Tencel in Courtaulds Annual reports (1996-97) Part 1

With about £1 of the Courtaulds share price being generally regarded as a premium riding on a successful outcome of the continuing Tencel investments, this annual report features Tencel like no other.  Tencel is mentioned on 10 pages and in 4 illustrations.  Since the last report, Sir Christopher Hogg has been replaced by Sir David Lees as Chairman and Sipko Huismans by Gordon Campbell as CEO.  Expansions at Grimsby and plans for a 50,000 tpa plant in Asia are mentioned.

This is also the first report to mention the development of "Courtaulds Lyocell"(tm) for nonwovens and industrial textiles.  These were the original "launch" markets for the Mobile SL1 plant justification back in 1989-90, but these developments were sidelined as strategy switched to a fashion-first launch. Here are the main pieces:

In Chief Executives Review...
Despite an almost doubling of capacity in the early part of 1996, demand for Tencel exceeded our capacity, and we had to balance the development of demand with our ability to supply. This was difficult but important, since existing demand is primarily from the textile market and we have an untapped industrial market still to develop. The most encouraging feature of the textile demand, however, is the breadth of products now available from our customers and which demonstrate the versatility of Tencel. 

Clearly, the parts of the textile industry which will survive in the developed world are those that are capable of creative and innovative design. It is unsurprising, therefore, that Europe has now joined Japan as a major market for Tencel. Our next Tencel plant - the first in Europe - is intended to serve this market and is on schedule to open before the end of 1997 Tencel also made a firm breakthrough into profit last year despite unfavourable exchange rate movements and the increasing expenditure on marketing. The latter, together with continued investment in research and development, imposes short term costs but is essential if Tencel's world leadership is to be maintained.

Capital expenditure remained high in 1996/97 Tencel is a significant component of our capital spend, but we are not ignoring the potential in our other businesses...

In "Positioned for Growth"...
Tencel the fibre of the future...For the last five years, Courtaulds Fibres has been the only producer of a new cellulose based fibre, the first new fibre to be developed anywhere in the world for a third of a century. The raw material is woodpulp, from the trees of harvested, self-sustaining forests. lts production process produces virtually no effluent and it is extraordinarily comfortable to wear. Its generic name is lyocell. Courtaulds now markets it in two forms: Tencel for apparel and home furnishings and Courtaulds Lyocell for industrial uses. Both have huge potential but it is Tencel with its direct appeal to the Consumer, which has captured the public imagination wherever it has been introduced.

Tencel has exciting colour characteristics, can produce a wide range of textures, and has excellent, and varied, aesthetic qualities. Tencel has immense scope in fashion markets both in pure form and in refined blends with silk, linen and wool. Tencel now features in the ranges
of an increasing number of fashion houses, such as Calvin Klein, Donna Karan, Joop!, Georges Rech, John Rocha, Armani, Lacroix, Jean Paul Gaultier, Paul Costelloe,  Ferre and Cerruti. And this is only the beginning.

The qualities that make Tencel so special also open a broad spectrum of opportunities for its industrial variant, Courtaulds Lyocell. The fibre's unique combination of strength and absorbency make it suitable for a wide range of uses, ranging from protective clothing for North Sea oil rig workers to surgical gowns; medical swabs; incontinence pads; oil and smoke filters and even teabags and sausage skins. 

Courtaulds Fibres pioneered lyocell and launched it as Tencel in l992. lnitially marketed in Japan, its rapid success was a powerful indicator of its potential. Today sales of Tencel are expanding rapidly in North and South America, Europe and Asia-Pacific.

Tencel and Courtaulds Lyocell are at an early stage of their lives, and the scope for development is huge. They are the fibres of the future, and Courtaulds is clearly in the lead, a full five years ahead of its closest competitor.

Tencel in Courtaulds Annual Reports (1996-97) Part 2

Inside Front cover...

Our strategic objectives are to build Tencel, our pioneering new lyocell fibre, into a leading fibre throughout the world ...and [especially] in the fast-growing Asia Pacific region.

Page 1.  In "Principal features of the Year" - first point...

Tencel demand continues to climb. European plant on schedule for Autumn 1997.

Page 2. Illustration...

Page 3.  In "Cellulosics"...

Tencel: Radical new lyocell fibre with exceptional qualities of strength, absorbency and softness for a wide range of fashion apparel.  Also Courtaulds Lyocell for industrial, medical, hygienic and other applications.  Plants in the USA and from October 1997, UK.

