Saturday, December 7, 2013

Tencel in Courtaulds Annual Reports (1981-90)

The Courtaulds Annual Reports contain concise statements of the progress of the Tencel development year-by-year.  These statements have been pasted into a series of 10 posts which can be read in sequence by scrolling down from here:

1981-82 - under "Research"
Technology is being developed in the use of novel solvents for the conversion of woodpulp to regenerated cellulose products, leading to lower effluent levels and reduced energy consumption in the manufacturing process.
1982-83 - under "Courtaulds Research"
 A pilot plant incorporating a process which directly dissolves cellulose ran successfully towards the end of the year.  First indications are that the process may provide a low cost route to novel types of fibres and films.
1983-84  - under "Courtaulds Research"
Development of the new process for directly dissolving and regenerating cellulose continued.  Samples of fibres, of fabrics made from them and of transparent films have been produced, all with interesting properties.
1984-85 - Under "Research"
The research progamme into the production of new fibres and films by direct dissolution and regeneration of woodpulp continued successfully.
1985-86 - under "Research"
The development of a direct solvent spinning system for cellulosic fibres and films continued successfully.  An expanded pilot plant will be available by the end of 1986.
1986-87 -  under "Fibres"
Research expenditure was again at a high level for all fibres, but especially in the development of the new solvent-spun cellulose fibre.  Its pilot-plant came on stream and good progress has been made on the next stage of production which will make commercial quantities available.
               - under "Research"
The programme to develop a new range of cellulosic fibres using a new direct solvent spinning system continued with the successful commissioning of an expanded pilot-plant and with engineering developments for further expansion.  The process gives significant improvements over existing fibre properties and environmentally.
1988-89 - under "Fibres"
The first commercial scale Tencel plant was commissioned during the year. Its capacity is modest and design work on larger units is now well underway.
                - under "Research"
Substantial work was undertaken to transfer expertise learned on the pilot the scaled up plant Grimsby.
1989-90 - under "Fibres and Films"
The new solvent spun fibre Tencel continued to progress well.

N.B.  (1) Tencel is not mentioned in the "Research and Technology" section in 89-90.
        (2) The Textiles business had been demerged and was no longer part of the Courtaulds Group.
        (3) Saiccor Pulp (the best pulp for making Tencel) had been sold in 1988 to fund acquisitions of US sealants and adhesives.
        (4) Bonded Fibre Fabric, the nonwoven business which had been modernised at the end of the eighties, was sold at the end of March.  (Tencel was showing great promise in nonwovens)
        (5) Prior to 1989-90, "Fibres" came immediately after the "Chairman's Statement" at the front of the Annual Report.   Here "Fibres" comes last after Coatings, Performance Materials, Packaging and Chemicals.  Furthermore it has been merged with the "Films" used in packaging - cellophane, polypropylene and polyethylene.  Maybe the continued development of Tencel clashed with the emerging strategy of getting out of Fibres and Textiles and was therefore downplayed.

Thanks to Ted Richards who provided the full set of Courtaulds Annual Reports from 1970 to 98

Tencel in Courtaulds Annual Reports (1990-91)

More Tencel extracts from the Courtaulds Annual Reports.  From this point on, Tencel project news becomes an increasing factor in Courtaulds share price:

under "Chairman's Statement" 
...Significant examples (of investing for organic growth) during the year have been further investment commitments to the new Tencel fibre... (Christopher Hogg will be replaced as CEO by Sipko Huismans on Aug 1st 1991)
under "Fibres and Films"
Market development of Tencel, the new solvent spun cellulose fibre, continued in the US, Europe and Japan, and work started on the first commercial scale Tencel plant, adjacent to the existing viscose rayon factory in Mobile.  

