EFI has reported record Q3 sales in its results for the three months ended 30 September 2018, but its profits have dipped slightly.

The manufacturer’s revenue climbed by 3.5% compared with Q3 2017, to $257.1m (£202m), from $248.4m in Q3 2017, but its gross profit fell to $125.5m, down by 1.5% from the $127.4m recorded in the same period last year.

For the nine months ended 30 September 2018, the company has reported revenue of $758.1m, up 5% year-on-year compared to the $724.1m for the same period in 2017.

Speaking yesterday evening (29 October) in his first results call to investors since he was appointed as EFI’s new chief executive officer earlier this month, Bill Muir said: “I’ve already come to admire EFI’s culture on multiple fronts.

“The combination of courageous innovation, technical leadership and customer care is something special and I am thrilled to be a part of it. I see an exceptional group of individuals who are passionate about driving EFI’s success and I see exciting growth opportunities ahead of us.”

EFI reported Q3 Industrial Inkjet revenue of $154.9m, up 8.4% compared with Q3 2017, Productivity Software revenue of $40.5m, up 8.9% year-on-year, and Fiery revenue of $61.8m, down 9.5% year-on-year.

“The [Vutek] h3 is selling very well and we have received exceptional feedback from our customers, but we don’t yet have the new products available to meet demand at the high-end of this market,” said Muir.

“We will get there, and we will have an industry leading product when we do. But we have to accelerate our innovation timeline.”

He added: “In the textile segment of inkjet, our innovation is on track with the introduction of Bolt in Q4, which is our one-pass system derived from the Nozomi platform.

“Bolt will be shown publicly for the first time in just a couple of weeks to over 100 customers from around the world. And while we are not expecting anywhere near the first-year revenue growth we saw with Nozomi, in the long-term Bolt is a game changer in accelerating the digital transformation of textile.”

He added Q3 saw EFI finalise the development of the white ink option for the Nozomi and that the business – which shipped seven Nozomi presses in the quarter – has raised its full-year 2018 outlook for Nozomi revenues to $70m.

“Based upon the pipeline and customer demand, we expect this momentum to continue and we anticipate revenues of $120m in 2019.”

Muir said Fiery sales were “slightly above expectations” and that the company continues to see “good demand” for its corrugated software products.

Geographically, EFI recorded full-year sales of $134.5m, up by 3.9% on Q1 2017, $88.9m in EMEA countries – up 4.5% year-on-year, and $33.7m in the APAC region, down 0.05%.

Looking ahead, Muir said EFI needs to ensure that its various businesses “are operating in a more integrated fashion”.

“EFI has grown in part by acquiring terrific technology and brands. We need to more thoughtfully integrate those businesses, so they can scale and service a global market,” he said.

“We also need to improve our manufacturing processes so we can meet demand in a cost-effective repeatable manner. These are just a few of the areas where I see opportunity to instill greater discipline so EFI can scale to meet its potential.”

Details on outlook for 2018

The order intake recorded by the Rieter Group in the first nine months of 2018 was down by 2% compared to the prior year period. The cumulative order intake was CHF 749.8 million. In the third quarter of 2018, order intake was CHF 238.0 million (Q3 2017: CHF 269.7 million).

In the Business Group Machines & Systems, order intake fell to CHF 433.4 million, a reduction of 12% compared to the first nine months of the previous year (2017: CHF 490.1 million).

In the third quarter of 2018, Machines & Systems received orders worth CHF 135.7 million (Q3 2017: CHF 164.9 million). In the Asian countries (excluding China, India and Turkey), especially in Vietnam, order intake increased compared to the third quarter of 2017. In China, development was stable. For Indian customers, increasing challenges in financing of orders led to a weakening of demand in the third quarter. In Turkey, demand was very low.

The Business Group After Salesrecorded a decline in order intake compared to the first nine months of the previous year, from CHF 115.8 million to CHF 111.3 million (-4%).

