement in the EBITDApre margin from 5.4%  to 9.3% in 2022. Energy costs play only a minor role at PT.

In the reporting year, sales of the Carbon Fibers (CF) business unit increased by 3.0% to €347.2 million (previous year: €337.2 million). It should be noted that CF had to absorb the scheduled expiry of a supply contract with an automotive customer at the end of June 2022. These sales were offset by orders from the wind industry and Industrial Applications. However, EBITDApre in the CF division decreased by 20.7% year-on-year to €43.2 million (previous year: €54.5 million). This earnings development is mainly attributable to the expiry of the high-margin automotive contract. In addition, a special effect from energy derivatives in the amount of minus €9.2 million impacted CF earnings in the 1st quarter of 2022. However, the implemented energy price hedges enabled the business unit to maintain its production capability throughout the entire fiscal year, that the weakening of earnings was mitigated.
The Composite Solutions (CS) business unit confirmed its upward trend in fiscal 2022 with a 25.0% increase in sales to €153.1 million (previous year: €122.5 million). The most important market segment for the CS business unit is the automotive industry. In line with the highly positive business performance, EBITDApre of CS increased by 65.3% to €20.0 million (previous year: €12.1 million). This figure also includes non-recurring positive effects of €3.7 million from compensation payments received from automotive customers for premature project terminations.

The non-operating Corporate segment contributed €17.1 million to Group sales (previous year: €16.5 million). In line with continued strict cost management as part of the transformation, EBITDApre improved slightly to minus €18.8 million (previous year: minus €19.2 million).

Outlook
"If we summarize our expectations for the 2023 financial year, it can be summed up under the guiding principle: -invest and stabilize," CFO Thomas Dippold comments on the forecast for 2023.
For the fiscal year 2023 we continue to expect solid demand for our materials and products. In particular, we expect that the demand for special graphite products for high-temperature processes, e.g. in the semiconductor, solar and LED industries, will continue to increase. On the other hand, the first-time full-year effect from the expiry of a supply contract with an automotive customer in the carbon fiber segment and the sale of our business in Gardena (USA) will burden sales development.

"The increasing demand for high-performance semiconductors for electromobility or renewable forms of energy will also boost the demand of components made of graphite for the production of these semiconductors. To benefit from the related opportunities, we will expand our production capacities in this segment and invest a double-digit million amount in 2023 . Based on existing supply relationships, we will implement this investments partly together with our customers," explains CEO Dr. Torsten Derr.
On the cost side, we expect energy and raw material prices to remain at a high level in 2023, along with significant wage increases. Our forecast implies that higher factor costs can be partially passed on to customers through price initiatives.
Based on the assumptions described, we expect Group sales to be at prior-year level and EBITDApre to be between €160 million and €180 million in the financial year 2023.
In the medium term (until 2027), we anticipate a further improvement in our EBITDApre margin between 18% and 19%.

• Harmful PFAS chemicals, used in thousands of consumer products, are shaping up to be the big environmental and health threat of our time. The EU is now the first in the world to propose a broad ban on these chemicals.
• Consumer brands worth more than €130 billion support the ban on PFAS.  
• Investors with assets in PFAS-producing companies are calling for an end to production.

Many companies are taking a stand against PFAS chemicals as the EU invites the public to give its opinions on the proposed ban on these harmful chemicals.

108 companies dedicated to phasing out PFAS chemicals from products and processes have joined the PFAS Movement, an advocacy campaign initiated by environmental NGO ChemSec that calls for comprehensive regulation of PFAS in the EU. The members comprise many well-known brands, such as Inditex, Urbanears and the Cookware Company, representing various industries— fashion, home goods, food, and personal care. The members are worth more than €130 billion in total revenue.

“A European ban on PFAS chemicals will have huge repercussions for all manufacturing industries and require much work for companies in the global supply chain. However, some parts of the industry oppose this ban, claiming that the change is too big to be justified. That’s why the support for a ban from such influential consumer brands as those in the PFAS Movement is so important. It’s a strong sign that businesses want to eliminate PFAS chemicals in products and processes”, says Anne-Sofie Bäckar, Executive Director at ChemSec.