Tencel is not mentioned under "Research and Technology" but some Tencel pipework appears in a full page photo (above) which also features Anne Ronchetti in a hard-hat.  The caption reads The product of sustained and successful work by Courtaulds Research, the first full-scale Tencel solvent spun cellulosic fibre plant is now under construction in Mobile, Alabama. Offering a huge advance environmentally, the project involves close collaboration between Courtaulds Fibres, Courtaulds Research and Courtaulds Engineering, both in North America and, as here, at the pilot plant in Grimsby England.  N.B. the flow sheet in the photo is labelled Tencel Mobile - SL1.

Friday, December 6, 2013

Tencel in Courtaulds Annual Reports (1991-92)

under "Chief Executives Review"
In pursuit of organic growth we have made good progress in Tencel, our new cellulosic fibre, and the first commercial plant, in Mobile, Alabama, is due to be completed and start operation in mid-1992.
under "Fibres and Films"
Tencel, the new solvent spun cellulosic fibre developed by Courtaulds Research, continued to make excellent progress, with favourable test marketing results in the USA, Japan and Europe.
under "Human Resources, Research and Technology"
...for over a decade now, many of the Group's R&D programmes have been devoted to the improvement of environmental performance...and the Tencel process ... with virtually no effluent [is a] current example.

Thursday, December 5, 2013

Tencel in Courtaulds Annual Reports (1992-93)

In "Chairmans Statement"
...Best of all, Tencel came of age with the commissioning in Mobile Alabama of the first major plant.  The origins of Tencel go back to the late 1970's and over the years since then those responsible for its development have nurture it with a skill and confidence which have owed much to Courtaulds massive experience with cellulosic fibres and technology since the start of the century. Tencel is now a product with a very exciting potential...
In "Chief Executives Review"
However the most important event of the year has undoubtedly been the successful start-up of the Tencel plant in Mobile, formally opened on 2 December 1992. Initial market reception of the product matches, or even exceeds, expectations and a key decision in the coming year will be the timing and scope of investment in further capacity in this core area.  The credit due to all those who have made this success possible cannot be overstated.
In "Fibres and Films"
Tencel, the new solvent spun cellulosic fibre, was commissioned on schedule at the Courtaulds Fibers facility in Alabama.  By the end of the year it was running at 80% of nameplate capacity, and such was the interest in the fibre that demand outstripped supply.  Tencel is capable of producing effects which are not available in other fibres and this, combined with high processing efficiencies is stimulating great interest amongst innovative customers.  In the final quarter, 50% of Tencel fibre was exported, principally to Japan, and Tencel was operating profitably.  

In Japan a consortium of textile mills focussed the development of Tencel into fabrics for fashion apparel.  A key feature has been the wide use of finishing techniques to develop a variety of fabrics with unique aesthetic effects.  Market reaction has been excellent and Tencel is leading the 1993 Spring/Summer collections.

N.B There was no "Research and Technology" section in this report.

Tencel in Courtaulds Annual Reports (1993-94)

- In "Chairmans Statement" (Sir Chris Hogg)
The company's balance sheet is sound and we are well placed for funding capital requirements in the foreseeable future, including those for Tencel and the Far East expansion.
-In "Chief Executives Review: Strategy" (Sipko Huismans)
We brought our new Tencel fibre into full production and turned it into a commercial success.  In November we announced a second US plant, more than doubling capacity, and we hope to make a start on a European plant in the present financial year.
-In Finance Directors Review (Michael Pragnell)
...expenditure plans for the coming year remain at the 1993-94 level*: in addition the next phase of US investment in Tencel is already underway.
*£143m representing 1.7 times depreciation.

-In "Fibres and Chemicals"
The common theme of these businesses is the transformation of cellulose and other material into fibre or film and the use of R&D and market development to create product differentiation.  Tencel, the world's first solvent spun fibre, with exceptional versatility and environmental compatibility, is an outstanding example.
Tencel made a notable contribution to profit in 1993/94 despite an increased level of investment in research and market development.  Manufacturing continuity and yields improved throughout the year.  Dependence on the Japanese market lessened as both US and European demand increased, and by the end of the year sales were equally balanced between all three geographic regions. Construction of a second Tencel plant in the US, which will more than double capacity, commenced in January 94.  It is expected to be on stream by mid-95.