In Fibres and Chemicals..

Despite the successful commissioning of a second plant in Mobile, Alabama' more than doubling annual capacity to 43,000 tonnes, Tencel had difficulty in keeping up with demand. The volume of sales rose strongly over the previous year and operating results moved firmly into profit despite increased development and marketing expenditure, which is being incurred to establish a global franchise for the Tencel brand.

The development of a range of fibre variants to meet the growing interest in Tencel and Courtaulds Lyocell (for industrial and technical applications) is progressing well. New techniques for dyeing and finishing TenceL fabrcs are advancing rapidly, assisted by close working relationships with machinery manufacturers and chemical and dyestuff suppliers. ln this area the collaboration between Tencel Research and Technology and the Tencel Kai (the group of Japanese textile and apparel manufacturers who are working together on Tencel's development) in Japan is paying valuable dividends.

Tencel garments are now being actively promoted at retail level in 31 countries worldwide. Close partnerships with innovative textile manufacturers in every region are helping to increase the range and variety of Tencel fabrics available to garment makers. While Japan led the way, recent progress in Europe has been particularly encouraging in this regard.

Construction of Tencel's first European plant at Grimsby is on schedule and production will begin there in October. Planning for the next phase of Tencel's expansion, involving the construction of a 50,000 tonne plant in Asia, is at an advanced stage.

click to enlarge

Tencel in Courtaulds Annual Reports (1997-98)

The Chairman's statement covers the recently received bid for the Group by Akzo Nobel, and this last report contains a fraction of last year's Tencel coverage.

In Chief Executive's Review...For the first time in its short commercial history, Tencel disappointed as sales fell back in the face of declining denim demand and Asian economic turmoil.  Tencel sales fell well short of the previous year as a result of weaker final demand and pipeline destocking. These events inevitably meant that Tencel recorded a loss in 1997/98. The demand for Tencel-containing fabrics, however, remains very encouraging and the breadth of the products now containing Tencel is reassuring for its future. The completion of the first European facility for Tencel was delayed by construction difficulties but will commence production shortly.

In Finance Directors (now Patrick Shanley) Review...

Tencel sales fell during the year, firstly as a result of a decline in denim demand and subsequently as a result of the currency turmoil in Asia.

Illustrations...

       

Innovation: Product Development with Courtaulds Lyocell (1994-1999)

"Courtaulds Lyocell", a cut-price version of Tencel finished to discourage its use in premium apparel applications, was launched at Tech Textil in June 1995 and with it came a proliferation of developments in nonwovens, special papers and industrial textiles.  "HF100", a version intended to be easier to fibrillate in papermaking and hydroentanglement was also launched.  Between 1995 and 1998 over 400 separate developments with these fibres were initiated.  
Some of the key markets and trialists are listed below:

Click here for earlier developments under the Tencel brand.

Abrasives: Backing cloths and papers for belt and disc sanders and polishers: 3M, Sumitomo 3M, English Abrasives and Chemicals Ltd.

Absorbent Wadding: Brannoc Fibres, Edward Hall

Air-laid Papers and Nonwovens: (for absorbent cores, wipes, tissues, filters, separators): United Paper Mills, Metsa Serla, Walkisoft, Laroche, Sofrance, Papeteries Canson & Montgolfier SA, Bernard Dumas SA, Fort James, Duni AB.

Automotive Felts: Borgers GmbH, Vereinigte Wollwarenfabriken GmbH, Fiberduk

Automotive Filters:  Toyo Tokushi, Sommer Alibert GmbH

Automotive Upholstery: Courtaulds Textiles Auto Products

Baby Diapers:  Linostar SpA, Procter and Gamble, Personalidzados

Bandages: Thuasne et Cie

Battery Separators: Nippon Kodoshi, Kuraray, Varta Batterie AG, Papetries de Mauduit

Biocomposites: Institut for Structurmechanik, DLR (German Aerospace R&D)

Belting (Conveyors): Marathon Belting Ltd.,

Building Nonwovens:  Dexter AB

Cabin Air Filters: British Filters Ltd

Calendar Bowl Papers: Buhl GmbH

Carpets:  Arlex

Cigarette Filters:  Papeteries de Mauduit, Filtrona International, Philip Morris, Japan Tobacco, Austria Tabak, Papierfabrik Wattens GmbH, Rothmans International

Cleaning Cloths: Lever GmbH, Textilwerke Emsdetten, Freudenberg Haushaltproduckte KG, Rydals Garn AB, Guldner GmbH, Spontex International, Jean Kraut AG