A Hollywood Helping Hand
ChemSec’s PFAS Movement is not only supported by the brands but also by Hollywood actor Mark Ruffalo who became a PFAS activist after his involvement in the film Dark Waters. The film depicts the real-life events following the massive uncovering of PFAS contamination in the USA. As a result, several PFAS producers in the USA are now involved in multimillion-dollar lawsuits.

The health and environmental threats of PFAS, along with all the lawsuits, have also created attention among another influential group: institutional investors. Last year, 47 institutional investors with US$8 trillion in assets sent a letter to 54 chemical companies named by ChemSec, calling for them to halt the production of persistent “forever chemicals”.

The EU ban on PFAS
The proposed EU ban on PFAS is extensive and the first of its kind worldwide. The idea was initially initiated by Sweden, Denmark, the Netherlands, Germany and Norway, who have spent almost three years mapping the implications of a ban on PFAS chemicals in a dossier that expands over nearly 2000 pages. The proposal shows, among other things, that the emissions of PFAS were 75 000 tonnes in 2020. If this continues, the emissions are expected to sit at 4.4 million tonnes in 30 years. The emissions originate from the production and use of the many products that contain PFAS; furniture, cosmetics, electronics and many more.

• TreeToTextile sustainable textile fibre demo plant in Sweden

TreeToTextile, owned by H&M Group, Inter IKEA Group, Stora Enso, and LSCS Invest, invested €35 million in constructing a textile fiber process technology demonstration plant in Sweden. AFRY supported TreeToTextile throughout the project in the development and implementation phases from 2016-2022. The demonstration plant is now in the start-up phase.

TreeToTextile is offering a new technology to produce bio-based textile fibers with a low environmental footprint and aims to make sustainable textile fibers available to all. The new fiber is a regenerated cellulosic fiber, produced from renewable and sustainably sourced raw materials from forests. TreeToTextile has invested €35 million in developing and constructing a new demonstration plant in Nymölla, Sweden. This investment is a crucial step prior to the scale-up and commercialization of this technology.

AFRY has been the leading consultant and engineering partner of TreeToTextile from its early stages of project development in 2016, continuing onto demo plant implementation engineering from 2020-2022 In the project development phase, AFRY’s assignment included several pre-feasibility and feasibility studies, process design, up-scaling evaluations, and supplier pilot runs planning. In the demo plant implementation phase, AFRY was responsible for the engineering, project management and site services, also providing many additional services like permit and procurement support as well as machine and IT solutions.

“AFRY and TreeToTextile have a long-lasting, mutually developing relationship that we hope to continue. Together with AFRY, we have overcome the challenges through close collaboration, flexibility, broad competence and most important of all, mutual commitment”, says Olli Ylä-Jarkko, CTO at TreeToTextile.

The commissioning of the demonstration plant started in the summer of 2022, and the project was handed over to TreeToTextile for start-up and further optimization of the process.

“I’m proud of the deep and long-lasting cooperation with TreeToTextile. This project shows AFRY’s ability and wide competence to meet various demands of customer investment projects – from early phase development to implementation. AFRY’s long experience with bio-based materials, combined with our extensive process industry and project execution experience, makes us a unique partner for industrial clients in accelerating their bio-based fibers to scalable commercial production”, says Lisa Vedin, Head of Process Industries Sweden at AFRY.

Flat knitting solutions provider SHIMA SEIKI MFG., LTD. of Wakayama, Japan, together with its Brazilian representative BRASTEMA TECNOLOGIA TEXTIL LTDA., will participate in the FIMEC 2023 46th International Fair of Leather, Chemicals, Components, Machinery and Equipment for Footwear and Tanneries in Rio Grande do Sul, Brazil next month.

Working off the recent trend in knitted shoe uppers in the athletic footwear market, SHIMA SEIKI proposes knitted fabrics to the general footwear market as an alternative to leather. To that end SHIMA SEIKI will be showcasing the latest applications of computerized flat knitting technology to demonstrate its contributions in this field.