More to come...

Wednesday, December 4, 2013

Tencel in Courtaulds Annual Reports (1994-95)

In "Chairman's Statement"  
... we have continued to press on with our now well-established basic strategies, particularly the development of Tencel. Building capacity for Tencel has raised our capital expenditure from one-and-a half times depreciation to more than twice. Gearing has risen from 3O% to 37%, but interest cover remains comfortable.  Notwithstanding the requirements through the build-up stage of Tencel, the Board has continued its record of at least maintaining the real value of the dividend. Our plans for the current year, assisted by the recently announced breakthrough in Tencel technology, do not foresee a need to call on shareholders for cash.
In "Chief Executive's Review"
We entered the next phase in the development of Tencel with the announcement of a European plant, to be built at Grimsby in the UK.  A breakthrough in technology enable us to redesign both this plant and the second Mobile plant for much higher output levels, so greatly increasing the productivity of the capital invested.
Tencel had a slow first half of the year as the start up and development costs overtook profits.  By the second half of the year, total revenue was again exceeding total costs.  Over the next two years we shall make a major step up in the size and scope of the Tencel business.  Such developments require heavy upfront investment.  The improvements in productivity have been remarkable however.  They hold much promise for the later stages of the Tencel development programme by when we shall have established a major new fibre process from a natural and self-replenishing polymer.
In "Finance Directors Review" (Howard Evans)
The significant capital and revenue investment in Tencel and the Far East continued to depress the Return on Capital Employed which showed a further reduction to 17%.
In "Fibres and Chemicals"
Demand for and interest in Tencel continued to be very strong with seasonal factors again emphasising the second half relative to the first.  Trading margins were encouraging, but the increase in marketing expenses and research to support the planned development programme more than offset this contribution.  The first US facility is now running ahead of the design specification.  The second of the US facilities is on schedule and should be commissioned in the final quarter of 1995.  Significant progress continues to be made in improving capital productivity and further breakthoughs were achieved in 1994/95
In Research and Product Development
...a high proportion of [Fibres] development work is focussed on Tencel.  Process improvements have significantly reduced the capital cost per tonne and there has been considerable progress both in improving the processability of the fibre and in developing its aesthetic characteristics.

Tencel in Courtaulds Annual Reports (1995-96)

This report contains Sir Christopher Hogg's excellent summing up of the project prior to his departure.

Inside Front cover...
Our strategic objectives are to build Tencel, our pioneering 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...
Demand for Tencel exceeds capacity.  Second plant opened; construction of third plant accelerated.

In Chairman's Statement (Sir Christopher Hogg)...
...and we sold more than 25,000 tonnes of Tencel to an increasingly receptive and varied group of customers around the world. 

Of these forward indicators, it is the evolution of Tencel which promises the most. Even at this stage of its development, 18 years after the start of serious work on it in our research laboratories, it is difficult to judge how far and how fast it will progress. But I believe Tencel will be as significant in shaping Courtaulds future in the 21st century as was viscose rayon, with which Courtaulds pioneered the world man-made fibre industry, at the start of the 20th.

The project (then called Genesis) to create a new cellulose fibre process was first referred to in the Report & Accounts for 1981/82. Shareholders might well ask, therefore, whether we could not have reached the present point much earlier, Perhaps; but we are well ahead of our only known competitor. And the fact of the matter is that timescales for large and genuinely innovative projects are long. lndeed, they are often so long from conception to payback that they would never get started, even with perfect knowledge of the future, if investment was determined solely on the basis of discounted cash flow.