Coating Bases/Artificial Leather: Syntz, ORV, ORSA, Redbridge International, Sangular, Corexim SRL

Composite Reinforcement: Matsushita Denko, ETH, Tufnol, Owens Corning fibreglass, Coventry University, Les Fils d'A Chromarat et Cie, Moy Nonwovens, LNP Engineering Plastics, Fothergill Engineered Fabrics

Carbonless Paper: Carrs Paper Ltd.,

Currency Paper:  Tumba Bruk, Louisenthal, Thomas de la Rue, Crane, VHP Security

Decorative Felts:  Fytisa

Decorative Papers: Tokushu Paper, Oji Paper

Disposable wipes:   Spontex, J&J, P&G, BFF, Lohmann, Hainan Xinlong, Dupont, Sanwa, PGI-Chicopee, Veratec, Daiwabo Nonwovens, Unicharm, EFI Lahav, J W Suominen, Sage Products Inc. Ahlstrom Lystil OY, Arbora

Disposable Apparel: Dupont, Nisshinbo, PGI Chicopee

Dressings:  Smith and Nephew Medical

Durable Wipes:  Dupont

Duvets and Pillow Fillings:  Trendsetter Home Furnishings

Felts: FIR

Filters:  3M Filtrete bv, 3M UK, Purity Textiles PVT Ltd., Devon Valley Industries, Seitz Filter Werke, Steinbeis-Gessner, Hollingsworth and Vose, Fluid Dynamics, Cuno, Valeo - Division Fils Techniques, Unichem Corp., Schoeller and Hoesch, J C Binzer GmbH, J R Crompton, Ahlstrom Filtration, Memcor Filtertechnik GmbH, Electrolux AB, Alias Technology and Filtration, Technical Fibre Products, Humber Fabrics Ltd, UFI SpA, Lydall Inc., Technical Textiles Lorrach, Whatman Paper, Schleicher and Schuell, Sattler Textilwerke
Fine Papers:  Modo och Domsjo, Curtis Fine Paper 

Flame Retardant Fabrics: Mehler Technishe Textilien, Pincroft Dyeing and Finishing, Dorma, Carrington Career and Workwear, Dale A/S, Albright and Wilson (Proban Provider),Alfredo Grassi spa,

Flock: F H Wrigley, Schwarzwaelder Textil Werke, Fratelli Casati, Le Flockage, Hiva Products, John Peel and Sons

Flushable Wipes:  Ahlstrom Lystil SA

Home furnishings: Dranger Design AB, Kvadrat, Filatura Pettinata Alta Biella srl, CIPA Lin,.

Industrial Fabrics: Lantor UK, Gekatex SA, Perseverance Mills, DMC, Troll Safety, Ten Cate Advanced Textiles, , IPT Group, Casa Moda, K Stormark

Interlinings:  BFF, Freudenberg, Intissel

Knitted Fabrics: Soc. European de la Maille, Guilford Mills, Wykes, Chromarat Textiles, Karl Meyer, Bergham Weaving AB

Loudspeakers:  Tannoy Ltd., Kurt Mueller, Onkyo KK

Mattress Covers: Anallegro, Baekaert Textiles

Medical Fabrics and Papers: J&J, Smith and Nephew, Karl Otto Braun, Barlow Paper, Union Textil de Tourcoing, Arjo Wiggins SA, Molinier Industries, Beiersdorf AG, IPM Textiles, Vernon Carus, 

Military Uniforms: Quartermaster Department of the China Army, UK Ministry of Defence, Natick US Army Soldier Center, Spinnerei Kunz, 

Needlefelts: FILC Menges, Pro Tec GmbH, Sage Products Inc., Fritz Landolt AG, Kahnes and Co., Tharreau SA, Vita Fibres, BWF Textil GmbH, Tefisa SA, Dittrich and Sohne, Flytex Srl, Freudenberg (Weinheim), Freudenberg UK, Borkent Bv, Althoffer

Paintshop and Printing Wipes:  SCA Hygiene Paper

Parchment:  Sibille Dalle

Photobase Paper: Eastman Kodak,  Felix Schoeller, 

Rubber Reinforcement:  Dunlop Ltd, Akerlund & Rausing, Hutchinson SNC

Scrims: Fothergill Crenette Ltd, Chavanoz Industrie

Sewing Threads:  Levi Strauss, American and Efird, Coats (several divisions), Gutermann, Cousin Freres SA, Hilaturas y Tejidos de Levante SA, DMC Fils a Coudre, Empriss Mills, Belgian Sewing Threads, The Israeli Processing Co Ltd, Oxley Threads, Manila Bay Spinning Inc., Fil Man-Made, Vich Industrial, Werneth Ring Mills, Hilatoros Technicos

