Page 13 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

Accordingly, the investments are currently aimed at the industrial segment, including plant and
equipment investments at the Hof location. The Italian sales and production site in Milan, which
was acquired by the TENOWO Group in autumn of 2018, adds a tremendous amount of value to the
strategic business sector medical thanks to its product and market expertise.
Performance in the traditional interlinings segment, which comprises all apparel applications,
remained stable. This market has been in decline in Europe for years now, but TENOWO has kept its
market shares stable throughout this time. This sector currently only makes up around 8% of the
total sales within the TENOWO portfolio.

Unit sales and sales in the various segments, above all in the international locations, made
continuous machine capacity utilisation impossible. The shift in the product mix at the German
locations and the implementation of a range of investment projects led to a change in cost
structures. A variety of process optimisation programs were launched in 2018 that already bore
fruit during the year under review and led to substantial efficiency gains in China in particular.

Alongside the completion of the administrative building and technical centre in Mittweida, spending
centred on both production locations in Hof, where investments were made in replacements and
expansions as well as building renovations. Some of these projects have been completed, while
others will continue to have an impact through the 2020 and 2021 fiscal years.
Overall, TENOWO performed well in a difficult market environment in 2019 and was able to push
ahead with its strategic direction. However, TENOWO was unable to maintain the previous year’s
sales performance due to the market situation.

NEUTEX Division
In 2019 sales in the NEUTEX division, which produces and supplies decorative fabrics, interior
sun protection solutions and technical textiles, fell by 11.8% to EUR 13.4 million (prior year:
EUR 15.2 million); unit sales dropped accordingly. All of the divisions in the domestic market
and the export markets were affected by the sales slump. As early as the first half year sector
performance data clearly indicated a downward trend in unit sales, sales and apparel and
textile production figures. The decline persisted throughout the entire 2019 fiscal year. Business
development at NEUTEX was equally impacted by a less dynamic core business. Sustained import
pressure from Asia aggravated the business situation even further. The weak sector made it difficult
to position new products in the market, which delayed the establishment and expansion of market
shares, above all in the SUN and CONTRACT divisions. A slump in demand for READY products also
affected ready-mades in Romania. However, Textor’s tremendous flexibility has enabled it to quickly
respond to the changes in capacity utilisation and adapt accordingly.
On the operational front, performance enhancing programmes that had been initiated were
continued while observing strict cost discipline. Nevertheless, the resulting savings were unable
to make up for the decline in sales and the corresponding underutilisation in production, negatively
impacting the results of operations and earnings.

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