One way of looking at Tencel is that we have already invested more than £300m in a long and risky journey and we are still some way off a proper return. Another way of looking at it, however, is that the Company can go into the next century having found what it has been looking for since the 1940s, namely a secure basis for long-term growth - a basis, furthermore, which is absolutely rooted in what Courtaulds has been doing for most of its history. lt is the task of every generation of management to take the best things in its inheritance and shape them so as to survive healthily the 'creative destruction' of the capitalist process. Tencel is fully in keeping with that endeavour.

In Chief-Executive's Review (Sipko Huismans) ...
There was also some good news on the fibre front. First and foremost was that Tencel has now passed the commercial lift-off phase. Demand, now and anticipated for the next few years, exceeds our planned capacity. That is in spite of the fact that we have now commissioned the new 25,000 tpa second phase Mobile plant, The Grimsby plant programme has now been accelerated and the planned phases one and two will be built simultaneously. Whilst this is already a daunting technological challenge it would remain only that, but for the progress being made in the market place - both technical and commercial. ln this respect we owe a debt of gratitude to those early customers in all three continents, who did so much to overcome the initial constraints in fabric finishing capacity. 

lt is one of the most gratifying aspects of the entire Tencel story to see equipment suppliers bring out special machinery to deal with Tencel - just as happened for polyester in earlier years. I have no doubts that if the rate of progress over the last five years is sustained, Tencel
can be one of the world's major man-made fibres in the 2lst century. As with viscose earlier this century, Courtaulds will have pioneered this first lyocell fibre and should be the major player in lyocell for many years to come.

In Finance Directors Review (Howard Evans)...
Capital expenditure at £177m was again over twice depreciation and in line with last year. ln addition to maintaining the normal levels of capital expenditure in the Company's established businesses, this year's expenditure includes significant investment in the completion of the second Tencel plant at Mobile and the expansion programme in the Far East. Expenditure plans for 1996/97 are a little higher than 1995/96. The major projects in 1996/97 will include the construction of the new Tencel plant at Grimsby...

The significant capital and revenue invested in Tencel and the Far East over the last few years have continued to depress the Group's return on capital employed which was again 3.6% lower than it would have been if these activities had been excluded.

In Business Review (David Wilkinson)...
Demand for Tencel, now in profit despite development costs, was very encouraging. We opened our second plant, more than doubling our capacity, and accelerated the investment programme.  Together with new technology this will give us some 100,000 tonnes of Tencel capacity by early 1998.

The development of the Tencel market accelerated in 1995/96 as work with customers in Japan, USA and Europe bore fruit, and Tencel broke through into profitability. We were reassured by the pattern of the demand, which was widely spread, both in terms of end use and of geography. By the end of the year demand was so strong that the extra capacity promised by the second US plant, also at Mobile, was badly needed. Unfortunately, bad weather caused delays to the start-up of the new plant and its first line could not
come on stream until mid-February. Subsequently, production reached anticipated levels rapidly, with excellent product quality. The new plant's second line started up in May 1996 (sic - see photo caption), on schedule.

As a consequence of the very strong demand for Tencel, and of our confidence that this would be maintained, the original plans for the third plant, at Grimsby, were modified. The facility will now be built in one single stage with a capacity of 42,000 tonnes. Together with the retrofitting of new technology to the Mobile facilities, this will take our total capacity to almost 100,000 tonnes by early 1998. We believe that this rapid expansion will enable us to maintain our marketing, technical and cost advantages, and reinforce our
competitive position.

In Research, Technology and Development (Eryl Morris)...
Tencel and its generic family, lyocell, are still only in an early stage of development some 18 years after work began. With such a radical method of manufacture, resources continue to be devoted to the improvement of process performance and capital productivity, with the objective of reducing capital cost per annual tonne of production. ln terms of the product itself, the exploitation of lyocell is still in its infancy, and the scope for developing it to meet a wide range of applications, from high fashion to industrial uses, is very substantial. The research and development work needed to achieve this is essentially long-term, extending into the foreseeable future.

Tuesday, December 3, 2013

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.

Monday, December 2, 2013

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

Sunday, December 1, 2013

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.