As pioneer of WHOLEGARMENT® knitting technology whereby the knitted product can be produced in one entire piece on the machine without linking or sewing, the company is showing the MACH2XS WHOLEGARMENT® knitting machine for the first time at FIMEC. MACH2XS features 4 needle beds and SHIMA SEIKI's original SlideNeedle™, capable of producing high-quality fine gauge WHOLEGARMENT® products in all needles. Proposals include WHOLEGARMENT® sportswear as well as seam-free shoe uppers. For conventional shaped knitting of shoe uppers, the SVR123SP machine features a loop presser bed that permits inlay technique for producing hybrid fabrics with both knit and weave characteristics, suited to shoe upper applications that require form-fitting function, comfort, flexibility, breathability as well as strength and stiffness. SVR123SP furthermore features i-Plating inverse-plating capability for increased patterning capability, including the production of jacquard-like patterns in light-weight plain jersey stitch. Also on show will be the compact SVR093 machine with a short knitting width intended for knitting shoe uppers. Both SVR machines feature such SHIMA SEIKI innovations as DSCS® Digital Stitch Control System, spring-type moveable sinker system, stitch presser, yarn gripper and cutter, and takedown comb. Made-in-Japan quality, reliability, productivity, user-friendliness and cost-performance all combine to satisfy the high expectations of the world's shoe industry.

SHIMA SEIKI’s SDS®-ONE APEX4 3D design system will also be available for demonstrations in design and simulation suited to shoe production. Of particular interest is its ultra-realistic simulation capability that realizes Virtual Sampling. When countless variations must be evaluated before arriving at a final design, virtual product samples can be used to streamline the decision-making process by minimizing the enormous amount of time and cost normally associated with producing actual samples for each variation. The sustainability factor is also undeniable.

The EU's plans to ban PFAS (per- and polyfluoroalkyl substances) chemicals will have an immense impact on companies globally. Perhaps even more than expected, as many manufacturers are unaware that they may have PFAS chemicals in their product line. A new online tool, launched today by NGO ChemSec, will help to solve this problem.

Just a couple of weeks after the big PFAS restriction proposal in the EU was published, ChemSec launches the PFAS Guide, which helps companies investigate the use of persistent chemicals within their businesses. The main feature of the PFAS Guide is the searchable database uncovering different PFAS uses and functions. The online tool also provides guidance on different aspects of the phase-out process from regulation and investigation all the way to testing and supply chain communication.

“We’ve been working to support companies in chemical substitution for a long time, and the last few years we’ve gathered a group of companies working specifically on the PFAS issue. The discussions with them made it clear to us that a main challenge is understanding if and where in your business you may have PFAS”, says Dr. Anna Lennquist, Project Leader for the PFAS Guide.

PFAS are a source of growing concern
It has been estimated that 95 percent of all manufactured goods rely on some form of industrial chemical process. A large share of the chemicals used in these processes have been linked to adverse impacts on human health and the environment. PFAS are a clear example of this problem. PFAS have been manufactured and used in products such as make-up, non-stick pans, water- and greaseproof textiles, food-packaging materials, and firefighting foam since the 1950s and are still used in a wide variety of products around the world today.

But they are also substances of growing concern due to their problematic properties. Per- and polyfluorinated alkyl substances (PFAS) are a group of several thousand man-made chemicals that accumulate in the environment and cause health impacts for generations. They are, for example, linked to cancer, lung disease, diabetes, reproductive abnormalities and learning difficulties. Since PFAS do not degrade, these “forever chemicals” are now so widespread that is safe to say that every single human being on the planet have detectable levels of these toxic chemicals in their blood.

A couple of weeks ago, a big proposal to restrict PFAS in the EU was published. The five EU Member States behind the proposal submitted a broad restriction proposal that clearly shows the need for the industry to put all resources into phasing out all PFAS substances.

Global Fashion Summit, a leading international forum for sustainability in fashion, will convene core stakeholders across the fashion ecosystem and parallel industries to drive tangible action on social and environmental sustainability. The Summit is presented by Global Fashion Agenda (GFA). GFA is a non-profit organisation that is accelerating the transition to a net positive fashion industry, under the patronage of HRH The Crown Princess of Denmark. Global Fashion Summit: Copenhagen Edition 2023 will take place on 27-28 June in Copenhagen, Denmark.