Shoe Construction: Nike, Western Board, Promocompo LDA, IS Supplies, BUSM/Texon, Service House Lahore

Speciality Paper: Neu Kallis Special Paper, Papierfabric Lahnstein, Fukuda Paper, La Papelera de Besos, Bollore Technologies,  James Cropper, MB Special Paper SA, Arjo Wiggins Appleton

Sponge Reinforcement:  Spontex Espana

Stitchbonding:  Cosmopolitan Textiles, Welbeck Technical Textiles

Tampons: Tambrands, J&J

Tarpaulins:  Borghorster Warpspinnerei

Tenting:  Ten Cate Technical Fabrics

Tea-Bags: Dexter Nonwovens, Miki Tokushu, Taylors of Harrogate, Papeteries de Cascadec

Vacuum Cleaner Bags:  MB Special Paper, Melitta Household Product

Waddings:  Libeltex bv

Workwear:  Carrington Career and Workwear, Klopman International, Weberei Wangi, Ten Cate Protect, Lauffenmuhle Textil GmbH, Boras Watveri AB, Beijing Public Security Bureau, Hironen Co., Taizhou Jitai Worsted Spinning, Boco GmbH, Textil Santanderina, Unit Products AB, Sagatex ASA, Landau Shamash Ltd., Patron Saint,

Wipes:  (see also Disposable Wipes) Lever Espana

Wound Care: Speciality Fibres and Materials, Nimrod, Lantor International, Johnson and Johnson, Bristol Myers Squibb, AM International, Veratec

The Analysts View of Tencel - Part 1: BZW (1997)

After the rather gloomy prognosis of our Hotel Byblos Worldwide Fibres Conference, here's a more optimistic note, a few months later, from a key opinion former, Barclays de Zoete Wedd.

Points to note:

• Growth in Tencel sales was the major factor driving improvement.
• By 2000, they expect Tencel to be generating sales of £220m and profits of £50m

Courtaulds Strategy and the Role of Fibres: Part 1 (1997)

From 1997 WORLDWIDE FIBRES CONFERENCE - Hotel Byblos, Malaga, 30/1/1997

Points to note:

• "Acrylics (1986) generated an enormous amount of cash... and was the reason we could develop Tencel... without that we would probably not have Tencel today"
• "Viscose (1989-91) poured in  an enormous amount of cash ... was a money printing machine ... it wiped out all the problems of acquiring businesses in the USA." (Ironic this: the new US businesses were bought to replace loss-making Fibres)

ln 1980 Courtaulds recorded an operating profit of break-even and a loss after
extraordinary items of £160m. lt was from that base that Courtaulds started to pull out from a horrendous position. The first part of the 1980s was trying to grind outmargin improvement. The only thing that mattered then was how much cash togenerate. We achieved it. People sold businesses, company names and did anything to hit the cash target. That started to take Courtaulds up. During the mid to second half of the 1980s Courtaulds had a very strong reputation for the quality of its management.

Then we demerged Textiles. The strategy was to drive for growth in businesses that were broadly management intensive rather than capital intensive. Our acquisitions in the US could have been damaging but for Viscose. A major competitor in viscose went out of business in the US. The combination of that and a fashion swing meant that Viscose poured in an enormous amount of cash from 1989 to 1991. To some extent we let that fool us and Viscose was a money printing machine. We were so successful it wiped out all the problems of acquiring businesses in the US.

Courtaulds Fibres Worldwide Conference Delegates List (1997)

89 delegates attended this conference at the Hotel Byblos, Malaga, Spain, 30/1-1/2/1997 to discuss Fibres strategy for the next 5 years.  Tencel was high on the agenda and sent the most delegates (24). More information from the meeting will be posted shortly.

