TT Martket Trends & Challenges

Technical textiles

Market Trends and Challenges

Crisis, Restructuring and Major Companies Strategies

Project “Promouvoir les actions novatrices en matière d‟ICP dans le domaine de

l'anticipation/accompagnement/gestion des mutations industrielles dans le secteur des textiles

techniques”

Fédération Syndicale Européenne Textile Cuir Habillement

30 et 31 mars 2011

Hôtel Concorde Lafayette, Paris

Draft and Interim Version – not to be quoted

Agenda

Main Characteristics Of Technical Textiles Industry

The Technical Textiles Industry – Production Trends

Impact Of The Economic Crisis Upon The EU Technical Textile Sector

Overview Of The Major EU Technical Textile Companies

Overview Of Main End-use Markets

Main Characteristics of Technical Textiles Industry

1 - Definitions

1 – Definitions Technical textiles comprise all those textile-based products which are used principally for their

performance or functional characteristics rather than for their aesthetics

Technical textiles comprise all those textile-based products

which are used principally for their performance or functional

characteristics rather than for their aesthetics, or are used for

non-consumer (i.e. industrial) applications. The definition

includes finished products and components of other products.

Thus, the definition does not depend on the material used (yarn

or fibre), but on the end-use o the product itself.

An outstanding feature of the technical textiles and nonwovens

industry is the range and diversity of raw materials, processes,

products and applications that it encompasses. Indeed, the

development of the sector is linked to the development of

science and research and development which allowed to find

numerous new applications for textile.

Technical textiles have developed thanks to various innovations

in material processing, production processes and final products.

Therefore, their diversity renders difficult to identify them as they

are very often mixed with other materials, part of a product or

used as a semi-product, all of these in different economic

sectors or activities.

Technical textiles are being used in a wide range of industries

such as aeronautics, construction, automotive, agriculture or

even the sport industry.

Technical textiles are divided into seven product groups. These

are:

Technology, machinery and accessories;

Fibres and yarns;

Woven fabrics, scrims, braids and knitted fabrics (tapes,

string, cords, belts, ropes and nets);

Nonwovens;

Coated textiles;

Composites;

Bondtech.

1 – Definitions Technical textiles are usually classified by their end use applications (12 categories)

However, the market for technical textiles is generally analized threw end –use consumption. The 12 applications areas are the

following:

Segment Market

AGROTECH (AGRICULTURE, HORTICULTURE AND FORESTRY)

BUILDTECH (PROPERTY AND BUILDING PRODUCTS)

CLOTHTECH (SHOES AND CLOTHING)

GEOTECH (GEOTEXTILES, CIVIL ENGINEERING)

HOMETECH (FURNITURE, INTERIOR DECORATION, UPHOLSTERY, HOUSEHOLD TEXTILES, FLOORING)

INDUTECH (FILTERS, CLEANING AND OTHER INDUSTRIAL APPLICATIONS)

MEDTECH (MEDICAL, HEALTH AND HYGIENE)

MOBILTECH (AUTOMOBILE, NAVAL, RAIL AND AEROSPACE)

OEKOTECH (ENVIRONMENTAL PROTECTION )

PACKTECH (PACKAGING)

PROTECH (PERSONAL AND PROPERTY PROTECTION AND SECURITY)

SPORTTECH (SPORT AND LEISURE)

1 – Definitions Due to their caracteristics and to their extreme diversity technical textiles have a wide range of

applications (1)

AGROTECH BUILDTECH CLOTHTECH GEOTECH HOMETECH INDUTECH

agriculture, horticulture, forestry and fishing

building and construction functional components of shoes and clothing

geotextiles and civil engineering

products used in the home components of furniture and floorcoverings

filtration and other products

used in industry

• woven, nonwoven crop protection covers

• capillary matting

• land netting

• fishing ropes

• fishing nets

• fishing line, baler twine

• tarpaulins

• textile structures

• awnings

• roofing felts

• sewer linings

• woven roofing

• roof scrims

• housewrap, shingles, hoardings

• scaffold nets

• Concrete reinforcement (fibre, scrims)

• composites

• woven/knit, nonwoven interlinings

• waddings

• laces

• shoe components

• sewing threads

• hook and loop fasteners

• zips/ other fasteners

• Labels

• ground stabilisation

• soil reinforcement

• pit-linings

• erosion control

• woven/knit, nonwoven wipes

• vacuum filters

• HVAC filters

• pillow tickings

• mattress tickings

• mattress components

• spring wrap

• spring insulators

• platform cloths

• dust cloths

• fibrefill

• furniture components

• webbings

• curtain tapes

• woven, nonwoven primary, secondary carpet backing

• carpet ground yarns

• sewing threads

• Composites

• conveyor belting

• hoses

• drive belting

• brushes

• battery separators

• other electrical goods

• abrasives

• PCBs

• other electrical composites

• woven filters

• cable components

• nonwoven air, dust, liquid, other filters

• cigarette filters

• paper-making felts

• woven/knit, nonwoven wipes

• seals/ gaskets fibrefill

• anticorrosion composites

• lifting webs

• ropes

• silos

• oil booms

• other coating substrates

1 – Definitions Due to their caracteristics and to their extreme diversity technical textiles have a wide range of

applications (2)

MEDTECH MOBILTECH OEKOTECH PACKTECH PROTECH SPORTTECH

hygiene and medical transportation construction, equipment and furnishing

Environmental protection packaging and storage personal and property protection sports and leisure technical components

• woven, nonwoven gowns and drapes;

• woven/knit, nonwoven woundcare;

• sterile packaging;

• medical mattresses;

• coverstock;

• cotton wool;

• Wipes

• car, CV tyre cord;

• drive belt;

• hose;

• cabin filters;

• seat belts;

• air bags;

• tufted, needled carpet;

• carpet backing;

• woven/ knit, nonwoven trim;

• upholstery;

• insulation;

• truck covers;

• tiedowns;

• ropes;

• transport, marine composites

• housewrap;

• erosion control;

• pit linings;

• woven filters;

• nonwoven dust filters; automotive insulation

• FIBCs;

• Laundry bags;

• sacks;

• twine;

• teabags, food soaker pads;

• other nonwoven packaging;

• netting;

• Fibre strapping; other woven packaging

• FR;

• NBC;

• cut/slash, ballistic, dust, disposable chemical, durable chemical protection;

• FWC; face masks, hi-vis;

• Harnesses

• boat covers;

• bookcloth;

• shopping bags;

• sports bags/luggage;

• Leather substrate;

• sailcloth;

• artificial turf;

• ropes;

• nets;

• balls;

• flags;

• air-sport fabrics;

• tents;

• sleeping bag fill, fabrics;

• webbing;

• equipment composites

Source: DRA

1 – Definitions The technical textile sector cannot be isolated from the technical fibre industry and technical textile

machinery production

As technical textiles can be used in a wide range of applications, there is an extreme diversity of technical textiles products. Therefore

the production processes and the raw materials used may be very different from product to product.

However, the production process can be divided into 4 parts:

Raw material processing (different according to the use of synthetic fibres or natural fibres, may include chemical processing,

washing, bleaching among others);

Yarn processing (fibre preparation, drying, spinning, drawing, twisting);

Cloth production (which can include as diverse operations as weaving, knitting, finishing, coating, bonding;

Final product production (cuting, sewing).

The diversity of technical textile applications and therefore of production processes engenders the need of customized machinery.

Thus, the sector cannot be analized without taking into account the technical textile machinery industry.

This need of customization, the changing needs of final users and the continuous obligation of innovation engenders the need of

close cooperation between technical textiles producers and the textile machinery industry.

1 – Definitions Despite of this diversity, some common caracteristics can be find for the different Technical Textiles

subsectors

Dependant of end – use sectors

Strong correlation with the industrial end-use (cyclicality), while the consumer markets are mainly driven by demographics

Global market

TT textiles are being used in sectors such as construction, aeronautics, hygiene and medicine which are global markets.

Niche markets

Technical textile products are very diversified and are used in a wide range of sectors. As TT have multiple applications, products are very

often customized to the customers needs. In this view, TT can be, at least partially, seen as a cumulation of niche market for high added

value products.

Close cooperation between producers and customers

As product application may be very specific, TT products are customized to the customer’s needs. This results in the obligation of close

cooperation between producers and customers and in geographic proximity.

Constant need of innovation and of investment in R&D

The constant need of finding new applications for textile and of improving existing technological solutions (better efficiency, reduction of

energy intensity and use of raw materials, etc.) necessitates a high level of investments. The need of constant innovation creates the

obligation of close cooperation between producers, customers and research organisations (such as universities for example).

This is even more important as the sector is mainly composed of SMEs. This results in the creation of multiple associations and research

clusters generally at regional level.

Production costs highly dependant of raw material costs

The production costs of the industry are highly dependant of raw material prices as well as energy prices as the processing of raw materials may be

highly energy intensive.

2 - A global market

2 -The TT market is a global market

The Technical textile sector is capital intensive and highly dependant of its end-use markets which are global ones for the majority of

them (automotive market, construction market, aerospace, packtech). Therefore, for obvious reasons, a majority of players in the TT

sector are operating at a global scale.

As an example, among the 40 world leading producers of nonwovens, 15 of them are based in Europe, while 13 are in the US, 6 in

Japan, 2 in Israel, 1 in Brazil, Taiwan, South Korea and in China. However, almost all of them have production facilities in the different

regions of the world and sell their products worldwide.

Source: companies’s annual reports

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Freudenberg Ahlstrom Kimberley-Clark Fiberweb Dupont

Sales by region of choosen leading nonwovens producers in 2009

ROW

Asia / Pacific

South / Central America

North America

Europe

2 -The TT market is a global market Top 40 players of the global nonwovens market – breakdown by headquarters location (2009)

CompanyTurnover

in 2009Headquarters Company

Turnover

in 2009Company

Turnover

in 2009Headquarters

1 Freudenberg 1250 Germany Dupont 1200 Japan Vilene 239 Japan

2 Ahlstrom 1120 Finland Kimberly-Clark 1150 Companhia Providencia 225 Brazil

3 Fiberweb 792 U.K. Polymer Group Inc. 882 Avgol 213 Israel

4 TWE Group 260 Germany Johns Manville 670 Asahi Kasei 195 Japan

5 Fibertex 236 Denmark Glatfelter 350 Mitsui Chemical 164 Japan

6 Sandler 218 Germany Buckeye Technologies 247 Toray Advanced Materials 150 Korea

7 Colbond 163 Netherlands First Quality Nonwovens 220 Toyobo 144 Japan

8 Vita Nonwovens 162 U.K. Hollingsworth & Vose 215 Jofo Group 118 China

9 Pegas Nonwovens 160 Czech Republic Propex Holdings 165 Spuntech Industries 104 Israel

10 Jacob Holm Industries 156 Switzerland Georgia-Pacific 152 Unitika 104 Japan

11 Andrew Industries 130 U.K. Precision Custom Coatings 115 Kuraray 101 Japan

12 Union Industries 120 Italy Lydall 98 KNH 80 Taiwan

13 Textilgruppe Hof 98 Germany Foss Manufacturing 96

14 Rexcell 80 Sweden

15 Suominen 72 Finland

Rest of the WorldUSAEurope

Source: Textile intelligence

3 – An addition of highly

specialized markets

3 – The TT sector: an addition of highly specialized markets Due to the diversity of TT applications and to the fact that they are often used as components of a final

product, the TT market can be seen as an addition of niche markets

As an example, the European filtration market which evaluated to be worth around 825 mln € is composed of

products which can be used in different sectors and different purposes.

Cartridge

Medical / Food

Coolant

Machining / Metal working

VAC BAG

INDOOR

PERSONAL PROTECTION

LIQUID FILTRATION

28%

AIR FILTRATION

72%

EUROPEAN

FILTRATION

MARKET (2009)

c. € 825 MLN

Source: Fiberweb

3 – The TT sector: an addition of highly specialized markets the example of the European market for nonwovens membranes (Buildtech / Hometech)

Vapour permeable 70%

Vapour control layer 20%

Non VP Underlay 10%

Roofing underlay 95%

Ridge and hip 2,5%

Repair tapes 2,5%

Bitumen carrier 100%

Pitched roof 80%

Commercial 20%

Residential 80%

Facade 50%

Window sealing 5%

Sealing tapes 5%

House wrap 40%

Foundation drainage 70%

Vapour control layer 20%

Non VP Underlay 10%

Flat roof 20%

Roofing 75%

Roofing 20%

Roofing 5%

Nonwoven

membranes

European market for nonwoven

membranes (2009)

c. € 900

Source: Fiberweb

4 – A constant need of innovation

and R & D

4 – A constant need of innovation and R & D A great part of TT companies’ turnover is linked to new products and innovations

The graphic below shows Fiberweb’s forecasted growth drivers for the period 2010 / 2013. The company expects a growth of its

turnover equivalent to 70 mln € by 2013. 65% of this growth should come from new products.

The importance of innovation touches all actors of the sector. As an example, Glatfelter (US 5th nonwoven producer) reported in 2010

that 50% of its turnover comes from products that are less than 5 year old for the 7th consecutive year. Freudenberg reported that

16% of its total revenue comes from new products.

65% 65%50%

62%

89%

35% 35%50%

38%

11%

Overall Filtration Industrial specialties

Construction Graphic arts

Fiberweb's expected growth drivers by end - use

applications (2010 - 2013)

New products All others

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4 – A constant need of innovation and R & D Companies efforts seem to focus rather on incremental innovations

R&D expenditures in the TT sector represent generally less than 5% of sales, which seems to indicate that

companies of the sector are focused on improving already existing products (incremental innovation).

6%

2%

1%

4%

1% 2% 1%

4%

6%

2%

1%

5%

2% 2% 1%

4%

0%

1%

2%

3%

4%

5%

6%

7%

Autoliv Sioen L & B Rieter Lenzing Fiberweb Ahlstrom Freudenberg

R & D expenses / sales of choosen TT companies

2006 2007 2008 2009 2010 2 okr. śr. ruch. (2009)

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4 – A constant need of innovation and R & D Of course, there are counter examples such as the horticulture market (crop covers, agrotech) which

can be considered as a mature market

23%

15%

5%

3%

20%

15%

9%

5%

5%

Market share 2009

Fiberweb

Texnovo

D&L

Texton

Others

Freudenberg

Pegas

Soft

Agrimpex

European Market for horticulture

(2009)

15.000 mt - € 45 mln

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Functions: reduce exposure to sun and insects,

reduce light transmission, energy saving in winter

Southern

Europe 50%

Eastern Europe

10%

Greenhouses (30%)

Crop covers for Agriculture / Horticulture market

Western

Europe 65%

Southern

Europe 25%

Eastern Europe

10%

Open fields (70%)

Western

Europe 40%

Functions: protect against the elements and

insects, accelerate growth, improve yields

4 – A constant need of innovation and R & D Constant need of innovation and fierce competition from Asian countries and the US reinforce the needs of close

cooperation between european producers (creation of industrial clusters) and financial support from public

authorities

Financial support from public authorities

As investment is the key for success, public authorities play an important role supporting the sector in order to maintain its

competitiveness.