The theme of Global Fashion Summit: Copenhagen Edition 2023 is ‘Ambition to Action’. Under this premise, the Summit will present content experiences focused on tangible impact.

The theme will underly all elements of the Summit and Main Stage speakers will showcase inspiring thought leadership for accelerated change by exploring a matrix of interconnected topics. The 2023 Copenhagen Edition will build on more than a decade’s worth of Summit guidance and outcomes by dedicating even more focus towards action-oriented workshops and case studies. Through these formats, the forum will demonstrate tangible learnings and concrete recommendations that can help drive implementation.
 
The forum will also host strategic roundtable meetings with the aim to mobilise industry leaders to build alliances with solution providers, policy makers, investors and other industry stakeholders and implement immediate solutions. Such alliances can set in motion progress towards a net positive industry. With upcoming policy expected to influence the fashion industry even further this year, the Summit will shed light on the ongoing pieces of legislation currently under discussion both within the EU and worldwide.

This year’s Global Fashion Summit: Copenhagen Edition is supported by Principal Sponsor, Maersk. A globally renowned leader in logistics that aims to deliver a more connected, agile and sustainable future for global logistics. Maersk will support the Summit's agenda to accelerate industry transformation by highlighting how logistics can help the fashion and lifestyle industry in reaching their sustainability goals.

Additionally, the Innovation Forum will present a curated exhibition of other leading sustainable solutions. Summit attendees can meet with exhibitors covering the entire value chain – from innovative materials to end-of-use solutions. Innovation Forum Matchmaking will enable small and large fashion businesses to advance their sustainability journey, by providing the unique opportunity to be matched with relevant solution providers. 

CHIC - China International Fashion Fair starts the new year with a new date and fresh ideas. The unrestricted entry to China is possible again and CHIC March will be postponed by three weeks to facilitate visa applications.

From March 28 to 30, 2023 around 1,600 exhibitors will meet on 117,200 sqm at CHIC at the National Exhibition & Convention Center (NECC) in Shanghai.

In 5 halls the fair presents itself in clearly structured segments with the big players and young, up-and-coming designers as well as exciting niche brands in the areas of womenswear, menswear, kidswear, denim, shoes, bags and accessories, young fashion, sportswear, designer brands and overseas brands.

Around 120,000 trade visitors are expected at the upcoming CHIC, serving all major distribution channels in China such as large shopping malls and department stores, agents, distributors, buyers from multi-brand and concept stores, live stream providers, etc. The CHIC organizers invest in intensive visitor marketing measures. CHIC Matching, the successful networking system of CHIC, brings exhibitors and visitors together efficiently and individually. New contacts can be made and cooperation opportunities explored. Comprehensive marketing activities via all relevant channels such as the CHIC WeChat Public Account (> 200,000 subscriptions), the CNGA WeChat mini program (> 100,000 subscriptions) and TikTok ensure visibility.

New: CHIC Showroom, the innovative young showroom concept in Beijing, which is to be expanded and will enable international brands to enter the Chinese market in the medium term.

Freudenberg Performance Materials (Freudenberg) will present surfacing veils and core materials for lightweight fiber reinforced plastic (FRP) parts at JEC in Paris, France. Freudenberg will also be showcasing Enka® Solutions flow media and spacers for efficient vacuum infusion, resin transfer and foam injection molding processes for applications in the composites industry, etc. at the international composites show.
 
Freudenberg’s solutions for the FRP industry include a variety of glass, PAN and PET nonwovens, as well as core materials for the production of lightweight fiber reinforced plastic parts. These products are designed for anti-corrosion coatings in piping and tank construction, smooth UV resistant surfaces for facade panels, and other applications for a diverse range of end products. Products made from fiber reinforced plastics must be equipped with surfacing veils to provide abrasion resistance, corrosion resistance, smooth surfaces and mechanical strength. Freudenberg offers high-tech nonwovens that can meet these challenges.
 
Enka® Solutions products are characterized by their typical 3D entangled polymeric filament structures. Thanks to this structure, they are exceptionally suitable as flow media and spacers when producing composite materials.