1997 WORLDWIDE FIBRES CONFERENCE
DELEGATES
David Adkins	Tencel CFI	Alabama, USA
Jose Ambros	Acrylics	Barcelona, Spain
Sergio Ansaldi	Novaceta	Milan, ltaly
Egidio Apolloni	Novaceta	Milan, ltaly
Joaquim Bestit	Acrylics	Barcelona, Spain
Geoff Blackburn	Tencel Asia	Hong Kong
Simon Brearley	Viscose Europe	Grimsby
Eric Chan	Tencel Asia	Hong Kong
David Christian	Rayon	Alabama, USA
Josep Colobran	Acrylics	Barcelona, Spain
Hilda Coulsey	Fibres/Chemicals	Coventry, UK
John Cross	Acrylics	Kelheim, Germany
Dick Doidge-Harrison	Rayon	Alabama, USA
David Duthie	CFI Corporate	Alabama, USA
John Fagge	Acrylics	Grimsby, UK
Robert Feil	Tencel CFI	Alabama, USA
Mike Finlen	Tencel CFI	Alabama, USA
Ellen Flynn	Tencel CFI	New York, USA

Tencel sales of £265 million expected by end 1997 (1996)

Gloomy news leavened only by the prediction that Tencel sales will reach £265m by end of 1997.  With capacity predicted to reach 100,000 tonnes capacity this assumes a sales price of £2.65/kg.

Lenzing confirms bigger group losses in '97 (1997)

So Lenzing were having a difficult time too.  The phrase "prudential reserves of considerable magnitude are being built up in order to finance further (group) restructuring processes" maybe illustrates the differences between Austria and UK businesses.

Austrian fibres producer Lenzing confirmed Monday that additional restructuring provisions, the Asian currency crisis, start-up losses at its novel fibre business Lyocell and poor results from its Brazilian pulp plant Bacell will push the group into a greater deficit this year.

Although it did not disclose detailed figures, Lenzing said "prudential reserves of considerable magnitude are being built up in order to finance further (group) restructuring processes."

A company spokesman declined to quantify the exact scale of the restructuring costs but hinted that they would be at least Sch100m ($8m). He explained that they covered Lenzing's affiliated companies in Brazil and the US.

Lenzing blamed foreign exchange difficulties in Asia for a 1997 loss at South Pacific Viscose (SPV) in Indonesia.

"This factor, together with scheduled start-up losses at Lyocell and the disappointing result scored by Bacell, Brazil, will definitely lead to a deterioration in the Lenzing Group's results for the year 1997." The Lyocell fibre business is a rival to Tencel, made by Courtaulds of the UK.

Lenzing group losses last year totalled Sch30.3m ($2.54m) and compared with a profit in 1995 of Sch312.6m.

However, Lenzing said the restructuring measures will have a "clearly positive effect" on the group results by 1998.

It expects Lenzing Fibers Corp in the US to achieve a "clearly more positive result" in 1998 and said Bacell is "showing clear indications of improvements in operational terms." Lenzing said SPV would be generating positive results again in 1998.

In direct contrast with the group's 1997 results, Lenzing said its domestic operation Lenzing AG would report operating profits up Sch200m on 1996, when the company made a loss.

By: Neil Sinclair 22 December 1997 12:17 [Source: ICIS news]

Tencel sales fall: UK plant start up delayed (1997)

LONDON (CNI)--The strength of sterling continues to undermine results at Courtaulds which Wednesday reported first half pre-tax profits of £62m ($104m), nearly 5% lower than the same period last year, on sales 6% down at just over £1bn.

Chief executive Gordon Campbell said the currency impact on translating overseas profits cost £6m and an estimated £10m was lost on transactions compared to the same period last year. "This was particularly acute in fibres and chemicals where our major manufacturing facilities are located in sterling and dollar areas," he explained.

Operating profits for the fibres and chemicals division fell 7% to £25m on sales down 12% at £388m. At constant exchange rates profits would have been 4% lower, while sales would have been down 5%

Tencel sales continued to be positive at the retail level, with indications that next year's spring and summer season will be substantially ahead of this year. However, the company admitted that fibre sales were lower than the first half of 1996 due to poor denim demand, a weak Japanese consumer market and excessive ordering last year.

Courtaulds said completion of its new UK production plant has been delayed due to construction difficulties and commissioning will not now start until spring 1998. However, it said this should not impair long term plans for Tencel expansion.

Overall group net borrowings increased from £320m at 31 March to £430m at 30 September, with an accompanying increase in gearing from 46% to 59%.