In Europe, the European Technology Platform was created in 2004 to obtain funding for R&D under various programmes, among

which the most important is the 7th EC Framework Programme.

The platform can be described as a stakeholder forum that brings together the European textile and clothing industry, its research and

education community, representatives of related industrial sectors and scientific disciplines as well as public authorities. Its aim is to

develop and implement long-term industry visions and a Strategic Research Agenda (SRA) to improve innovation, competitiveness

and growth potential for this key industrial sector in Europe.

In the field of technical textiles, the following key research priorities had been identified:

Development of new specialty fibres and fibres composites for innovative textile products;

Development of bio-based materials, biotechnologies and environmentally friendly textile processing;

Development of new textile applications.

Other programmes includes EUREKA, various national and regional programmes and schemes for support of industrial R&D, specific

funding opportunities targeting SMEs and new financing options including equity, loan and guarantee based schemes.

4 – A constant need of innovation and R & D Research and development priorities of the Strategic Research Agenda

Commodity to

special products

New textile

applications

Mass production to

customisation

Smart textile and clothing

New textile products for

technical applications

New textile products for

human performance

Life cycle and total

quality management

concepts

New product design

concepts and

technologies

Clothing / fashion

mass customisation

New speciality fibres &

fibres composite

Functionalisation of

textiles

Biomaterials &

biotechnologies

4 – A constant need of innovation and R & D Industrial clusters play a key role in maintaining EU leader’s position in innovation. But until when?

Industrial clusters:

As innovation is a key success factor in order to maintain the competitiveness of EU TT industry and therefore employment in

the sector, a certain number of industrial clusters have been created. They regroup companies, research institutions, public

authorities and financing institutions (public and private).

TT clusters exist in all European regions where TT is produced

(Germany, Italy, France, Spain, Austria). Among the main ones,

there are:

Techtera (Lyon, France)

Uptex and clubtex (Lille)

The Catalonian textile cluster (Barcelona)

Voralberg (Austria)

The North West region cluster (UK)

Industrial clusters play a key role as they allow EU companies to

maintain the innovative gap between Europe and the fast

developping countries like India and China.

Research institutions Companies / initiators

Other support institutions Financial support

Industrial Cluster

5 – High importance of raw

materials and energy in the

cost structure

5 – High importance of raw materials and energy in the cost structure Raw material and energy expenses may represent even more than 50% of total costs

According to the companies taken into account, raw material expenses account for between 40 and 60% of total

net sales. It is however difficult to obtain precise data as most of the companies do not publish this kind of

information in their annual reports.

Energy costs = 17%

39%

28%

55%

21%

50%

19%

Materials and supplies Personnel expenses

Raw material and personnel expenses in % of net sales (2009)

Freudenberg Ahlstrom Fiberweb Source: Companies’ annual reports

5 – High importance of raw materials and energy in the cost structure Both man made and natural fibres are used for the production of technical textiles

Both man-made and natural fibres are used for the production

of technical textiles. Therefore the production costs of the

industry are highly dependant of raw material prices as well as

energy prices as the processing of raw materials may be highly

energy intensive.

Man-made fibres:

Man-made fibres are classified as either regenerated fibres or

synthetic fibres. Regenerated fibres are those where the

starting material is a natural polymer such as cellulose.

Synthtic fibres are those where the starting materials are

polymerised organic chemicals.

All man-made fibres are produced initially in continuous form.

The finer ones are sold as continuous filament yarns. The

larger bundles of filament (tow) are usually cut into short

lengths (staple) for the manufacture of spun yarns and fabrics.

Synthetic fibres are derived from fossil fuels, namely oil and

gas. Concerning the processing of the raw materials, some

polymers are melt-extruded into fine fibres. Others are

processed via dry and / or wet spinning.

The main synthetic fibres are polypropylene, polyester,

polyamide filament and acrylic.

Natural fibres:

Cotton is the main natural fibre used in the manufacture of

technical textiles. Raw cotton fibre, however, is insufficiently

absorbent and pure for yarn-based hygiene end uses. The

processes of washing and bleaching with hypochlorite or

peroxide alow the fibre to be used in some technical textile

nonwovens. The main applications for cotton fibre include

absorbent wadding, apparel interlinings, coating substrates,

coverstock, filters, medical and sanitary applications, sewing

thread and wipes.

Wood pulp is another source of natural fibre for technical

textiles, notably nonwovens. Short cellulosic fibres are

obtained from the wood by chemical removal of the lignings

that bind the plant cells together. The fibres are cleaned and

wet laid into sheets of pulp and then dried. The properties of

the pulp depend of the type of the tree. The main applications

for wood pulp in technical textiles are hygiene and medical

products, tea bagsd, wipes and cellulosic fibre manufactured.

5 – High importance of raw materials and energy in the cost structure Man-made fibres represent 80% of fibres used for the production of technical textiles

At a high level of aggregation, the world technical textile market is dominated mainly by synthetic, regenerated or inorganic fibres

polymers as a result of their general strengh and versatility. Their share is of about 80% of fibres used for the production of technical

textiles.

3125 3462 3839

1084613252

15843

1995 2000 2005

World consumption of fibres for technical textile

production (in 000 tons)

Natural Man-made-inorganic


5 – High importance of raw materials and energy in the cost structure In the EU, 93% of fibres used for the production of technical textiles are man-made fibres

In Western Europe, 30% of total fibre consumption is for technical textile end uses. Fibre consumption for technical textiles in the

region amounted to 1,29 milion tonnes in 2005 (6,5% of total world fibre consumption for technical textiles).

Among these, 1,2 mln of fibres are man-made fibres, which is around 93%. The most used materials are polyester staple and filament

(40%), Polypropylene (25%), cellulosic (mainly viscose, 22%) and polyamid (9%).

483

299 264

112

69

10 38

Polyester Polypropylene Cellulosic Polyamid

Fibre consumption for technical textiles in Western and

Eastern Europe (2005)

Western Europe Eastern Europe

In Central and Eastern Europe,

consumption of fibres for technical

textile in 2005 was still much lower

than in Western Europe and

amounted to 147 000 tonnes (29%

of total fibre consumption in the

region).

Man – made fibre consumption

comprises polyester staple and

filament (47%), cellulosic staple and

filament (26%) and polypropylene

staple and polypropylene filament

(7%).

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5 – High importance of raw materials and energy in the cost structure Europe was still

the second largest man-made fibre producer worldwide in 2010

Although its market share has fallen significantly over the years, Europe is still the second largest man-made fibre

producing region in the world.

Moreover, Europe is:

The largest regional exporter of acrylic fibres and of cellulosic fibres;

A significant producer of speciality polyester;

A global leader in fibres made from modified polymers;

And the world’s largest producer of polypropylene fibres, aramid fibres and ultra-high strengh polyethylene.

In addition it is a leader in innovation in polyamide textile yarns, and is home to the largest single units for making

acrylic fibre and viscose staple.

Furthermore, it holds a strong position in the production of special fibres for filtration, geotextiles and agrotextiles.

5 – High importance of raw materials and energy in the cost structure Main applications

of EU man-made fibres

Raw material Main end-uses

Acrylic fibrescar upholstery fabrics, filtration fabrics and nonwovens, nonwovens for

roofing materials and outdoor fabrics

Cellulosic fibres

absorbent wadding, apparel interlinings, coating substrates, filters, flock,

food casing, mechanical rubber gods, medical products, sanitary products,

tea bags, tyres and wipes

Specialty polyester

geotextiles, home textiles, filling, filters, coating substrates, coverstock,

knitted fabrics, roofing, mechanical rubber gods, sewing thread, apparel and

automotive industries, the hygiene sector and technical applications

Modified polymers asphalt, bitumen, bioplastics,

Polypropylene fibresautomotive products, coating substrates, coverstock, filters, geotextiles,

medical and sanitary applications, roofing, ropes and wipes

aramid fibresmainly high technology (aeronautics, space industry, navy, military

applications) but also automotive and sports and leisure industries

ultra-high strengh polyethylene packaging (bottles, boxes, recipient, reservoirs...)

The Technical Textiles Industry - Production

Asia is the world’s biggest market for technical textiles (43% of worldwide

consumption)

The total world consumption of technical textiles is groing continuously

from 1995, in both terms of value and volume. The market value had

growth from 65 bln € in 1995 to 85 bln € in 2005. It reached a global

turnover of 100 bln € in 2010.

At this period, the total world consumtpion was of 22 milion tonnes per

year. Asia is world’s biggest consumer with 8,5 mln tonnes. It is being

followed by the US and Europe whose consumption reaches

respectively 5,8 and 4,8 mln tonnes.

As shown in the table below, the TT sector is growing four times faster

than conventional textiles. Between 1995 and 2005, the world’s

consumption of TT has grown by 41%.

1995 2000 2005evolution

1995/2005

Americas 4 288 5 031 5 777 35%

Europe 3 494 4 162 4 773 37%

Asia 5 716 6 963 8 504 49%

ROW 473 558 628 33%

Total 13 971 16 714 19 682 41%

World consumption of TT (in 000 tonnes)

24 20,5

39

2

Americas Europe Asia ROW

Consumption of TT by region in bln € (in 2005)


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The Technical textile subsector has a growing influence within the european

textile sector

The importance of this sector is constantly growing within the European textile industry. This situation is mainly due to the following

reasons

having to face fierce competition from developing countries in the clothing sector (highly labour intensive), the european textile

industry had to adapt itself and concentrate on high added value segments.

Since the 90’s, a wide range of new textile applications have been found. Textile is being used in a growing number of sectors

such as the construction and medical sectors, the car industry, agriculture, etc.

Nowadays, technical textiles represent between 20 – 25%

(22 – 27,5 bln €) of the total textile turnover.

Contrary to conventionnal textiles, the EU TT sector has a

positive external trade balance.

In Europe, 4 countries consume about half of the technical

textiles in terms of value: Germany, France, the UK and

Italy.

40 000 are employed in the technical textiles industry in

Germany, that is 45% of the textiles industry, compared to

30% in France (25 000 employees), 12% in Italy (20 000

employees) and 30% in the UK (18 000 employees).

14%

12%

10%

9%

55%

European consumption of TT by geographic area

Germany France UK Italy Others

Source: IFTH

In 2005, Mobiltech, Builtech and Indutech were the 3 most important end-

use markets for the EU TT sector

23%

20%

10%

21%

4%

14%8%

Western Europe consumtion of TT per market in 2005 (values)

13%

25%

5%39%

2% 10%6%

Western Europe consumption of TT per market in 2005 (volumes)

Hometech

Indutech

Packtech

Mobiltech

Geotech

Buildtech

Agrotech

Source: EURATEX

The Main EU producers are located in Western Europe (mainly France,

Germany and in the UK)

1079

1237 1287

90 135 14745 101 150

1995 2000 2005

European production of technical textiles

(in 000 tonnes)

Western Europe Central and Eastern Europe Turkey

Source: IFTH

According to a survey made by German DFV among some EU TT

producers, 10% of the TT companies that answered to the survey had a

turnover superior to 100 mln €

According to a survey of 215 European producers of technical textiles conducted in november 2010 by Deutscher Fachverlag GmbH,

a majority of players on the European Market are SME’s with a turnover being inferior to 100 mln €.

Source: DFV

Furthermore, a majority of players had less than 100 employees

The European Technical Textile market is dominated by small and medium sized companies, as more than 83% of

firms employ less than 100 people. The situation is a bit different for the fibre and chemicals sectors where the ratio

is around 65%.

Source: DFV

DFV’s survey shows that a major part of the EU production is being

exported

Source: DFV

In the nonwovens sector, 15 EU companies are listed among the 40 world’s

top producers

38% of the 40 world’s top producers of nonwovens listed by textile intelligence are EU companies (15). In the top 10, there are 4:

Freudenberg (German world leader), Ahlstrom (Finland), Fiberweb (UK) and TWE Group (Germany).

EU companies’ turnover represent 40,4% (5 bln $) of the total turnover of companies included in the list (12,4 bln $), with a share of

25,5% for the sole Freudenberg, Ahlstrom and Fiberweb.

50175560

947 118772

EU USA Japan China ROW

Turnover of top 40 nonwovens producers by country of origin in 2009 (in $)

40%

45%

8%

1%

6%

Share of global nonwovens turnover by country of origin in % (2009)

EU USA Japan China ROW

Source: Textile intelligence Source: Textile intelligence

40% of nonwovens leading producers’ production sites are located in the

EU

In 2009, the 40 world’s top nonwovens producers had 189 production sites located around the world. Among them, 75 were situated

in the EU, 60 in the US and 18 in China.

The important number of production sites in China shows how much this market is being penetrated by foreign companies, as this

country has only one firm among the 40 world’s biggest nonwovens producers.

40%

32%

9%

19%

Geographical dispersion of nonwovens production sites (2009)

EU USA China ROW


A significant part of top 10 nonwovens producers’ production sites are

located in the EU

43% of top 10 global nonwovens producers’ production sites are located in the EU, 9% in China.

EU China Worldwide

1. Freudenberg 1250 Germany 7 2 17 41%

2. Dupont 1200 USA 2 1 7 29%

3. Kimberly-Clark 1150 USA 2 7 29%

4. Ahlstrom 1120 Finland 15 1 29 52%

5. Polymer Group Inc. 882 USA 3 2 16 19%

6. Fiberweb * 792 U.K. 9 1 17 53%

7. Johns Manville 670 USA 6 2 13 46%

8. Glatfelter 350 USA 3 1 5 60%

9. TWE Group 260 Germany 2 1 3 67%

10. Buckeye Technologies 247 USA 1 3 33%

Production sitesratio

EU/globalCompany

Turnover (mln

USD)Rank Headquarters


Impact of the economic crisis upon the EU Technical Textile sector

1- The impact of the economic crisis upon the EU TT sector In 2008/09, the European Technical textile sector has been severely hit by the economic crisis

In the period 2006 / 2007, driven by average growth rates of 2.5 / 3.5%, the European Textile sector had been developping very well.

