Coatings - AkzoNobel

account for approximately one-third of sales. Textile
sales are divided fairly equally between apparel and
domestic textiles.
A cyclical downturn in textile demand, coupled with
interfiber competition and excess capacity, has created
difficult conditions for viscose over the past two years.
Some recovery occurred in Europe, but the U.S. market
is under increasing pressure from imports of Asianmade
textiles and garments.
Overall, earnings performance in 1998 was similar to
that of the previous year, with a significant
improvement in Europe being offset by a decline in the
United States. The European operations were
profitable, and sales of speciality and nontextile
products increased. In contrast, the financial
performance in North America deteriorated. Industrial
demand remained stable, but textiles fell sharply.
TENCEL AND SPECIALITY FIBERS
Full-year sales NLG 180 million (1997: NLG 190 million)
Potential very high
Tencel® was the world’s first lyocell fiber when it was
launched in 1992. Initially produced in the United
States, Tencel® was developed as an upmarket fashion
fiber by virtue of its unique combination of absorbency,
tenacity, and esthetic qualities. The fiber is made by an
environmentally friendly process. Demand grew rapidly
in denim and peachskin end-uses and, geographically,
in Asia. A combination of changing fashions and the
Asian economic crises caused growth to plateau.
However, with Tencel® fiber being used in an
increasingly wide range of textile products, the basis for
resumed growth has been established.
AKZO NOBEL ANNUAL REPORT 1998
61
ACORDIS
The first European facility was commissioned in late
1998. It is capable of producing a new variant of
Tencel® fiber: A100. Tencel® A100 has surface
characteristics which should further enhance the
opportunities for Tencel® products. The high costs
associated with R&D, marketing, and commissioning
new facilities, combined with stalled growth, inevitably
meant that the Tencel® fiber business was in loss for the
year. These costs are being carefully managed to ensure
that the balance between expenditure and growth is
sustained.
Speciality Fibers serve medical markets and the
superabsorbent market. Sales are growing rapidly, with
good margins.
ACRYLIC FIBERS
Full-year sales NLG 640 million (1997: NLG 740 million)
Innovation helps to offset difficult conditions
Acordis’ Acrylic Fibers are produced in Spain, Germany,
and the United Kingdom. The majority of its sales are
to the textile industry, but products for industrial enduses,
such as carbon fiber precursor for the aerospace,
sporting goods, and reinforcement markets, are
growing rapidly. Amicor, a new fiber with locked-in
antimicrobial properties to increase comfort and
preserve personal freshness, has been well received.
The European acrylic fiber industry exports roughly
50 percent of its installed capacity and is therefore
sensitive to changes in demand, in particular in the
Asian market. During the second half of 1998, prices
fell quite sharply, with the inevitable impact on margins.
In the face of these problems, costs are being reduced
through productivity improvements, while the business
is continuing to use its R&D resources to increase the
share of differentiated and industrial products.