Source: Neil Sinclair ICIS News 19/11/1997

Courtaulds pins hopes on Tencel: Asia plant is going ahead (1997)

Tencel sales in Japan had stalled and the delay in the start of the new Grimsby Tencel plant was probably "helpful". However:

• The South Asia Tencel plant "is going ahead"
• Another plant "most likely in China": decision in 2003

Courtaulds will maintain heavy investment in its promising Tencel fibres business as other units continue to be hit by negative currency effects. Chief executive Gordon Campbell described potential growth for the product as 'very significant to the company's future although it represented only 4% of turnover last year'.

Campbell confirmed the company is going ahead with an investment of about £150m ($254m) for a 60 000 tonne/year Tencel plant in Indonesia, Singapore or South Korea in spring 1998. He said a further Asian Tencel production site would most likely be built in China but no decisions will be made until the year 2003.

Lenzing Lyocell on the Fast Tack (1997)

Here's a comprehensive Nov. 1997 overview of the Lenzing Lyocell development by Marjorie Walker of ICB, quoting Heinrich Stepniczka.

• Heiligenkruez at 10,000 tpy in the summer, 12,000 tpy now and 15,000 tpy by Xmas.
• 60,000 tpy plant next in Asia, Lenzing or Heiligenkreuz.
• Existing investors will have to be convinced pretty quickly of Lenzing Lyocell's success or they will vote with their feet.
• Industry sources do expect Lenzing Lyocell to be a success

Lenzing's new Lenzing Lyocell fibre is making its commercial debut on world markets. After years of development and patent disputes with Courtaulds, the Sch1.5bn ($120m) 12 000 tonne/year plant at Heiligenkreuz, Upper Austria, came onstream this summer and Lenzing is already pushing ahead with plans for doubling its capacity. There is even talk of a second major facility.

A lot rides on Lenzing Lyocell's success. Lenzing is the world's largest producer of viscose fibre but the global market shrank in 1996 and has shown little growth in 1997. In Europe and the US environmental expenditure and declining viscose

Courtaulds eyes No 2 Asian Tencel plant (1997)

COURTAULDS may set up a Tencel manufacturing plant in India after completion of intensive market testing.

The move would be its second major investment in Asia. The company will announce the location of its first Asia Pacific Tencel plant later this year. It has drawn up a shortlist for the location of the Asia Pacific plant - South Korea, Indonesia and Singapore.

'As for India, we will first have to see how strong the domestic market is,' said Alan Jones, Courtauld's commercial director for Tencel in Asia Pacific.

Courtaulds has launched a Tencel marketing tie-up with five Indian mills - Arvind, Raymond, Morarjee, Garden Silk and Madura Fabrics. The mills will use Tencel, a 100% natural solvent-spun cellulosic fibre, to manufacture either 100% Tencel fabric or a blend with other fibres.

Jones told ACN that a decision on a Courtaulds Tencel plant in India was far from imminent. 'It will probably be the next century before we come to the conclusion as to whether it is worthwhile producing Tencel at a plant in India,' he said.

Courtaulds has a worldwide Tencel capacity approaching 100 000 tonne/year.

06 September 1997 [Source: ACN]

Courtaulds seeks partner for Far East Tencel project (1997)

Searching for the right site and partner for its planned Tencel production unit in the Far East is taking longer than anticipated for Courtaulds.

Courtaulds is in discussions with a number of companies as it looks for a partner for a planned Far East investment in Tencel lyocell fibre production. The location is yet to be chosen but it is known that two or three sites in the region are in the running.

It could be the end of the year before Courtaulds finalises its plans for the 50000 tonne/year plant, with issues such as financial assistance, political stability and closeness to textile markets being considered.

A decision had been expected by the end of the first quarter this year but, said fibres chief David Wilkinson, narrowing down the possible locations has proved a lengthy process: 'It is a very big step and if we get it wrong, we get it badly wrong.'

The issue of whether to take a partner for the $250m investment is not fully resolved, said Wilkinson, and Courtaulds could go it alone. However, the assistance of a local partner that knows the region's fibre and textile markets would be an advantage, he said.

The Far East plant will add a third production arm to Courtaulds' global strategy for the fibre. It currently has 43 000 tonne/year capacity in Mobile, Alabama, and by the end of this year will have onstream 42 000 tonne/year of capacity in the UK, at Grimsby.

There is 12 000 tonne/year of debottlenecking potential at Mobile, but a decision on when to implement this has not been taken. Courtaulds' aim is to have sales in excess of 150 000 tonne/year by 2005.