In some subsectors, EU Technical textile producers realized growth rates above 10% in 2006 in comparison to 2005, with similar

trends showing in 2007.

This results are due to the good performance of the industry in general as technical textile are used in a wide range of industries

directly dependant of the general economic growth (like construction or motorvehicles).

Moreover, TT are being increasingly used in consumer product segments such as sports, leisure, smart textiles and functional textiles.

This change allowed TT producers to exploit the EU internal consumption growth due to tax reductions, lower unemployment rates

and slightly increased salaries.

European TT producers also increased their exports. In 2006, Germany realized exports worldwide of 3,9 bln USD, representing a

world market share of 12,5 %, while the US realized exports worldwide of 3,4 bln USD, representing a world market share of 10,8 %.

European TT producers exploited therefore their technology advantage compared with countries like China, India and Russia, which is

evaluated to be of 5-10 years. China, India and Russia currently import 70-80 % of their technical textiles, especially those of quality,

due to their lack of capacity and technical knowhow.

However, the situation changed in 2008 because of the world economic crisis. The EU industry had been severely hit by the downturn

in GDP of anywhere up to -4,2% for the EU – 27. By january 2010, industrial production in Europe was still 17% down on the pre-crisis

level.

1- The impact of the economic crisis upon the EU TT sector In 2008, the global fiber consumption declined for the first time in history


1- The impact of the economic crisis upon the EU TT sector TT producers had been additionnaly affected by the high value of the Euro and the price rises of both

natural and made-man fibres

Moreover, EU TT producers were also affected by:

The high value of the Euro against currencies of other

countries which slowed down the recovery exports in 2008

and 2009.

The increasing oil price – from $143,95 in july 2008, down to

$35 in december 2008, and up again to %85,99 a barrel by

march 2010 – put pressure on raw material costs.

As a majority materials used for the production of TT are

derived from oil and gas, this price rise had a direct impact

over the production costs of TT producers in a context of

weak demand. The situation also affected cotton prices, as it

can be considered as a substitutive material.

At the beginning of 2009 raw material prices felt down

however the situation last only until the middle of the year.

Final product components June 2009 June 2010 Max priceyear average

evolution

Max price

variation

Acrylic value chain Propylene (USD/MT) 850 1070 1290 26% 52%

Acrylonitrile (USD/MT) 1195 2445 2455 105% 105%

Acrylic staple fibre (USD/KG) 2,05 3,03 3,03 48% 48%

Polypropilene (USD/MT) 1070 1265 1340 18% 25%

Viscose staple fibre (USD/KG) 1,9 2,48 2,55 31% 34%Source: Fibre2fashion

Source: Fibre2fashion

1- The impact of the economic crisis upon the EU TT sector As a consequence of raw materials prices rises, polyester raw products prices have increased on

year average of 23% between june 2009 and mid 2010

1,05

1,1

1,19

1,141,11

1,21

1,28 1,29 1,291,32

1,35 1,36

1,31,18

1,24

1,35

1,291,27

1,38 1,381,35

1,41 1,421,44 1,44 1,44

1,3

1,36

1,47

1,421,39

1,51 1,521,49

1,55 1,561,59

1,61 1,61

1

1,1

1,2

1,3

1,4

1,5

1,6

1,7

june 09 july 09 aug 09 sept 09 oct 09 nov 09 dec 09 jan 10 feb 10 march 10

april 10 may 10 june 10

Raw polyester products price evolution (USD/KG)

Polyester staple fibre Polyester filament yarn (POY) Polyester filament yarn (DTY)

Sou

rce:

Fib

re2

fash

ion

1- The impact of the economic crisis upon the EU TT sector However some subsectors such as the the medical & personnal care subsectors were less affected

than others

As a consequence, EU TT producers growth in 2008 and 2009 was much lower than in the previous period and restricted to specific

markets. For the industry, 2009 was the first year to record negative production growth (in terms of weight).

However, the TT sector serves a very broad number of end-use industries, and some producers have been less affected by the

economic recession than others.

The most notable distinction has been between the no- durable nonwoven products for end-markets such as personal care and

medical, and certain durable products. For obvious reasons, those durable products destinated for industries such as automotive and

building and construction were the hardest hit throughout 2008 and 2009.

Nevertheless, the EU TT trade balance remains strong, with the total tonnage exceeding that which had been imported – in stark

contrast to the conventional textiles sector.

Many companies have also viewed the crisis as an opportunity to look long and hard at their business in terms of structural

organisation and efficiency.

1- The impact of the economic crisis upon the EU TT sector In 2010, the sluggish overall economic growth and the credit crunch slowed down the TT sector’s

recovery

In 2010, the EU TT industry was still recoverring from the crisis. The situation was rendered difficult by polypropylene price increases

in 2010 what forced TT companies to increase their selling prices.

Additionnaly, the recovery of the EU TT sector had been also hampered by the credit crunch. Indeed, according to a survey launched

by Euratex in november 2009, a majority of companies from the textile and clothing sector was complaining about the growing

restrictiveness in accessing credit because of increased demanded guarantees, higher charges and costs and too important interest

rates. This situation was due to a decrease in the rating of the sector (notamment difficulte d’assurer le credit a l’export).

This restricted access to credit is a considerable burden for the TT sector as two its major caracteristics are the constant need of

innovation and the important number of SMEs.

Nevertheless, in 2010, major producers of technical textiles saw their results improving, comparing to the year 2009.

1- The impact of the economic crisis upon the EU TT sector As an example, in 2010, Dupont saw it results improving (especially in the Asia-Pacific region) but

however without reaching pre-crisis levels

As for example, Dupont’s performance materials sales of 6,3 bln $ were 32%

higher than in 2009, reflecting 27% higher volume and a 7% increase in USD

selling prices. The higher volume was led by broad-based demand across all

markets, particularly in automotive and electronic markets, with strong volume

recovery in all regions, led by Asia-Pacific.

Concerning the performance coatings segment, sales of 3,8 bln $ were up 11%

(9% higher volumes). Here as well higher volume reflects recovery in global

automotive OEM markets as a result of higher global motor vehicle builds and

strong demand in industrial coatings.

In the safety & protection segment, higher volumes led also to better economic

results. Demand was particularly high in Europe and in the Asia-Pacific region,

especially in aramid and nonwovens products.

4,4

3,4

3,8

-0,008

0,069

0,249

-0,05

0

0,05

0,1

0,15

0,2

0,25

0,3

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

2008 2009 2010

Performance coatings PTOI

6,4

4,8

6,3

0,128

0,287

0,994

0

0,2

0,4

0,6

0,8

1

1,2

0

1

2

3

4

5

6

7

2008 2009 2010

Performance materials PTOI

3,7

2,8

3,4

0,661

0,26

0,454

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0

0,5

1

1,5

2

2,5

3

3,5

4

2008 2009 2010

Safety & Protection PTOI

Sou

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Du

po

nt

de

Nem

ou

rs’

ann

ual

rep

ort

20

10

2 - The situation of the EU

nonwovens sector illustrates the

impact of the crisis upon the EU TT

industry

2- The impact of the economic crisis upon the EU nonwoven sector 2009 was the first year where the nonwovens sector recorded negative production growth

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Nonwovens production in Europe; '000 tonnes

11,1%

10% 8,9%

12,7% 8,8%

8,7% 6,2%

3,7%

10%

7,6%

7,5% 1,2%

-6,3% As a result of recent market trends and recent economic pressures, after

uninterrupted era of steady growth, 2009 was the first year to record

negative nonwovens production growth in Europe (in terms of weight).

The European nonwovens industry (Europe, Turkey and a few significant

Russian producers) produced around 1.6 million tonnes of nonwovens

(roll goods) in 2009, a 6.3% decline in volume compared to 2008.

However, it must be noted that the industry’s effort to provide

lighterweight nonwovens (using less material) with the same function

juxtaposes on the crisis impact.

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2004 2005 2006 2007

Europe

North America

Japan

China

Korea

Taiwan

RoW

Nonwovens production globally; in „000 tonnes

Sou

rce:

ED

AN

A

Sou

rce:

ED

AN

A

2- The impact of the economic crisis upon the EU nonwoven sector This negative trend touched all the nonwovens subsectors

End-use market diversity of nonwovens not only perfectly illustrates the

ongoing growth and innovative uses (both industrial and daily-life) - even

in a maturing market like Europe - but also explains, why the overall

nonwovens industry is not that hopelessly exposed thanks to flexibillity,

with some segments being less affected by the economic recession than

others.

For the first time a marked difference could be observed between

“recession–proof” end‐uses for non-durable nonwoven products and

other markets for certain durable products.

Nonwoven industrial segments which are highly dependent on economic

activity were tremendously depressed in 2009.

In contrast, medical applications recorded notable positive development

in 2009, while personal care nonwovens at least remained stable in terms

of surface area (or even increased).

2008/2009 YoY evol.

of production volume

Hygiene category (except for the growing market for incontinence products) consists of mature products with stable or slowly

contracting demographic markets. Maintaining innovation momentum in oversupplied and price-sensitive markets is a key

issue in the current economic environment.

34,3%

11,2%

9,5%

6,4%

5,6%

4,7%

4,5%

3,8%

3,5%

3,0%

2,6%

2,3%

1,9%

1,9%

1,7%

1,2%

0,7%

0,7%

0,2%

Hygiene

Building / roofing

Wipes - personal care

Wipes - others

Civil engineering / Underground

Upholstery / table linen

Others

Liquid filtration

Automotive

Medical / surgical

Air & Gas filtration

Coating substrates

Floor coverings

Agriculture

Interlinings

Shoe / leather goods

Garments

Unidentified

Electronic Materials

End-use market segmentation of nonwovens production in Europe

in 2009

-6,3%

-17,4%

--1,1%

--10,1%

16,7%

--14%

Sou

rce:

ED

AN

A

2- The impact of the economic crisis upon the EU nonwoven sector The crisis dampened trade, but did not change the positive balance

Trade flows for both exports and imports slowed down in 2009.

However, in stark contrast to the conventional textiles sector, the trade

balance in nonwovens remains strong, with the total tonnage and value of

nonwovens exported by the EU-27 still far exceeding imports.

EU-27 positive trade balance for nonwovens hovers at EUR 0.5 billion.

EU-27 remains a net exporter for each single subcategory of nonwovens.

EU-27 trade flows (total nonwovens); in „000 tonnes

2006 2007 2008 2009

Average price of nonwovens (EUR/kg) 3,43 3,27 2,969 2,975

Total turnover

of the European nonwovens industry (EUR mio) 5124 5410 4790

EU-27 exports of nonwoven roll goods (EUR mio) 928 1017 1020

Trade balance (EUR billion) 0,4 0,5 0,5

Sou

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ED

AN

A

Sou

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AN

A

3 – Counter-crisis measures

implemented by EU Companies

3 – Counter-crisis measures implemented by EU companies The sector responded in manifold ways to the downturn

• The counter-crisis measures taken by the companies outlined in this report may be summed-up as follows:

• Restructuring schemes

• Introducing flexible worktime schemes, pay cuts and redundancies

• Reduction of energy and raw materials use

• Optimizing assets through consolidation of capacity

• Temporary idling of production lines as a response to significant decline in demand

• Shutdown of outdated production lines

• An exit of low value-added (commoditized and/or underperforming) segments not considered core to one’s business

• Plant relocations to low-cost countries (Eastern Europe, Asia and Latin America)

• Shifting more responsibility into major regions - allowing them to make faster, closer-to-customer decisions, and to be more able to respond quickly to customer trends.

• Grouping businesses together (streamlining), to foster growth and strengthen customer orientation

• Exiting business where a company does not consider itself a technology leader

3 – Counter-crisis measures implemented by EU companies Employment data reveals uneven weight of the crisis on technical textile suppliers

HEADCOUNT EY 2006 [units]

CHANGE 2006 vs 2010 [units]

CHANGE 2006 vs 2010 [%]

HEADCOUNT 2010 as % of 2006

NET SALES 2010 as % of 2006

FREUDENBERG

NONWOVENS 5 575 -565 -5,7% 89,9% 89,6%*

AHLSTROM 5 650 +173 3,1% 103,1% 118,5%

AUTOLIV 35 700 -1 100 -3,1% 96,9% 115,9%

LENZING 5 044 +1 486 29,5% 129,5% 160,5%

FIBERWEB 2 948 -1 145 -38,8% 61,2% 79,2%

FILTRONA 5 473 -2 035 -37,2% 62,8% 81,6%*

LOW & BONAR

1 874 +72 3,8% 103,8% 153,5%

PEGAS NONWOVENS

324 +56 17,3% 117,3% 102,1%

RIETER GROUP

9 485 -340 -3,8% 90,7% 75%

SIOEN 4 687 -450 -9,6% 90,4% 74,2%

Source: Companies’ consolidated financial reports

3 – Counter-crisis measures implemented by EU companies Implementation of restructuring processes: the Freudenberg case

Having to face a decrease in sales due to the overall economic

downturn, a certain number of TT companies reacted by

implementing restructuring processes which led to a decrease of

their number of employees.

As an example, Freudenberg, the nonwoven world leader, saw its

sales drop from US$ 1,45 bln in 2008 to US$ 1,25 bln in 2009 (-

14%). As a result, the number of employees decreased by 596 and

the personnel expenses of the group were reduced by 3,5% to the

amount of 1,48 bln €.

However, this reduction in the level of employment was not the

same according to the region taken into account.

-310

-1402

-50

-845

48

1966

-3

US EU (excluding Germany)

Other European countries

Germany Africa / Australia

Asia South / Central America

Freudenberg's employment evolution by region (08/09)

5 678

8 123

567

10 642

413

5 285

1 434

US EU (excluding Germany)

Other European countries

Germany Africa / Australia

Asia South / Central America

Freudenberg's employees by region Indeed, main reductions were observed in the EU where the

number of employees dropped by 6% (-2247), and in the US (-

5%, -310 workers), while in the South / Central America region

the number of employees remained stable.

In the contrary, as a result of regional growth in Asia, the

headcount in this region grew significantly (+60%).

