Bilancio Sociale 2005 Social Report 2005

Social Report 2005
and medical applications. In addition to these two applications,
which make up the bulk of total sales, we produce nonwovens
for the industrial roofi ng sector. In 2006 we expect an upsurge
in production of 30%, a sign of the good results we are achieving
in this market.
The European fabrics market was in a full-blown crisis during
2005. The sector is in a complete state of fl ux, both on the demand
side (a recession in end-user clothing sales in many world
markets and a change in market geography stemming from the
international relocation of clothing manufacturing operations)
and on the supply side, with the entry of new competitors. It
is important to point out that, according to the latest available
data (2004), about 75% of world weaving investment was
made in China and only 9% in Europe. In accordance with this
market scenario, RadiciGroup has undertaken an extensive reorganization
to realign our products and operations to meet the
needs of garment makers who are looking to forge a partnership
with suppliers that can provide the proper mix of innovation
and service. Inevitably this restructuring has resulted in a
reduction in production capacity and personnel, being handled
in collaboration with the employees’ unions and employers’ association.
As in the current year, 2006 demand in Western Europe
is not expected to be very buoyant, because of persistently
weak clothing consumption (the real increase probably will not
exceed 0.4%), as well as the progressive shift of the garment
production “barycentre” towards Asia. In order to improve our
performance, it is becoming more and more pressing to accelerate
our future product action plan, i.e., continual product innovation,
promotion of a quality culture, improvement of service
levels and strengthening partnerships with our most important
customers.
During 2005 the textile fl ooring (rugs and carpeting) market
suffered from overcapacity, which led to lower sales volume for
many companies. This situation was aggravated by the fi nancial
problems of many producers caused by a decline in sales. In
2005 the lead players in the sector continued their corporate restructuring
plans initiated in prior years. Even though the sector
was undergoing hard times, RadiciGroup managed to improve
its sales volume, primarily due to an upturn in Great Britain, one
of its key European markets. Profi t margins in the textile fl ooring
market were curtailed by a rise in raw materials prices. The
positive results in sales were achieved thanks to the consistent
quality of our products and our selling and marketing efforts on
our customer base. During 2005 we centralized operations at
our Belgian production site, where we installed new Millitron
machines to give us more printing fl exibility, lower costs, up to
5,000 designs and 2,000 different colours, and rotary printing.
This new production capability is one of our strengths because
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we will always have at our disposal a vast portfolio of products
and solutions to offer our customers. Our goal for the future
is to improve our sales in the contract sector, in particular the
hospital segment, by taking advantage of the fl exibility of our
Millitron technology.
The energy market is steadily rebounding all over Europe.
Growing demand is fuelled by residential and small business
consumption, while demand from the principal industrial customers
is falling on account of the manufacturing crisis. The
price of energy is closely tied to the price of oil, which lately
has been skyrocketing and shaping the entire world market.
In 2005 RadiciGroup’s performance in the energy sector was
good. Our hydroelectric and cogeneration power plants serve
both our own companies and the free market, primarily in Italy.
Our customers are small manufacturers, individuals with
VAT numbers, hospitals and rest homes. Often they are the
very customers or suppliers of our chemicals, plastics or synthetic
fi bres companies. Self-production of energy to fulfi l the
needs of many of our companies allows us to be more cost
competitive compared to the past, when we purchased power
from various producers. Within our business unit we have set
up a centralized management unit, in support of all Group
companies, to deal with the issues of the Kyoto protocol, that
is, greenhouse gas emissions and related tradable quotas.
Thanks to the technology implemented in our chemical unit
in Novara, Italy, we can reduce the emissions of nitrous oxide,
which might be treated like a CO2 equivalent when Italy lays
down the law in this area. Our goal for the future is to develop
our energy production and sales capabilities. To this end, in
the immediate future we plan to construct new power stations
and revamp existing ones to increase their productivity.