Courtaulds is already collaborating with Japanese fibre producer Asahi Chemical in market testing of lyocell filament fibre, which Courtaulds is jointly developing with Akzo Nobel.  Wilkinson said the two European companies should be able to put up a proposal at the end of July for a 5000 tonne/year production plant. It will most likely be built at one of Akzo Nobel's German sites. Filament lyocell ("Newcell") will compete against cuprammonium rayon at the higher end of the textile markets, said Wilkinson.

5th May 1997 [Source: ICB]

Courtaulds and Akzo Nobel cooperate on the development of lyocell filament (1997)

Courtaulds and Akzo Nobel are working together in the development of lyocell (solvent spun) cellulosic filament yarn. A market evaluation and test marketing programme has been conducted with Asahi in Japan over the past two years and it is expected that a final investment decision will be taken by Courtaulds and Akzo Nobel by the end of this year.

The two companies have also agreed to undertake a detailed study for construction of a 5000 tonne/year facility to be located in Europe. Akzo Nobel is producing lyocell filament yarn at its pilot plant in Oberburg, Germany, with Courtaulds contributing process and product know-how derived from the manufacture ofTencel, its branded lyocell staple fibre.

In 1990, Courtaulds opened its $100m Tencel facility adjacent to the rayon plant at Mobile, Alabama, US. It is the only location where this revolutionary new fibre is currently being produced in industrial-scale quantities in the world.

Tencel is biodegradable and can be used for many industrial applications, as well as fine yams and fabrics. The advanced material features many environmental benefits, from the raw material which goes into its manufacture to the process that forms it. This process converts wood pulp harvested in managed forests to fibre by a method which recycles almost 100% of the solvent, virtually eliminating the need for effluent discharges.

This year Courtaulds completed a $134m expansion at the plant, one which doubled its capacity and raised employment to 200.

Tencel demand remains strong, particularly in Europe, but with Japan a major market and all production still in the US, the current weakness of the yen against the dollar is a negative factor on margins, according to Gordon Campbell, chief executive of Courtaulds.

In viscose, Campbell said there is some evidence of recovery in demand, but

Parties in Tencel patent row to settle out of court (1997)

The Lenzing Filmtruder process patent was summarily dismissed in the USA but now the Appeal Court overturn that ruling.

Fibre manufacturers Lenzing and Courtaulds have begun discussions to resolve their differences without further recourse to the American courts.

Lenzing and Courtaulds are to settle out of court over the Tencel patent row - despite a US court decision in Lenzing's favour. Lenzing fought the action over alleged infringement of a patent for production of what it calls lyocell fibres.

The Federal Court of Appeal in Washington DC reversed an earlier summary decision of the New York court in November 1995, which held the patent invalid for failure to disclose the 'best mode' of the invention. Lenzing claimed infringement of the patent by Courtaulds at its lyocell plant in Mobile, Alabama, and the infringement suit in the New York court is now set to continue.

Lenzing, which produces lyocell under the brand name Lenzing Lyocell, sought damages and an injunction against Courtaulds in the New York district court action. Courtaulds denied infringements and called the patent invalid. Lenzing said the decision accentuated the importance of the Lenzing patent and emphasised its contribution to commercialise the lyocell process.

A Lenzing spokeswoman said negotiations had taken place between Lenzing and Courtaulds. 'We still want to continue discussions, but we must review the court decision,' she said. 'No firm date has been set for a resumption of the New York district court case, but we intend to get the issue resolved.'

David Wilkinson, Courtaulds' director responsible for fibres, said discussion at an advanced stage would enable both companies to get on without the fear of invoking patents against each other. He said Courtaulds and Lenzing companies could then defend actions against third parties if they infringed patent agreements for the manufacture of lyocell.

Wilkinson added: 'I am confident the discussions will produce an amicable solution. I have no reason to believe that Lenzing does not have the same objective.'

Lyocell, a fibre used in clothing, is spun from a solution of cellulose in an organic solvent and water. The Lenzing patent relates to the preparation of the spinning solution.

28 July 1997 [Source: ICB]

More Here.

Akzo/Courtaulds move to make NewCell (1997)

The commercialisation of lyocell (solvent spun) cellulosic filament yarn has taken a step forward with Akzo Nobel and Courtaulds' decision to carry out an engineering study for the construction of a 5000 tonne/year plant in Europe.

According to Fritz Fröhlich, a board member of Akzo Nobel, the location of the plant will depend on final government support. An investment decision will be made by the Akzo Nobel and Courtaulds boards later this year.