Sou

rce:

Fre

ud

enb

erg

Sou

rce:

Fre

ud

enb

erg

3 – Counter-crisis measures implemented by EU companies Implementation of restructuring processes: the Ahlstrom case

The situation was almost the same at Ahlstrom which sales dropped by

11%, passing from 1,8 bln € to 1,596 bln €.

The company implemented two restructuring programs during 2009. As a

result, the number employees was reduced by 10% and reached 5 993

workers at the end of 2009 (compared to 6 365 in 2008). An additional

decrease of approximately 180 employees was planned for 2010.

As in the case of Freudenberg, major workforce reductions happened in

Europe. Among others, the company closed down:

Plants in Milan, Gallarate and Cressa (Italy, Home and personal nonwovens

business area, 50 people);

The filtration business area’s paper machine in Barcelona (37 employees);

Plants in Karhula (Finland) and Altenkirchen (Germany) which result in the lay off

of 76 and 34 people.

The total annual savings from these programs are approximately 55 mln €.

On the other hand, the company hired new employees for the Mundra ,

India plant, among others.

3609

2523

378

6510

3380

2261

352

5993

0

1000

2000

3000

4000

5000

6000

7000

Fiber composites

Specialty papers Other operations

Total

Ahlstrom employee number in 2008/09

2008 2009

Source: Ahlstrom

3 – Counter-crisis measures implemented by EU companies In some companies, staff reductions were followed by even deeper cuts in labor costs due to relocation of

facilities in low labour costs countries AHLSTROM LENZING FIBERWEB

83220

-351-532

-1152

121,1 124,8 129,9

119,5

125,3

105,4

-100

-50

0

50

100

150

-2000

-1500

-1000

-500

0

500

1000

1500

2000

04 05 06 07 08 09 10

FILTRONA

72

-451

307

27

-137 -125

59,7 58,651,0

66,6

80,7

68,2 71,0

-100,0

-80,0

-60,0

-40,0

-20,0

0,0

20,0

40,0

60,0

80,0

100,0

-2 000

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

04 05 06 07 08 09 10

LOW & BONAR PEGAS NONWOVENS RIETER GROUP SIOEN GROUP

22 -9 34 23 -1

5,111 6,279

6,545

7,551

-1

0

1

2

3

4

5

6

7

8

-2 000

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

04 05 06 07 08 09 10

158

387 393

-559-719

909,5942,5

1 011,71 064,0

938,2

693,0

-200,0

0,0

200,0

400,0

600,0

800,0

1 000,0

1 200,0

-2 000

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

04 05 06 07 08 09 10

14542

182

-193-439

61,7 63,567,7

72,6 71,8

57,9

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

-2 000

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

04 05 06 07 08 09 10

Y/Y change ’06 ’07 ’08 ’09 ‘10

Headcount 0,8% 12,1% 2,8% -7,9% -2,8%

Personnel costs 4,0% 9,7% -2,7% -0,3% 4,3%

Y/Y change ’06 ’07 ’08 ’09 ‘10

Headcount 3,8% 19,8% -1,6% 1,3% 8,5%

Personnel costs 0,9% 9,9% 6,5% 3,0%

Y/Y change ’06 ’07 ’08 ’09 ‘10

Headcount 1,0% -17,6% -11,2% -10,3% -6,9%

Personnel costs 4,1% -10,8% -4,0% 2,8%

Y/Y change ’05 ’06 ’07 ’08 ’09

Headcount 1,6% 4,2% -6,4% -10,4% -25,1%

Personnel costs 3,1% 4,1% -8,0% 4,9% -15,9%

Y/Y change ’06 ’07 ’08 ’09 ‘10

Headcount -19,4% 16,4% 1,2% -6,2% -6,0%

Personnel costs -12,9% 30,6% 21,2% -15,5% 4,1%

Y/Y change ’05 ’06 ’07 ’08 ’09

Headcount 7,1% -2,7% 10,5% 6,4% -0,3%

Personnel costs 22,9% 4,2% 15,4%

Y/Y change ’05 ’06 ’07 ’08 ’09

Headcount 1,8% 4,3% 4,1% -5,7% -7,7%

Personnel costs 3,6% 7,3% 5,2% -11,8% -26,1%

Y/Y change ’05 ’06 ’07 ’08 ’09

Headcount 3,2% 0,9% 3,9% -4,0% -9,4%

Personnel costs 2,8% 6,7% 7,3% -1,2% -19,4%

15184

999

-9876

509

206,9 208,7229,3

244,1 251,5

-200,0

-150,0

-100,0

-50,0

0,0

50,0

100,0

150,0

200,0

250,0

300,0

-2 000

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

04 05 06 07 08 09 10

29

-519

-271

-222 -133

97,1 101,1

90,2

86,6 89

-100

-50

0

50

100

150

-2000

-1500

-1000

-500

0

500

1000

1500

2000

04 05 06 07 08 09 10

-823

45

681

179

-517-170

254,8

225,1 234,1

256,9

249,9 249,1259,9

-100

-50

0

50

100

150

200

250

300

-2 000

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

04 05 06 07 08 09 10

€ m

€ m € m £ m

€ m £ m £ m

CHF m

Hedcount change (units)

Personnel costs

3 – Counter-crisis measures implemented by EU companies Europe has to seek productivity improvements to retain textile production at home

-1000

-2050

-3400

-1700

900

4000

2150

1200900

3500

06 07 08 09 10

High-cost countries Low-cost countries

53% 28%

47% 72%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

06 07 08 09 10

Headcount evolution at Autoliv HCC vs LCC [in units]

Headcount evolution at Autoliv HCC vs LCC [share in total direct labor]

Cost breakdown evolution at Autoliv [% of sales]

Source: Autoliv annual reports Source: Autoliv annual reports Source: Autoliv annual reports

• Automotive industry supply chain is a classic case of suppliers following the automotive makers in shifting production localisation. By moving and building capacity in low-cost countries (i.e. Eastern Europe and Asia Pacific), automotive suppliers, apart from seeking cost reduction, want to be well-positioned to take advantage of long-term growth opportunities in the emerging markets.

• As of 2010’s end, 22,000 or 72% of Autoliv’s direct workers were in LCC at the end of 2010.

• As of 2010, Autoliv’s average headcount cost in LCC comprised only 17% of the average headcount cost in HCC.

• In order to continue to support the automotive producers with manufacturing close to their assembly plants in North America, Western Europe and Japan, Autoliv pursues productivity improvement investments in high-cost countries, aiming at increased manufacturing automation.

3 – Counter-crisis measures implemented by EU companies The sector responded in manifold ways to the downturn – Plants closures, relocations to low labour costs

countries and units disposals …

2006 2007 2008 2009 2010

Closures

AHLSTROM A plant | Nümbrecht, Germany FIBERWEB Geotextiles line | Terram, UK Hygiene business - 4 sites | USA RIETER „various plants” (as mentioned in AR ‘06)

AHLSTROM A plant | Ascoli, Italy A plant | Chantraine, France Release base paper line | Turin, Italy FIBERWEB Polyester fabric plant | S.Carolina, USA

AHLSTROM Coated papers fact.| Ascoli, Italy Coated papers fact. | Chantraine, France Filtration plant | Darlington, S.C., USA Filtration plant | Bellingham, MA, USA RIETER 4 plants | unspecified FILTRONA Filter plant | Sao Paolo, Brazil FIBERWEB Airlaid facility| Korma, Italy

AHLSTROM Filtration plant | Barcelona, Spain Home & Personal plant | Milan, Italy A plant | Gallarate, Italy One production line | Cressa, Italy AUTOLIV Normandy Precision Components (FRA)

AHLSTROM Spunlace composite line | Chirnside, UK

Relocations

RIETER Plant transfers | W. Europe → E. Europe FIBERWEB Hygiene | Canada → Mexico & Brazil Roofing | Canada → Berlin

RIETER Plant transfers | W. Europe / USA → LCC AUTOLIV Seatbelt plant | USA → LCC

RIETER Plant transfers | W. Europe / USA → LCC

AHLSTROM Home & Personal plant | intra-USA RIETER Plant transfers | W. Europe / USA → LCC FILTRONA A major downsizing | Jarrow, UK

Disposals

AHLSTROM Sonoco-Alcore JV

AHLSTROM 3 hydropower plants |Turin, Italy FIBERWEB Hygiene Wipes | Italy, Spain, USA Cotton bleaching | MA, USA

RIETER Sheet metal manufacturing facility | Ingolstadt, Germany Activities in machinery and systems for manufacturing plastics granulates

RIETER Rieter Perfojet, nonwovens machinery | France

AHLSTROM Sealing & Shielding business unit Dust Filtration business unit

3 – Counter-crisis measures implemented by EU companies The Capex analysis of choosen TT companies shows a major decrease of investments, notably in R&D

5%

14%

20%

2%

9%

8%

5% 5%6% 6%

5%

3%

21%

-2%

20%

6%

3%2%

4%

2%

13%

8%

4% 5%

-5%

0%

5%

10%

15%

20%

25%

Autoliv Sioen L & B Rieter Lenzing Fiberweb Ahlstrom Freudenberg

Capex / sales of choosen EU TT producers (in %)

2006 2007 2008 2009 2010

Sou

rce:

Co

mp

anie

s’ c

on

solid

ated

fin

anci

al r

epo

rts

3 – Counter-crisis measures implemented by EU companies The economic crisis and EU environmental regulations forced European companies to work on the

reduction of their use of energy and raw materials

Increasing costs of raw materials and energy obliged technical textiles companies to work on their production processes.

This obligation is reinforced by new EU environmental regulations such as REACH (chemicals), the climate energy package and the

Industrial Emission Directive (IED) which is going to come into force by 2015.

As an example, Ahlstrom spent 6,5 mln € in order to improve its energy efficiency by 6 percent from 2005 and 2009. Its aim is to save

an additional 4 percent of electricity and 9 percent of process heat by 2013. The company also tries to increase the use of

renewables, low-emission fuels as well as recycled materials.

Actual Target

KPI Units 2008 2009 2013 2008/2013 (in %)

Water intake m³/T 42,6 43,4 35 -18%

Eectricity usage MWh/T 1,03 1,05 0,99 -4%

Heat usage Gj/T 10,05 10,08 9,13 -9%

CO2 direct emissions kg/T 547 559 510 -7%

Waste kg/T 19,8 17,4 20 1%

ISO 14001 sites 27 (90%) 27 (90%) 27 (90%) -

Ahlstrom key environmental performance indicators (source: Ahlstrom annual report 2009)

Overview of the major EU technical

textile companies

A - Autoliv

Autoliv is the world’s biggest supplier of automotive safety

Region Plants

EU-27 & Suisse 33

Other Europe 3

Africa & Middle East 4

Region Plants

North America 9

Latin America 5

Region Plants

China 4

India 1

Other Asia & Pacific 16

Production locations

Sales by region

23%

49%

10%

18%

Europe

North America

Japan

RoW

Staff (total and Europe; in units)

67

33$ m

4807,2 $ m

2363,4

AIRBAGS & ASSOCIATED PRODUCTS SEATBELTS & ASSOCIATED PRODUCTS

REPORTABLE BUSINESS SEGMENTS (products & net sales by % of total and '09 ann. value)

Autoliv is a worldwide leader in automotive safety, pioneering in both seatbelts and airbags, and a technology leader with by far the widest product offering. Through decades of both organic growth and acquisition, the company has become the world’s biggest player in restraint equipment for automobile occupants. The company supplies all the leading automobile manufacturers in the world.

Passenger airbag Driver airbag Anti-sliding airbags Curtain airbags Side airbags Rear side airbags Knee airbags Electronic control units Satellite sensors Night Vision systems Radar systems Driver assist camera systems

Active Seatbelts Belt Grabber Belt-in-Seat Buckle Height Adjuster LoadLimiter Pretensioners Retractor Smart Belt Trunk Belt Integrated child seats

Headquarters: Sweden, Stockholm

Autoliv commands more than 33% of the global market and almost 50% of the European market. Autoliv’s two largest competitors (Takata and TRW) each account for about one fifth of the global market. All other competitors (including Key Safety Systems and Toyota’s in-house suppliers) account for approximately 25% of the market.

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

04 05 06 07 08 09 10

Source: Company materials

• Since Autoliv’s inception in 1997, the company’s sales in the Rest of the World have quadrupled.

• During the last decade Autoliv had been growing faster than the market. Sales had risen at an average annual rate of 8%, 3 percentage points faster than the market in general. This strong trend is likely to continue since Autoliv has relatively strong market position in the emerging markets, where the largest competitors typically are local companies that lack global capabilities and the latest technologies which Autoliv and its largest global competitors have and are developing.

• Strong rebound in 2010 reflects swift restructuring programs, which significantly reduced Autoliv’s cost base.

• For Autoliv, the shift in global LVP mix will be negative since its market share in Europe and North America is higher (slightly above 40%) than in the RoW, where Autoliv's market share is estimated to be approximately 30%.

• Cost base has been reduced mainly due to lower labour costs, as in this decade Autoliv has made a couple of strategic relocation moves to low-cost countries such as Poland, Mexico and Malaysia.

• In parallel with the decrease of permanent employees in high-cost countries (-21% on 2007), Autoliv expanded in low-cost countries (by 26% on 2007), particularly in direct manufacturing personnel.

• Autoliv’s total headcount in LCC: 63% (2010) vs 52% (2007).

• Temporary personnel 20% (2010) vs 16% (2007)

2010 was a record year for Autoliv USD milion 2006 2007 YoY % 2008 YoY % 2009 YoY % 2010 YoY %

Net sales 6 188,0 6 769,0 9% 6 473,2 -4% 5 120,7 -21% 7 170,6 40%

Cost of sales 4 922,8 5 438,4 10% 5 349,0 -2% 4 272,8 -20% 5 578,5 31%

Gross profit 1 265 1 331 5% 1 124 -16% 848 -25% 1 592 88%

Gross margin 20% 20% 17% 17% 22%

Operating result 520,0 502,0 -3% 306,5 -39% 68,9 -78% 869,2 1162%

Operating margin 8% 7% 5% 1% 12%

Net cash flow 168,1 153,8 -9% 488,6 218% 472,7 -3% 587,7 24%

Net CF / Sales 3% 2% 8% 9% 8%

Net Capital expenditure 288,4 431,1 49% 327,8 -24% 157,3 -52% 297,2 89%

CAPEX / Sales 5% 6% 5% 3% 4%

Net sales by region

North America 1 721,0 1 711,0 -1% 1 510,0 -12% 1 191,0 -21% 2 054,0 72%

Europe 3 251,0 3 661,0 13% 3 438,0 -6% 2 534,0 -26% 2 741,0 8%

Japan 559,0 627,0 12% 740,0 18% 499,0 -33% 791,0 59%

Rest of the World 657,0 770,0 17% 785,0 2% 897,0 14% 1 585,0 77%

Net sales by reported segment

Airbags and associated products 4 085,0 4 377,0 7% 4 130,0 -6% 3 299,0 -20% 4 807,0 46%

Seatbelts and associated products 2 103,0 2 392,0 14% 2 343,0 -2% 1 822,0 -22% 2 364,0 30%

R&D outlays 397,6 395,7 0% 367,2 -7% 322,4 -12% 361,3 12%

R&D / Sales 6% 6% 6% 6% 5%

Operating result was depressed by the effects of restructuring by USDm 24, 80 and 133 in 2007, 2008 and 2009, respectively.

Autoliv has been consistent at shifting production to low-cost regions

BACKGROUND (1) Accelerating production cuts by customers; (2) accelerating costs for raw materials

TARGETS (1) adjustment of manufacturing capacity, including plant closures, due to lower expected vehicle production, (2) accelerated move of sourcing to low-cost countries, (3) consolidation of supplier base and (4) standardization of products and (5) reductions in overhead costs, including consolidation of technical centers.

CONDUCT

Restruct. provisions USDm 2006 2007 2008 2009 2010

Opening balance 7,8 6,4 16,8 55,3 100,1

Charge 13,2 23,7 71,6 133,6 30,3

Cash payments -15,2 -14,4 -31,3 -85,1 -66,1

Closing balance 6,4 16,8 55,3 100,1 48,4

Fixed assets impairments 0 8 5,3

IMPACT

Affected regions Europe

Australia

Europe, Australia, North America

plant consolidation initiated in 2005-07

North America Europe

Closed technical centres in 3 countries –

replaced by new centres in Shanghai (China) and

Bangalore (India)

Lay-offs 938 647

July’08 - July’09 : Lay-offs of nearly 10 200 employees

H2 ‘09: Hirings of 3100 workers in China and India

in response to revitalized demand

Outstanding reserves stand for future

employee-related restructuring payments.

B - Rieter group

Rieter Group – the most global automotive supplier Region Plants

EU-27 & Suisse 33

Other Europe 2


Region Plants

North America 11

Latin America 6

Region Plants

China 6

India 4



Sales by region

Other

Europe

North America

Asia Pacific

46%

21%

22%

9%2%

0

2 000

4 000

6 000

8 000

10 000

12 000

04 05 06 07 08 09 10

Staff (in units)

66

34CHF m 1715,4

CHF m 870,4

AUTOMOTIVE SYSTEMS TEXTILE SYSTEMS


Rieter is an industrial Swiss-based operating group - a leading supplier to the textile and automotive industries. Textile Systems division is a leading supplier of machines and integrated manufacturing lines for the production of filament and staple yarns, nonwovens and pellets.Automotive Systems division is a specialist in noise control and thermal insulation systems for the automotive industry. Products and solutions are tailored to customers’ needs and are increasingly also produced in customers’ markets. Company’s global growth has been achieved through acquisitions, JV’s, licensing agreements and organically.

Leading global manufacturer of systems for acoustic comfort and thermal management in motor vehicles. The customer base includes all the world’s major automotive manufacturers. Components, modules and total systems for the passenger, trunk and engine compartments

Heat protection and aerodynamic underbody solutions

Leading supplier of integrated installations for short staple spinning mills, from the spinning preparation stage to the final spinning process. Machinery, systems and components for manufacturing yarns from natural and man-made fibers and their blends.

Headquarters: Switzerland, Winterthur

2010 marks clear recovery after difficult 2009 for Rieter • The recovery in the textile machinery and automotive

markets had already started during H2 2009 and continued in 2010.

• Orders received by the Rieter Group in the 2010 financial year totalled 3170 million CHF (up by 64% on 2009).

• The steep rise compared with the previous year was due primarily to very strong demand at Textile Systems. Rieter Textile Systems is continuing to expand its capacity and product portfolio in the large Asian markets.

• Rieter Automotive further expanded its presence and capacity in China and India. Production capacity in Asia will continue to be progressively expanded in 2011.

• Automotive division has virtually completed its restructuring program.

CHF milion 2006 2007 YoY % 2008 YoY % 2009 YoY % 2010 YoY %

Net sales 3 447,5 3 822,8 11% 2 971,7 -22% 1 846,5 -38% 2 585,8 40%

Operating result before special charges 256,3 278,7 9% 22,4 -92% 186,6 733% nd

Operating margin 7% 7% 1% 10%

Net cash flow 298,4 257,5 -14% 282,6 10% 217,7 -23% nd

Net CF / Sales 9% 7% 10% 12%

Net Capital expenditure 84,9 118,5 40% 35,8 -70% 33,2 -7% nd

CAPEX / Sales 2% 3% 1% 2%

Net sales by region

Europe 1 598,0 1 727,7 8% 1 449,6 -16% 901,1 -38% nd

Asia including Turkey 1 002,9 1 205,7 20% 791,3 -34% 405,3 -49% nd

North America 726,0 715,2 -1% 589,1 -18% 432,5 -27% nd

Latin America 171,5 204,4 19% 256,8 26% 181,7 -29% nd

Africa 81,5 77,1 -5% 55,7 -28% 35,7 -36% nd


Textile Systems 1 400,7 1 566,8 12% 1 120,4 -28% 532,0 -53% 870,4 64%

Automotive Systems 2 179,2 2 363,3 8% 2 022,1 -14% 1 424,3 -30% 1 715,4 20%

R&D outlays 144,8 141,1 -3% 122,3 -13% 98,7 -19% nd

R&D / Sales 4% 4% 4% 5%

A steep decline in demand forced Rieter into a serious restructuring program

• In 2006 the restructuring and realignment of Automotive Systems was expanded and the process accelerated by the closure of various plants and the establishment of new facilities. Rieter continued to pursue the cost-cutting programs within the scope of the agenda termed «Roadmap for Profi table Growth».

• In 2008 Automotive Systems had launched a program aimed at the sustainable improvement of its product cost and the division continued to implement this in 2009. This included improved utilization of material, strict purchasing management and enhanced productivity. Rieter was also reducing manufacturing capacity and the number of plants operated in Western Europe and North America in a multi-year restructuring program, and transferring production to countries where costs are lower. This was to enable Rieter to achieve an overall increase in its cost position, and also follow its customers in establishing new markets.

• In the context of the above program the closure of four plants had been completed by 2009 and corresponding negotiations at four other manufacturing sites took place at the end of 2009. The cost-cutting and restructuring programs included various measures concerning personnel. In order to adjust capacities to the lower order volumes, Rieter utilized flexible working-time models, introduced short-time working at numerous facilities in Europe and reduced personnel capacity.

• At the end of 2009 the Rieter Group’s worldwide workforce totaled 12 761 employees, a reduction of some 1 400 employees compared with a year earlier. Since the end of 2007, Rieter has reduced the number of positions for permanent employees by a total of 2 700 and for temporary employees by some 1 000.

• The transfer of manufacturing operations to lower-cost countries continued in 2009. Rieter aims to exploit the cost advantages of these locations and also to get closer to customers operating in those markets, primarily in China and India. The buildup of permanent employee numbers in the second half of 2009 took place in the growth markets or – due to firmer sales – at Rieter Automotive in

North America.

C - Freudenberg

15

50

Freudenberg is the largest nonwovens supplier globally

Region Plants

EU-27 & Suisse 7

Other Europe 0


Region Plants

North America 1

Latin America 2

Region Plants

China 2

India 1



Nonwovens staff (in units)

€ m 2226

20

€ m 911

SEALS AND VIBRATION CONTROL TECHNOLOGY HOUSEHOLD PRODUCTS


Freudenberg is a family-owned group of companies present globally and operating through 14 business groups in various industry sectors: automotive, mechanical and plant engineering, textile and clothing, construction and mining, energy, chemical, oil and gas industries. Freudenberg Nonwovens develops, produces and markets nonwoven products for a wide range of applications. The major customers are the textile and clothing industry (Freudenberg Nonwovens), the automotive industry (Freudenberg Filtration Technologies and Freudenberg Nonwovens) and the construction industry (Freudenberg Politex Nonwovens).

Headquarters: Germany, Weinheim

62%19%

6%

11%2%

Sales by region

Europe

North America

Latin America

RoW Asia

SPECIALTIES AND OTHERS NONWOVENS

14 € m 627

€ m 688

Simmerings Membranes High-precision moldings Bellows Dust-caps Hydraulic accumulators Vibration control technology Shock absorbers Valve stem seals Brake components

Floor cleaning equipment Household cloths Cleaning articles Household gloves Mats Laundry care Ironing boards Clothes driers

End-uses Interlinings (garments) Battery separators Acoustics (sound absorption) Fireblockers (in furniture) Cable insulation Roofing Padding Building materials Air filters Liquid filtration Masks

Oils, greases, waxes Pastes, bonded coatings Dry & solid lubricants Anti-corrosion products

Mechatronic solutions Heating and antenna foils Switch & touch control foils

0

1 000

2 000

3 000

4 000

5 000

6 000

04 05 06 07 08 09 10 3 DIVISIONS: - Interlinings - Spunlaid - Industrial

Source: Company reports

• In 2009, consolidated sales of Freudenberg Group declined across-the-board, in all Business areas.

• In 2009, nonwovens sales for the company, achieved by sister companies Freudenberg Nonwovens, Freudenberg Filtration Technologies and Freudenberg Politex, decreased on an accelerated drop in volume, particularly during the first half of the year.

• While the global economic crisis clearly left its mark, the company was more prepared than most, because it had already started a restructuring program prior to the crisis.

• A total of 183 million euros has been expensed for the measures to reduce break-even which were implemented in 2009

• In 2009, decline in investing outflows was chiefly attributable to strict cash management as a result of the crisis which only permitted investments for immediate economic reasons.

Freudenberg’s 2010 results are to be published shortly EUR milion 2006 2007 YoY % 2008 YoY % 2009 YoY %

Net sales 5 053,0 5 341,2 6% 5 050,1 -5% 4 200,8 -17%

Cost of sales 3 277,8 3 479,8 6% 3 339,0 -4% 2 889,0 -13%

Gross profit 1 775 1 861 5% 1 711 -8% 1 312 -23%

Gross margin 35% 35% 34% 31%

Operating result 303,5 383,6 26% 284,9 -26% -161,6

Operating margin 6% 7% 6% -4%

Net cash flow 11,6 40,6 250% 141,1 248% 110,9 -21%

Net CF / Sales 0% 1% 3% 3%

Net Capital expenditure 271,4 319,0 18% 384,1 20% 195,2 -49%

CAPEX / Sales 5% 6% 8% 5%

Net sales by region

North America 1 216,0 1 164,0 -4% 953,0 -18% 810,0 -15%

Europe 3 141,0 3 435,0 9% 3 278,0 -5% 2 587,0 -21%

Latin America 197,0 217,0 10% 269,0 24% 232,0 -14%

Asia 413,0 431,0 4% 461,0 7% 483,0 5%

Africa / Australia 86,0 94,0 9% 89,0 -5% 89,0 0%


Seals and Vibration Control Technology 2 788,0 3 008,0 8% 2 846,0 -5% 2 226,0 -22%

Nonwovens 1 017,0 1 034,0 2% 997,0 -4% 911,0 -9%

Household Products 627,0 650,0 4% 656,0 1% 627,0 -4%

Specialties and Others 885,0 927,0 5% 809,0 -13% 688,0 -15%

R&D outlays 200,2 200,3 0% 193,2 -4% 168,5 -13%

R&D / Sales 4% 4% 4% 4%

Freudenberg – restructuring recap • Freudenberg responded to the signs of an economic downturn and initiated appropriate countermeasures during H2 2008.

The undertaken measures culminated in a substantially lower break-even point and a positive operating result.

– Extensive capacity adjustments were introduced.

– According to the company, all options provided under legislation in the relevant countries were used to retain as many employees as possible with the company. Vacation time and work time accounts were run down, many plants made use of temporary closures and company holidays, temporary employment contracts and agency staff contracts were not renewed. Wherever it was feasible, short-time work instruments were used as extensively as possible.

– Plant closures (Czech Republic, France and USA) have been implemented.

– Freudenberg Produktionsservice KG and Freudenberg Gebäudeservice KG were sold to Johnson Controls Industrial Services GmbH in 2009.

– 2009 saw the start of the restructuring process at Freudenberg Anlagen- und Werkzeugtechnik GmbH, Laudenbach. Under this process, the viable sections of the company were to be integrated in other Freudenberg Business Groups.

• At Freudenberg Nonwovens, in particular, where the decline in sales affected all Divisions and regions, lost contribution margins as a result of lower sales were offset by systematic cost-saving measures, and in particular through the extensive use of short-time work at German sites.

– During 2009, adjusted were (1) spunlaid capacity at the Kaiserslautern site and (2) sales and distribution structures in the Interlinings Division in Europe.

D - Ahlstrom

Ahlstrom is pursuing an aggressive growth strategy Region Plants

EU-27 & Suisse 23

Other Europe 1

Africa & Middle East -

Region Plants

North America 9

Latin America 3

Region Plants

China 1

India 1



Sales by region

52%

24%

10%

13%

Europe

North America

Asia Pacific

Other

Staff (total and Europe*; in units)

14

17

18

15

37€ m

724,3

€ m 290,8

€ m 268,9

€ m 354,7

€ m 339,8

BUILDING & ENERGY FOOD & MEDICAL

FILTRATION

LABEL & PROCESSING

HOME & PERSONAL

REPORTABLE BUSINESS SEGMENTS (products & net sales by % of total and ‘10 ann. value)

Ahlstrom is the biggest manufacturer of nonwoven-based wipes in the world and arguably the largest manufacturer of nonwoven roll goods globally. The company has pursued and aggressive strategy of expansion, both organically and through acquisitions, as well as through the development of new products. Ahlstrom’s nonwovens provide multi-functional characteristics and are used both alone and as components in a variety of applications.