The firms decided to proceed with the study following progress in the process development at Akzo Nobel's Obernburg pilot plant in Germany. Akzo Nobel has been producing 100 tonne/year of lyocell filament yarns, called NewCell, at the unit. Courtaulds provided process and product know-how from Tencel, its lyocell staple fibre.

Market test programmes conducted over the past two years have been positive. The Japanese market was studied with Asahi.

Courtaulds produces Tencel lyocell staple fibre in two plants with a combined capacity of 55 000 tonne/year in Alabama, US. It is now building a £120m ($180m) 42 000 tonne/year facility in Grimsby, UK, due onstream in early 1998.

14 April 1997 [Source: ICB]

Zimmer Alceru and Carbacell along with Akzo Newcell to substitute cotton (1997)

The German plant contractor Zimmer has developed two cellulosic fibres processes that overcome the environmental problems with viscose production. The Alceru process is designed for new installations and produces a high tenacity fibre which will compete with the Lyocell fibres produced by Courtaulds and Lenzing. The process is described in detail. The Carbacell process is aimed at the revamp of old viscose plants, and this process is also described in detail. Akzo Nobel and Courtaulds have announced that they are to carry out a feasibility study for a 5,000tpy Lyocell cellulosic fibre plant in Europe. The market potential for cellulosic fibres is considerable with cotton production unable to meet the increase in demand. Estimates indicate cellulosic fibres could substitute 7.5% of cotton demand by 2010.

Anon: Eur. Chem. News, vol. 67, no. 1760, 14-20 Apr. 1997, p. 27 (P)

Carbacell was the CS2-free cellulose carbamate route to low environmental impact rayon fibres which could be made on viscose equipment.  It required a major commitment by a pulp producer to make the cellulose carbamate pulp and this did not materialise.  Alceru was piloted at TITK and acquired by Lenzing.  Newcell - the lyocell filament process - remains to be commercialised.

Courtaulds Shares Slump: Tencel won't be as lucrative as hoped (1997)

So it doesn't wrinkle, it's tough and it's as soft as silk. But can Courtaulds' "wonder-fibre", Tencel, revitalise the chemical group's flagging fortunes? Courtaulds shares have slumped to 270p, less than 50 per cent of their value five years ago, and 7.5p down on the day on the back of poor first-half results. Pre-tax profits in the six months to September were £62m, 5 per cent down on last year.

Tencel, touted as "the Lycra for the millennium", is unlikely to prove as lucrative as Courtaulds once hoped. First, the wonder-fibre is used in jeans - M&S is among the notable Tencel converts - and demand in the denim market is relatively weak. Second, Courtaulds, once the sole Tencel supplier, is now beginning to face competition. Nevertheless, prospects for Tencel are still good. Courtaulds reckons that Tencel will account for 20 per cent of all turnover within five years. Currently, it accounts for about 3 per cent of sales.

Even if Tencel fulfils all expectations, it is unlikely to be sufficient to transform Courtaulds into a high-growth organisation. The company needs to look elsewhere if it is to turn things around. Prospects at its coatings & sealants division, which account for about half of turnover, look good. Courtaulds has an entrenched position in market niches, such as aircraft coatings. Polymer products, which saw a moderate rise in profits this half, also look strong.

The real problem is that around one-fifth of revenues still come from viscose and acrylic. Not only are these mature markets, but competition, particularly in viscose, is vigorous. What is more, raw material prices for viscose and acrylic are notoriously volatile.

the independent, THURSDAY 20 NOVEMBER 1997

Increasing Demand for Man-made Cellulosic Fibres predicted: "The Cellulosics Gap" (1997)

Lenzing's recent paper (1) featuring the "Cellulosics Gap"  prompted me to look for the 1997 paper on the subject.  I've so far failed to find it but the following is from the 1999 paper "Whither Cellulosics" and includes the key reference to Tim Johnson's market research for Courtaulds. 

One of the most thorough recent expositions of the outlook for cellulosic fibres was compiled by T F N Johnson of Courtaulds (2). He argued that continued population growth and increased per capita fibre use will result in a demand for a further 70 million tonnes of fibres by 2050. With the potential for further cotton yield or hectarage increases now limited, and with the synthetics still looking unlikely to provide the comfort element of future textiles, Johnson postulates a "Cellulosics Gap" of up to 20 million tonnes.

He points out that for 60 years, cotton production has grown almost entirely due to increased fibre yield per hectare. Land area under cotton cultivation has been constant for that period, and pressure for the same top quality agricultural land will increase due to the need to feed increased population.