Wind turbine blades Floorings Wall coverings Boat hulls Building panels Fabric care

Medical gowns Drapesa and face masks Teabags Fibrous meat casings Baking papers Crepe papers

Baby care wipes, Personal care wipes Home care wipes Industrial wipes

Automotive filtration Transportation filtration Water filtration High efficiency air filtration Gas turbine Life science filtration

Poster papers Repositionable notes Furniture foils Abrasive papers Release liners Self-adhesive labels

Headquarters: Finland, Helsinki

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

04 05 06 07 08 09 10

* France, Italy, Finland and Germany Source: Company materials

Ahlstrom – Financial performance • In 2010, the demand for and sales volumes of nearly all products

manufactured by Ahlstrom increased. Growth was the strongest in Asia and South America, but growth compared to the difficult 2009 year was also seen in Europe and North America, in particular in the automotive industry and construction.

• However, Ahlstrom saw 2010 as a challenging year in terms of higher raw materials costs. The increase in the prices of synthetic fibers such as polymers, and chemicals continued strong due to stronger demand in Asia and insufficient availability. However, the company is able to secure availability of the raw materials without problems and adjusts its selling prices to compensate for this cost inflation.

• The company estimates that net sales for 2011 will amount to EUR 1920–2080 million. Operating profit (excluding non-recurring items) is estimated to be EUR 90–110 million.

• Long-term target: annual net sales growth at least 5% (inc. acquisition effects).

• Strategy for Building & Energy, Filtration and Food & Medical segments: further growth is going to focus on Asia and be organic (with possible small acquisitions), as well as niche-oriented.

• In 2010, Ahlstrom completed an acquisition in the Filtration business and established a joint venture in China in the Food and Medical business.

• As for Europe, recently, Ahlstrom announced, that it will invest EUR 17.5 million in the additional capacity of filtration materials for the transportation industry in its plant in Turin, Italy.

EUR milion 2006 2007 YoY % 2008 YoY % 2009 YoY % 2010 YoY %

Net sales 1 599,1 1 760,8 10% 1 802,4 2% 1 596,1 -11% 1 894,2 19%

Materials and supplies 893,0 1 039,9 16% 1 086,4 4% 883,1 nd

Employee benefit expenses 319,6 362,1 13% 337,8 -7% 337,8 nd

Operating result 96,1 25,8 -73% 14,6 -43% -14,6 53,7

Operating margin 6,0% 1,5% 0,8% -0,9% 2,8%

Net cash flow -2,5 1,4 38,7 2678% -40,2 2,9

Net CF / Sales -0,2% 0,1% 2,1% -2,5% 0,2%

Net Capital expenditure 79,0 358,1 353% 153,4 -57% 66,3 -57% 48,7

CAPEX / Sales 4,9% 20,3% 8,5% 4,2% 2,6%

Net sales by region

Europe 1 004,5 1 086,5 8% 1 015,9 -6% 846,3 -17% 987,3 17%

North America 358,1 399,3 12% 442,5 11% 410,1 -7% 455,9 11%

Asia-Pacific 137,6 130,3 -5% 119,4 -8% 134,2 12% 197,5 47%

Other 98,9 144,6 46% 224,7 55% 205,6 -8% 253,5 23%


Fiber - Composites 808,2 941,4 16% 987,4 5% 861,2 -13% nd

Specialty Papers 794,0 824,7 4% 822,4 0% 743,8 -10% nd

R&D outlays 25,0 23,9 -4% 23,8 0% 21,6 -9% 20,3

R&D / Sales 1,6% 1,4% 1,3% 1,4% 1,1%

E – Lenzing Group

Lenzing Group is the leading global supplier of fibers Region Plants

EU-27 & Suisse 3

Other Europe -


Region Plants

North America 1

Latin America -

Region Plants

China 1

India -



Sales by region

38%

10%

43%

8%

1%

EU

Asia

Americas Other

Other Europe

Staff (in units)

82

11

6

€ m 1090,2

€ m 81,5

€ m 147,8

FIBERS PLASTICS

ENGINEERING


The Lenzing Group is an international group of companies with its headquarters in Austria, production sites in all major markets and a global network of sales and marketing offices. The company has a leadership position in the manufacture of cellulosic fibres for both textiles and nonwovens. Recently the company has also entered the carbon fibre sector. Lenzing is the leading supplier in many business-to-business markets – from special cellulose fibers to high-quality plastic polymer products.

Textile fibers used in: Quilts, bedwear, mattresses Outerwear, workwear Sleeping bags Protective wear Flame resistant fabrics for

public transport and furniture Thermal insulation systems for

protective jackets

Nonwoven fibers used in: Wipes (hygiene & industrial) Wound pads, surgical swabs Components of surgical gowns Tampons Battery separators Fuel and oil filters Industrial air filtration Industrial liquids filtration Carbon fiber for

high-temperature applications

Thermoplastics Polytetrafluoroethylene Monofilaments Acrylic fibers

Headquarters: Austria, Vienna

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

04 05 06 07 08 09 10


With the crisis behind, Lenzing forges an ambitious capacity expansion in Asia

• Preliminary results for 2010 show the strongest growth of sales and profits in this Group’s history. The determinative factors for this result were the dynamic expansion of fiber production, very strong demand for Lenzing fibers and significantly higher fiber sales prices compared to 2009.

• Lenzing claims that 2010 business year was not an isolated event but the beginning of a long-term upward trend in the development of the man-made cellulose fiber business.

• The increasing structural shortage of cotton on the global market leads textile manufacturers to increasingly turn to alternatives, including Lenzing’s fibers.

• Backed by such conviction, the Group prepares itself for the most ambitious expansion program in its history. Lenzing plans to increase fiber production capacity from approx. 710,000 tons as of year-end 2010 by approx. 300.000 tons to more than one million tons by the end of 2014, mainly through expansion and modernization investments. The additional capacity has been installed outside Europe, in Indonesia.

• For 2011, Lenzing expects to increase sales by 15-20% and further improve EBITDA and EBIT margins. Capital expenditure is estimated to amount to approx. 15% of sales.

EUR thousand 2006 2007 YoY % 2008 YoY % 2009 YoY % 2010 YoY %

Net sales 1 100 533 1 260 510 15% 1 341 644 6% 1 254 734 -6% 1 766 300 41%

Cost of material and purchased services633 714 709 755 12% 822 996 16% 704 322 -14% nd

Personnel expenses 208 676 229 259 10% 244 130 6% 251 516 3% nd

Operating result 107 131 162 324 52% 130 268 -20% 100 671 -23% 231 900 130%

Operating margin 10% 13% 10% 8,0% 13%

Net cash flow 88 807 111 436 25% 105 795 -5% 125 353 18% nd

Net CF / Sales 8% 9% 8% 10%

Net Capital expenditure 102 465 260 167 154% 146 607 -44% 157 998 8% 285 100 80%

CAPEX / Sales 9% 21% 11% 13% 16%

Net sales by region

EU 557 128 588 006 6% 592 511 1% 479 147 -19% nd

non-EU Europe 62 248 75 856 22% 97 430 28% 125 658 29% nd

America 73 922 86 098 16% 112 149 30% 97 283 -13% nd

Asia 397 686 497 475 25% 522 557 5% 536 692 3% nd

Other 9 549 13 075 37% 16 997 30% 15 954 -6% nd


Fibers 902 824 1 069 470 18% 1 107 941 4% 1 090 222 -2% nd

Paper 57 914 - - - - - - - -

Plastics 93 453 133 087 42% 182 217 37% 147 767 -19% nd

Engineering 103 555 119 031 110 862 -7% 81 514 -26% nd

R&D outlays 16 100 18 300 14% 18 801 3% 19 909 6% nd

R&D / Sales 1% 1% 1% 2%

F - Fiberweb

4%

37%

11%17%

15%

16%

Fiberweb has been rearranging its portfolio Region Plants

EU-27 & Suisse 11

Other Europe -


Region Plants

North America 4

Latin America 2

Region Plants

China 4

India -

Other Asia & Pacific -


Sales by region

UK

Italy

Other

USA

Sweden

Germany


60

40£ m 271,5

£ m 182,7

HYGIENE INDUSTRIAL


Fiberweb is one of the largest groups by revenue in the nonwoven industry and produces fabric materials, in both rolled and converted forms, for use in hygiene and industrial speciality products. In each of its chosen market segments, the company has built strong market positions. Recently, the company has been taking some corrective steps, with a wide-ranging restructuring programme. The portfolio has been simplified through disposal or closure of various operations and investing in new technology.

Baby diapers Feminine hygiene Medical products Adult incontinece

Housewrap Filtration media Geosynthetics Roofing Industrial specialities Fabric softener sheets Landscape textiles

Headquarters: UK, London

0

500

1 000

1 500

2 000

2 500

3 000

3 500

04 05 06 07 08 09 10

three principal methods of production: spunbond, airlaid and spunlace.


Different recovery speeds in Fiberweb’s two divisions • In recent years, Fiberweb posted sales declines,

as a result of significant restructuring and economic recession in many markets

• In 2010, Fiberweb posted a modest increase in sales – however, against a background of increasing raw material costs

• While the Hygiene business enjoyed a mixed 2010 year, with total volumes up only 2%, the industrial businesses witnessed a much stronger trading performance (volume increase by 6.3%), despite tough market conditions.

• European Industrial volumes increased by 5%, with industrial Specialities and agriculture markets strong, despite seeing a major reduction in European geotextile demand as a result of the decline in public sector construction.

• In2010, Fiberweb completed a major restructuring programme commenced as early as 2006 – reducing staff by as much as 39%.

• According to the management statements, further acquisitions and innovations will be sought to accelerate Fiberweb’s development in targeted markets.

£ milion 2006 2007 YoY % 2008 YoY % 2009 YoY % 2010 YoY %

Net sales 584,7 473,6 -19% 512,8 8% 454,2 -11% 463,2 2%

Cost of sales 476,6 380,9 -20% 415,6 9% 355,8 -14% 363,7 2%

Gross profit 108 93 -14% 97 5% 98 1% 100

Gross margin 18% 20% 19% 22% 21%

Operating result from cont. operations 27,5 13,8 -50% 18,8 36% 23,1 23% 29,0 26%


Net cash flow 10,5 -27,5 -362% 7,0 -125% 3,7 -47% 2,6 -30%

Net CF / Sales 2% -6% 1% 1% 1%

Net Capital expenditure 43,9 -10,9 -125% 14,3 -231% 36,0 152% 31,2 -13%

CAPEX / Sales 8% -2% 3% 8% 7%

Net sales by origin (incl. discontinued operations)

North America 275,4 214,0 -22% 213,4 0% 170,2 -20% 164,4 -3%

Europe 270,1 254,9 -6% 263,0 3% 211,5 -20% 233,4 10%

Rest of the World 39,2 36,2 -8% 36,4 1% 72,5 99% 65,4 -10%


Hygiene 381,5 272,4 -29% 318,5 17% 271,5 -15% 274,5 1%

Industrial 203,2 201,2 -1% 194,3 -3% 182,7 -6% 188,7 3%

R&D outlays 8,8 7,4 -16% 7,1 -4% 7,7 8% 8,6 12%

R&D / Sales 2% 2% 1% 2% 2%

Fiberweb – restructuring recap

Year Costs £’m

Addressed issues

2006

Hygiene 82.8 Industrial 14.7

Fiberweb has suffered falling profitability for the last few years. As a result, the Company had undergone significant restructuring which started to benefit the business in H2 2006. The Group was demerged from BBA Aviation plc in November 2006.

Americas: Restructuring of the hygiene business: (a) closures of spunbond lines in Washougal (WA) (2 lines) and Simpsonville (SC) (2 lines) in the USA; (b) closure of two lines at the Canadian site in Toronto and relocation of the lines to Mexico and Brazil. Closures were justified by the changed market conditions - a mismatch in Fiberweb’s supply/demand balance.

Europe: Restructuring of the geotextile business in the UK through closure of one manufacturing line at Terram (capacity reduction of 35% along with a reduction in headcount ). Significant over-capacity in geotextiles in Europe led to strong price pressure in most of Terram’s export markets.

2007

The continuation of implementation of the turnaround strategy. The portfolio was further simplified.

Europe: Rationalisation of the cost base in Hygiene sites and UK head office.

2008

The group’s global hygiene business was reorganised into two divisions: Consumer Fabrics and Airlaid.

Within the industrial businesses three regional divisions were formed to simplify the structure and make it more customer-oriented: Americas Industrial, Europe Industrial and Terram.

G – Low and Bonar

Low & Bonar serves numerous markets Region Plants

EU-27 & Suisse 11

Other Europe -


Region Plants

North America 1

Latin America -

Region Plants

China 1

India

Other Asia & Pacific


Sales by region

64%7%

15%

3%6% 4%

Western Europe

North America

Asia

Middle East

Eastern Europe

RoW

0

500

1 000

1 500

2 000

2 500

04 05 06 07 08 09 10

Staff (in units)

69

31£ m

239,2 £ m

105,4

PERFORMANCE TECHNICALTEXTILES TECHNICAL COATED FABRICS

REPORTABLE BUSINESS SEGMENTS (products & net sales by % of total and ‘10 ann. value)

Low & Bonar is a world-leading technical textiles manufacturer. The global technical textiles industry comprises fibres, yarns, woven fabrics and nonwoven fabrics serving diverse markets such as the hygiene, automotive, building and construction, civil engineering, artificial grass, agriculture, industrial and healthcare markets. The company has grown significantly as a result of acquisitions in recent years. Core technologies are extrusion, spinning, fleecing, weaving and coating.

COLBOND Leading producer and supplier of synthetic nonwovens for flooring, automotive and construction applications and of three-dimensional polymeric mats and composites for civil engineering, building and industrial applications. YARNS Carpet backing yarns Artificial grass yarns Woven fabrics Specialist yarn

FABRICS Geotech Agrotech, Indutech Buildtech

Vertically integrated coating operations transform woven fabrics to premium materials designed to be durable, flexible, waterproof, UV resistant and printable.

END-USES

Lorry side curtains Advertising banners Tensioned structures Awnings Marquees Tarpaulins

Headquarters: UK, London


Low & Bonar – Financial performance • Significant sales increase posted in 2010 was driven by a partial

recovery in many of the Group’s end markets.

• The company has accelerated efforts to access higher growth emerging markets.

• In January 2011, a 50/50 joint venture was entered into in Saudi Arabia, to manufacture and sell geotextile products for the fast growing civil engineering markets in the Middle East and India.

• Also, in 2010, Low & Bonar successfully commissioned a new manufacturing facility for artificial grass yarns in Abu Dhabi and is closing the Ostend site (in Belgium) and transferring its business to Abu Dhabi.

£ milion 2006 2007 YoY % 2008 YoY % 2009 YoY % 2010 YoY %

Net sales 224,5 311,8 39% 335,2 8% 304,8 -9% 344,6 13%

Operating result 17,0 26,1 54% 26,7 2% 22,1 -17% 25,8 17%


Net cash flow 3,3 5,8 76% 27,5 374% 16,2 -41% 11,6 -28%

Net CF / Sales 1% 2% 8% 5% 3%

Net Capital expenditure 43,9 15,4 -65% 34,5 124% 11,6 -66% 7,4 -36%

CAPEX / Sales 20% 5% 10% 4% 2%

Net sales by region

European Union 205,1 263,6 29% 276,5 5% 249,7 -10% 246 -1%

North America 12,2 37,5 207% 51,0 36% 46,1 -10% 50,6 10%

Rest of World 7,2 10,7 49% 7,7 -28% 9,0 17% 48 430%


Technical Textiles, in that: 127,2 210,3 65% 335,2 59% 305 -9% 345 13%

Performance TechnicalTextiles - - - - - 212,3 239,2 13%

Technical Coated Fabrics - - - - - 92,5 105,4 14%

Floors 97,3 101,5 4% - - - - - -

R&D outlays 2,0 2,4 20% 2,9 21% 3,2 10% 3,1 -3%

R&D / Sales 1% 1% 1% 1% 1%

Low & Bonar shifts towards emerging markets to seek profitability

Year Costs £’m

Addressed issues

2006 2.0 Redundancy and other restructuring costs within the existing specialist yarn and construction fibres businesses;

Redundancies within the Colbond business.

2007 0 No restructuring costs incurred.

2008 2.3* A number of one-off post-acquisition integration and restructuring costs following the January 2008 acquisition of MTX.

2009 5.6** The cost of redundancies, asset impairments and similar costs to reduce the cost base in line with the then current demand patterns. Restructuring programmes took place within Performance Technical Textiles, Technical Coated Fabrics and within central head office functions.

2010 7.0

Restructuring of the yarns business undertaken in October 2010 to restore profitability . The restructuring of the business will result in redundancy for the majority of employees at the Ostend site. A social plan was agreed with the staff representatives in December 2010. The closure of the Ostend facility is expected to be concluded by June 2011. A new manufacturing facility in Abu Dhabi kickstarted to full commercial production.

* During 2008 a provision was added, while the direct costs were incurred in 2009. Low & Bonar recognizes provisions for restructuring costs when a detailed formal plan for the restructuring that has been communicated to the affected parties. ** The figure includes loan break fees incurred to terminate certain of Low & Bonar’s bank drawings.

H – Sioen Industries

Sioen Industries – Europe’s leading ProTECH supplier Region Plants

EU-27 & Suisse 21

Other Europe 1


Region Plants

North America 1

Latin America -

Region Plants

China 1

India -



Sales by region

80%

11%1%

8%

Europe

North America

Asia Pacific

Other

0

1 000

2 000

3 000

4 000

5 000

6 000

04 05 06 07 08 09 10


43

26

15

16

€ m 123,6

€ m 43,1

€ m 74,1

€ m 44,5

COATING DIVISION APPAREL DIVISION

INDUSTRIAL APPLICATIONS CHEMICAL DIVISION


Sioen Industries is a diversified industrial group which is the world leader in coated technical textiles, a market leader in industrial protective clothing and a specialist in fine chemicals. The group’s vertical integration makes it independent of outside suppliers. Growth has been realized through acquisition and organically.

END-USES Tents Tarpaulins Swimming pool covers Protective clothing Mattress covers

Firefighting clothing Bullet-resistant clothing Chemical protection suits Technical industrial

protective clothing

Pigment pastes Decorative inks Varnishes Ink jet printer inks

This division processes technical textiles and PVC film into heavy-duty applications.

Headquarters: Belgium, Bornem

The crisis weighted really hard on Sioen in 2009 • 2009 brought a dramatic drop in demand for Sioen’s

products. While the sales of the Apparel division resisted well to the economic crisis, the other divisions were more heavily hit by the slowdown of the global industry in general.

• In 2009 Sioen decided to put the focus for future development on its core activities and, as a consequence, to discontinue a group of non-core activities.

• Under pressure from the sudden, sharp economic downturn in the transportation market (the first global market to suffer from extreme economic downturn), Sioen decided to close the production of trailers, containers, railway curtains and tarpaulins.

• Also, the manufacturing activity of dashboardfoils in small volumes and the extrusion of technical foils on small width have both been discontinued.

• Forced by the worldwide economic slowdown the Group had to reduce the number of shifts in the plants, introduce temporary unemployment schemes and part-time labour where possible.

• The crisis measures taken in 2009, including decisions to discontinue some activities, and all efforts for innovation, have contributed to the positive impact in 2010.

EUR thousand 2006 2007 YoY % 2008 YoY % 2009 YoY % H1 2010 YoY %

Net sales 339 389 380 350 12% 349 366 -8% 251 918 -28% 145 769 13%

Cost of sales 267 436 289 191 8% 280 120 -3% 207 259 -26% 112 752 10%

Gross profit 71 953 91 159 27% 69 246 -24% 44 659 -36% 33 017 24%

Gross margin 21% 24% 20% 18% 23%

Operating result 25 891 38 792 50% 16 060 -59% -453 9 877 107%

Operating margin 8% 10% 5% -0,2% 7%

Net cash flow 13 116 7 479 -43% 14 545 94% 30 223 108% 29 688 138%

Net CF / Sales 4% 2% 4% 12% 20%

Net Capital expenditure 46 016 23 771 -48% 8 497 -64% 5 663 -33% 2 890 -4%

CAPEX / Sales 14% 6% 2% 2% 2%

Net sales by region

Europe 304 175 330 599 9% 319 415 -3% 228 567 -28% nd

North America 8 654 6 365 -26% 6 180 -3% 3 796 -39% nd

Rest of the World 29 120 46 171 59% 26 404 -43% 21 200 -20% nd


Coating 212 897 201 230 -5% 178 580 -11% 123 584 -31% 75 457 21%

Apparel 75 270 69 929 -7% 77 019 10% 74 135 -4% 38 544 4%

Industrial Applications 83 687 89 661 7% 74 672 -17% 44 479 -40% 20 183 -3%

Chemicals 0 63 878 55 174 -14% 43 055 -22% 25 162 18%

R&D outlays 7 021 7 352 5% 6 101 -17% 5 019 -18% 2 766 9%

R&D / Sales 2% 2% 2% 2% 2%

I – Pegas nonwovens

Pegas Nonwovens – an example of a small but resilient nonwovens producer

Region Plants

EU-27 & Suisse 2

Other Europe -


Region Plants

North America -

Latin America -

Region Plants

China -

India -

Other Asia & Pacific -


Sales by region

61%

34%

1%4%

Western Europe

Central & Eastern Europe

RoW Russia

0

50

100

150

200

250

300

350

400

450

04 05 06 07 08 09 10

Staff (in units)

89

11

€ m 109,8

€ m 13,6

HYGIENE NON-HYGIENE


Pegas Nonwovens was established in 1990 as a totally new, exclusively Czech Republic private company. The primary activity is the production of synthetic nonwoven textiles from polypropylene or polyethylene filaments. The production of nonwoven textiles is carried out at two plants, one in Znojmo – Přímětice and the other in Bučovice. The strategy has been the continuous expansion of capacity for the production of spunmelt nonwovens with advanced technology supplied by a german machine producer Reifenhauser Reicofil.

Non-woven fabric s used widely in the hygienic applications.

END-USES

Nappies Towels

Non-woven fabrics as a textile semi-finished product for the production of single-use protective clothes for health care and industry.

END-USES Head covers Surgical masks & coats Shoe covers Protective overalls Chemical suits

Agrotech Filtration Sorbents Buildtech Semi-finished products

for furniture industry

Headquarters: Czech Republic, Znojmo


J - Filtrona

Filtrona – serious downsizing of staff in the face of downturn

Region Plants

EU-27 & Suisse 4

Other Europe -


Region Plants

North America 3

Latin America 3

Region Plants

China 1

India 1



Sales by region

48%

28%

23%

Europe

RoW

North Amercia

0

1 000

2 000

3 000

4 000

5 000

6 000

04 05 06 07 08 09 10

Staff (in units)

46

21

13

20

£ m 202,9

£ m 58,5

£ m 95,2

£ m 87,3

FILTER PRODUCTS PROTECTION & FINISHING PRODUCTS

COATED & SECURITY PRODUCTS POROUS TECHNOLOGIES


Filtrona is an international specialty plastics and fibre products suppliers formed in 2005. Filtrona focuses on the light manufacture and distribution of high volume, small but essential products to a wide range of customers, across diverse geographies within a broad but targeted range of international markets. Filtrona Filters is the world’s leading cigarette filter manufacturer with the global market share of 80%. Filtrona Fibertec develops and manufactures component products that are fibre-based.

Cigarette filters Monoacetate filters Multi-segment speciality filters

Receiving industries: Hydraulics, pneumatics Oil and gas Electrical controls Tubular metal products.

The leading global technology developer and manufacturer of custom bonded fibre and hydrophilic foam components. Wide range of product applications: medical diagnostics and wound care, inkjet printer cartridges, writing instruments, and air fresheners

Global market leading producer of high quality self-adhesive tear tape and a growing supplier of products and technologies for brand protection, document authentication, personal identification and track and trace.

Headquarters: UK, Buckinghamshire


Serious restructuring of the Filter Products division • In 2008, the restructuring of the Filter Products division continued as Filtrona , it absorbed restructuring

costs of £ 1.8m relating to headcount reductions in the UK, US and Brazil.

• The Company undertook a restructuring programme in 2009 and 2010, with the focus on the Filter Products division. The cash costs of this restructuring were estimated at around £ 5m in 2009 and £ 2m in 2010. The restructuring was to deliver savings of circa £ 2.5m in 2009 and Ł6.5m from 2010 onwards.

Overview of main end-use markets

Strong correlation and reliance on the supplied end-use industries and

sectors is inherent in the performance of the major technical textiles

segments

Forecasting of the future trends that affect the technical textile sector cannot be conducted without in-depth

analyses of the economy sectors or industries on the receiving end.

In adjusting their strategic planning, major segments of technical textiles industry anticipate the general economic

trends affecting their customers’ business.

The need for geographical consolidation of the supply value chain (the formation of industry clusters) forces textile

manufacturers to follow their customers’ relocations with their own.

Acting as component suppliers, textile manufacturers in the MobilTECH segment heavily rely on the global vehicle

production.

BuildTECH, as well as GeoTECH suppliers anticipate the developments in the construction industry (civil

engineering, residential, office).

Medical and hygiene textiles producers are particularly reliant on demographic trends and disposable income

dynamics.

Research and development initiatives in the technical textiles sector, especially MobilTECH and InduTECH, only

rarely are not based on tight cooperation with the customers. Product solutions are often tailor-made. The trend is

to exit any commoditized product lines or whole segments whenever the increased competition leads to price

erosion.

A – The construction market

European construction market awakens from the slump

2009 was the worst year for the European construction sector in the 00’s.

• In the 19 European states covered by the EUROCONSTRUCT analysis (i.e. EU excl. Greece, Romania, Bulgaria, Cyprus, Malta, Slovenia, Luxembourg, incl. Switzerland) Total construction output fell by -8.8% and a further shrinkage of -3.3% on average was forecasted for 2010.

Lower performance was driven by various macro-economic factors.

• The difficulties of high public deficit in Ireland, Spain and Portugal forced further significant austerity measures, cuts in housing construction and public investments. In many other European countries, the lack in domestic demand, the revision of public investments, avoiding long-term commitments and the reassessment of ongoing public projects led also to lower performance. In the meantime, however, the best performers (Finland, Germany, Poland, Sweden, Switzerland) benefit from growing domestic confidence and demand.

2011 is believed to be a year of reversal

• A slight decline of about -0.1% on average consolidates construction markets on the level of 2010. After three years of recession, construction market players have one more year to restructure themselves before positioning to a very moderate recovery. By 2013, EU countries will still expectedly experience a lower than in 2007 total construction output. Recovery is forecasted to be variable, however, with some countries remaining in a depressed state, while activity is predicted to be significantly stronger in Central and Eastern Europe than in Western Europe.

Though, the recovery is expected to unfold rather lazily

Civil engineering proved to be the most stable during the crisis years and after

• The overweight of transport infrastructure construction will slacken and a shift towards energy and water construction will be experienced. A potential threat of public expenditure cuts will likely influence the infrastructure in Czech Republic, Ireland, Spain and the UK negatively.

The most severely hit residential construction will hardly recover from its poor position

• Neverthless a growth by a 1.9% in 2011 is expected. In 2013, output of the residential sector is not predicted to reach the performance of 2008. According to the forecasts, 60% of the residential output will come from renovation activity in 2013.

Non-residential construction is forecasted to see the slowest recovery

• The output in 2013 will hardly reach the level of the early 2000’s. Publicly financed health, school construction and renovation might suffer from the shrinking sources.

Lack of new office development will continue to affect the European construction market

• Global office completions are expected to continue at high levels in the next couple of years, though Asia far outpaces Europe and North America. For Europe as a whole, completions in 2011 are expected to be 30% lower than in 2010, with further contraction expected in 2012. In 2010, 46% of newly developed office space globally was introduced into the market in Asia (43 million sq m) versus 62% forecasted for 2011 (55 million sq m). A post-crisis trend in global office development has arisen. The strongest office development in 2010 and 2011-12 forecasts are in regions experiencing the most robust economic growth. Thus, much of the recent office development activity is occurring not in the world’s advanced economies, but instead in emerging markets where strong economic growth persists.

Less new developments, more modernization (through eco-efficiency)

Important structural changes can be seen within the sector

• During the ten-year-period between 2004 and 2013, European construction sector experiences a shift from new construction towards renovation and modernization. Practically 50% of the total construction output is now renovation.

Smaller countries will contribute the most to the growth

• A growing proportion in the total construction output of smaller countries, including Central-East Europeans and Scandinavian countries can be observed. Czech Republic, Hungary, Poland and Slovakia will contribute by 6.5% of the total sum in 2013, starting with 3% in the 90’s. Four Scandinavian countries will increase their performance up to 9.3% (from 6.9% in 2004) in ten years.

The target is a more sustainable construction sector contribution to GDP

• One of the most important structural changes is the convergence of the construction output to a percentage of the GDP to 10%. By comparison, in 2004, Spain, Portugal and Ireland were performing around 20% of the GDP. Now these countries are forced to shrink their construction activity to 7-10%, so the European average will stabilize around 10%.

Technical textile sector should anticipate promising market opportunities

• These structural changes direct individual countries and construction activity towards a more balanced, less vulnerable sector in the European economy. Actually experienced demand and imperatives in the near-future (i.e. efficient energy consumption, upgrading the built environment, housing replacement, new health utilities for the ageing population, lowering CO2 emission buildings) are expected to force construction to turn into a higher value and higher quality performing sector. This will require new technologies, new products, and will definitely mean new market opportunities for BuildTECH category of technical textiles.

B – The medical and hygiene

markets

The single-most important market for nonwovens is experiencing buoyant growth

Health care expenditure continues to grow in all markets

• Powerful demographic and lifestyle trends continuing to indicate strong, long-term demand for health-related products and services. Health care is now one of the world’s largest industries with an estimated value of USD 3,5-4 trillion a year. The USA alone spends around USD 1 trillion a year (15% of its GDP) on health care.

Global demand for health care services is rising rapidly as the population increases in developing countries and ages in developed economies

• According to the World Bank, about 20% of the population in the EU will be 65 years of age or older within 20 years (USA 20%, Japan 27%). Patients over 65 already account for more than half of physician visits and hospitalizations, while an average 75-year-old has three chronic conditions and uses five different prescription drugs.

• Germany is the third largest individual market (USD 24 billion) and the largest market in Europe, followed by France and the UK. China, Brazil and the East European countries have all been recording above-average growth rates.

95

65

40

USA Europe Rest of World

Source: Medical and Hygiene Textiles – Initiatives for Growth, 2nd Edition

Market volume for medical consumer goods [USD billion]

Competition in the consumer medical / hygiene textile market is fierce

Major market players set the rules

• The industry comprises a relatively small number of major international companies with strong consumer brands. Players in the hygiene products market range from large, multinational, branded, personal care companies, such as Procter & Gamble, Kimberley-Clark and Johnson & Johnson, to relatively smaller groups, like Hartmann, Playtex Products, SCA Hygiene Products and Unicharm.

• With their substantial financial, technical, marketing, manufacturing, logistics and personnel resources, the two main global players – Procter & Gamble and Kimberley-Clark – have been able to exert significant influence on prices and volumes in the absorbent hygiene product market and thereby gain substantial market share.

It is likely that the industry will continue to experience structural change

• With continuing price competition for most consumer products, strongs brands created through a focus on core products are essential for growth, particularly for the disposable hygiene segment.

• As part of an increasingly global business, suppliers of medical / hygiene textiles must now offer worldwide servicing. The shift of production capacity to lower-cost countries has already begun and is intensifying. Most multinational companies have already established marketing and production operations in Asia. China is a key market because of its growth potential and sheer size.

Increases in raw material costs (particulary polypropylene resin) have been a major recent problem for the disposable hygiene products sector

• The industry is largely based on oil-based by-products, which are highly volatile in terms of both price and unpredictable demand. Manufacturers have entered into short-term supply contracts to manage the volatility and pricing. Although hygiene products companies have continued to implement programmes to reduce manufacturing costs, such measures may not be enough on their own to offset raw material cost increases and supply shortages.

1,6

1,6

1,3



Global market for hygiene products (at producers’ prices) [USD billion]

Wound sector: rapidly evolving technology and intense competition Although the wound care market is large, it is also fragmented

• Many suppliers in the wound sector are large and have significant resources but small local manufacturers of mostly traditional products account for around half of all sales. The annual growth was expected to be about 6-8% through 2011, with the fastest rate in advanced wound care products (10-12%), and in bioactive products (25-30%).

Conventional wound dressings still account for the majority of the total market

• Innovation is not a key driver in this mature sector. Manufacturers are, instead, differentiated by the breadth of their product portfolio, the quality of their products and pricing.

The global market for advanced wound treatments is relatively unpenetrated

• It is estimated that the potential market is significantly larger than at present: 2/3 of the global market are still to be converted to advanced wound healing. Increased penetration is expected to be driven by improved outcomes from new technology; health care economic benefits; increasing nursing shortages; therapies that reduce nursing time and speed up recovery; quality of live expectations; and education of health care providers to convert from traditional to advanced treatments.

Medical textiles offer high value-added opportunities

• Some traditional textile companies have entered the medical textile market by pursuing diversification strategies. Many producers are, at the same time, moving away from the manufacture and supply of commoditized, e.g. diapers, to the more high-technology and higher-margin markets of medical textiles (e.g. surgical gowns, advanced wound dressings).

WOUND CARE PRODUCTS

1,6

1,6

1,3


The global market for wound care products [USD billion]


Demand for surgical textile products is growing Disposable surgical textile products products are replacing reusable ones

• There appears to be a growing use and acceptance of single-use medical products worldwide. As of 2006, single-use products accounted for about 56% on average of the global market, with the imbalance being greatest in the USA – where disposable products are used in some 80-90% of surgeries. In Europe, where the use of disposable products is around 50%, growth potential continues to exist. The European market for disposable operating theatre products was expected to grow by 5-6% a year through 2010. In the mature US market, growth is insignificant. In other countries, growth rates are estimated to be high, although sales volumes remain modest.

Demand for disposable medical fabrics comes primarily from the West European and North American markets

• The market for surgical products in the USA and Europe is estimated at about USD 1,7 billion. Globally, demand was expected to grow by around 4,5% annually through 2011. Much of this demand was expected to be met by the increase in converting operations in Asia. This requires large multinational groups to be strategically positioned in all three regions with a global focus on the management of the medical fabrics business.

Demand is driven by many factors

• Demand for surgical textiles is growing as a result of increasing demand for safety and economy. The protection of medical personnel from viral exposure has never been more important. The incidence of viruses and other transmissible diseases (e.g. SARS, bird flu, Creutzfeldt-Jakob disease) is increasing throughout the world. Another demand driver is the growing number of hospital stays, which is particularly due to the increased age structure of the European population.

• Other trends affecting the surgical textile market include (1) increasing demand for local supply in Asia, as global medical companies continue to shift converting operations to this region, and (2) the growing popularity of spunbond fabric in relation to traditional spunlace fabrics.

Demographic influences in Europe will boost adult incontinence market

Baby boomers and well-off ageing populations lend additional opportunities for growth

• According to medical industry estimates, bladder weakness (urine incontinence) affects 5-7% of the world’s population. Also, increased market penetration is leading to stronger demand for incontinence products (from large absorbent diapers, used in institutional care, to extremely thin protective pads sold mostly through retail outlets and pharmacies).

• Average growth is 5-7% a year. The fastest growth is in the light incontinence sector, while demand for products for more serious incontinence is somewhat lower.

• Rising purchasing power in a number of markets, increased acceptance of addressing incontinence problems, product availability in the retail sector, innovation and brand building are all additional driving forces in adult incontinence market growth.

ADULT INCONTINENCE PRODUCTS

1,59

2,39

1,06

0,27

North America Europe

Asia Rest of World

The global market for adult incontinence [USD billion]


Feminine hygiene and baby diapers markets are demographics-driven

Feminine hygiene products

• The world market for feminine hygiene products is valued as USD 9,7 billion. In Europe the breakdown is 54% sanitary pads and 23% panty liners and 23% tampons. In other regions of the world (Asia and Latin America), growth is strong as a result of increased market penetration and a growing target group.

• Market growth is determined by (1) the number of women in the active menstrual cycle (a basis that is showing marginal decline in Europe), and (2) the availability of new products.

Baby diapers market growth occurs outside Western Europe

• In spite of cost and supply issues, the global diaper market was expected to grow in excess of 5% annually through 2011, with substantially stronger levels of growth in the world’s developing regions (Asia and South America).

• The European market for baby diapers is valued at USD 3,6 billion. Growth is primarily in Central & Eastern Europe, where birth-rates and use of disposable diapers are increasing. The market in Western Europe is relatively stable. Retailer’s brands make up 27% of the market in Europe.

• Growth drivers include increasing disposable diaper penetration rates and higher nonwoven content per unit as the diaper continues to evolve in response to consumers’ performance demands.

• Patents and other intellectual property rights are an important competitive factor in the disposable diaper market, principally because of the industry emphasis on product innovation. The hygiene industry is one in which patents are numerous and enforced vigorously.

• The issue of an eco friendly production tends to be more and more relevant

C – The automotive market

The automotive safety market has been growing faster than the underlying light vehicle production

• The global occupant restraint market is driven by (1) higher safety content per vehicle and (2) global vehicle production. On average, since 1997, these drivers have caused the global occupant restraint market to rise by 3% and 2%, respectively, adding up to an annual average compounded rate of 5%.

• Light motor vehicles (i.e. with a weight less than 6 tons) are the most important market for textile products. Heavy trucks have seatbelts but rarely airbags. There were 57 million light vehicles produced in 2009 against less than 1.5 million heavy trucks.

• Safety content per vehicle is driven by the number of airbags and other safety systems in each vehicle and the value of these safety systems. The trend has been for each new vehicle model to still get more safety products than its preceding model. This trend of higher safety content per vehicle is driven by consumer demand, new crash test programs and regulations.

• Globally, the average safety content per vehicle is approximately $250 and this figure has been flat since 2005. The arrested growth of the global average is mainly due to (1) expanding share of emerging-market low-end vehicles in the market mix, but also due to (2) the shift in global LVP to more small cars and (3) the overall price erosion in the automotive industry.

• The highest safety values are in North America, Western Europe and Japan, where they exceed $300 (and sometimes $500) per vehicle. The greatest potentials are though in the emerging markets (Asia Pacific and in Eastern Europe) where the values are still only 50% of the global average (merely $60 in India and just recently exceeded $200 in China) but are increasing rapidly, with the tightening local safety standards of vehicles.

• For the automotive safety producers it is, therefore, of strategic importance to be in the established markets for current sales and in the emerging markets for long-term growth opportunities. However, the safety content in mature markets is expected to increase on the wave of new regulations in the US and consumer demand in Western Europe. Forthcoming regulations concerning automotive safety in the EU include a new whiplash rating program and the proposal for improved pedestrian protection.

• Consequently, the market is expected to continue to grow long term, but not without cyclical fluctuations. Automotive safety producers can affect the growth driver of this market by continuously developing new higher value solutions.

Average safety value per vehicle

Source: Autoliv

Major shifts in the post-crisis global vehicle production Quarterly Global Light Vehicle Production 2007-2011

Source: Autoliv, based on IHS (CSM) Source: Rieter

Global Light Vehicle Production 2009-2010

NAFTA +37,9%

S.America +10,7%

W.Europe +11,3%

India +34,7%

Rest of Asia +7,2%

Japan +21,6%

China +28,2%

E.Europe +19,1%

RoW +7,2%

73,0 m units in 2010

59,4 m units in 2009

2009 2010NAFTA 8,6 11,8W.Europe 12 13,4E. Europe 4,8 5,7India 2,4 3,2Japan 7,7 9,4S. America 3,7 4,1Rest of Asia 5,5 7China 12,7 16,2Rest of World 2,1 2,2TOTAL 59,5 73

• During the first eight months of 2008, global LVP was on its way to set a new record high of more than 70 million vehicles, which would have resulted in an increase of 2% from the 2007 level. Global LVP started to plummet during September and October, following the financial turmoil. The outcome for the 2008 year was a 4% LVP decline.

• The 2009 global LVP reached 59,5 million vehicles, a 13% decline from 2008.

• Although the total LVP level in 2010 was the same as the run rate before the crisis, there were significant differences in the LVP mix. LVP had dropped by nearly 20% (i.e. 8 million vehicles) in Europe, North America and Japan but had skyrocketed in China, India and our other growth markets. This expansion in these markets was so strong (almost 11 million more vehicles) that it more than offset the LVP decline in the other markets.

• Another important difference is the market share shifts among vehicle manufacturers. the Japanese, South Korean and other Asian vehicle manufacturers increased their global LVP share to 53% in 2010, from 52% in 2009, 48% in 2008 and 47% in 2007.

• Light vehicle production (LVP), which is expected to grow all over the world. For the years 2011 through 2013, the average global growth rate is expected by IHS to be 7% per year. This is due to the recovery in LVP in established markets after the crisis and the long-term LVP growth primarily in Asia.

Automotive safety textiles market overview • Globally, the occupant restraint market was worth $17 billion in 2006; $18.5 billion in 2007 and $18 billion in

2008. Due to the sharp drop in light vehicle production in 2009, the market contracted by 17% to $15 billion, only to strongly rebound in 2010 by 21% to $18 billion. This record high growth owed its rate to the sharp recovery in LVP.

• During the next three years through 2013, the global occupant restraint market is expected to grow at an annual rate of 6% to $21 billion due to an anticipated continued recovery in global LVP and higher penetration rates for airbags and advanced seatbelts.

• The European market is expected to grow at an average annual rate of 3%. The North American market is expected to grow at a rate of approximately 7%, the Japanese market at 1.5% and the RoW market at a rate of almost 10%.

• Curtain airbags and other side-impact airbags are the fastest growing product line of the market driven by regulation in the US, but by demand-driven voluntary initiatives in Europe. In Europe more than 50% of the new vehicles already have side curtain airbags.

• Global seatbelt market has grown at an average annual rate of 3% or almost as fast as the general market and is projected to grow at an annual rate of 5% to approximately $5.7 billion by 2013.

• Despite increasing volumes, the market value for frontal airbags has stagnated at $5 billion due to severe pricing pressure. Frontal airbags now account for less than 30% of the market (compared to nearly 50% in 1997). The market for frontal airbags is expected to grow at an annual rate of 4% to $5.7 billion by 2013.

• Both the North American and the West European occupant restraint markets are relatively well consolidated. In Japan, Korea and China there are a number of local manufacturers, primarily of seatbelts, that often have close ties with the domestic vehicle manufacturers in these countries (e.g. Toyota in-house suppliers). These companies are often the toughest competitors in the Asian markets, but only locally.

• As the vehicle manufacturers want to compete with safer vehicles, export them and eventually set up global manufacturing, they increasingly turn to automotive safety suppliers with marked global presence and technological edge (e.g. Autoliv). Traditional customers are increasingly turning to global contracts rather than regional contracts as before.

Global occupant restraint by region [US$ billion]

Global occupant restraint market by region

Source: Autoliv

Source: Autoliv

TT Martket Trends & Challenges

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