Order volumes in the third quarter of 2018, which totaled CHF 36.3 million, were lower than in the prior year period (Q3 2017: CHF 38.0 million). The spare parts business developed positively. However, the lower volume in the machinery business led to a decline in installation services. In the third quarter of 2018, After Sales also recorded a significant decline in order intake from Turkey compared to the previous year.

The Business Group Components? including the acquisition of SSM Textile Machinery ? increased order intake to CHF 205.1 million (2017: CHF 159.1 million), a growth of 29%.

In the third quarter of 2018, order intake was CHF 66.0 million (Q3 2017: CHF 66.8 million). For Components, compared to the prior year period order intake in the key markets of China, India and the Asian countries (excluding China, India and Turkey) was generally stable in the third quarter of 2018.

The global apparel consumption is forecast to grow at a CAGR of 4 per cent and reach $2.6 trillion by 2025. Market growth rate of developed countries is expected to slowdown whereas large emerging economies will be the key drivers of growth. China and India, with a large population base, will be the fastest growing markets in the segment.

Apparel consumption in 2017 is estimated to at $1.8 trillion, which formed around 2 per cent of the world GDP of $79.3 trillion. EU-28 was the largest apparel consumer market worth $400 billion, which was followed by markets of the USA, China, and Japan. These top four markets together constituted approximately 59 per cent of the global apparel consumption. The next four largest markets were India, Brazil, Russia, and Canada, accounting for an additional 11 per cent share while the rest of the world held a 30 per cent share.

It is expected that over the next decade, domestic apparel market of India and China will attain high growth rates of 11 per cent each, to add a cumulative market size of $393 billion by 2025.

Adverse weather and water scarcity have hit cotton yields in the key growing regions of Gujarat, Maharashtra and Karnataka. Due to the dry and hot weather, kapas bolls opened in the early stages this year. Farmers are getting a higher price for their crop at Rs 5,300 per quintal as against Rs 4,500 reported around the same time last year.

Record-breaking cotton arrivals were registered in October, mainly due to the absence of rain during the last 60 to 70 days in the entire cotton belt of India. Cotton consumption during October 2018 has been estimated at 27 lakh bales, while the export shipment of cotton in October 2018 has been estimated at 2.50 lakh bales.

Stock at the end of October 2018 is estimated at 20.63 lakh bales, including 16.53 lakh bales with textile mills, while the remaining 4.10 lakh bales are estimated to be held by CCI and others (MNCs, traders, ginners, etc). The carryover stock at the end of the 2018-19 season is estimated at 15.25 lakh bales.

Domestic consumption for the season has been estimated at 324 lakh bales while exports are estimated to be 51 lakh bales, 18 lakh bales lower compared to the 69 lakh bales last year.

Bangladesh is likely to get duty-free access to the Eurasian Economic Union (EAEU). This applies to Bangladesh's main export items like readymade garments, leather and ceramics. Members of the EAEU, launched in 2015, are Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.

Bangladesh has proposed including goods from Chapters 30, 61, 62, 63 and 64 of Harmonized Commodity Description and Coding System in the list of goods originating from least developed countries which are eligible for tariff preferences during its importation into the territories of the EAEU countries. Trade between the EAEU member states has risen sharply. Mutual trade in 2011 was 33.9 per cent more than in 2010.

Cambodia too wants the Eurasian Economic Union to include more Cambodian products like garments, shoes, bicycles and sugar in its tariff scheme. Currently about 900 Vietnamese exporters are active in the EAEU market, with key exports including seafood, coffee, rubber, tea, rice, apparel, woodwork products and confectionery.

In fact, Vietnam-Russia trade makes up 90 per cent of total trade revenue between the country and the EAEU, while trade between Vietnam and Belarus and Armenia in 2016 even recorded decreases from 2015. The reason for this is that Vietnam has a long-time trade partnership with Russia and an inadequate understanding about other EAEU markets.

India’s cotton exports grew 26.8 per cent from April to September 2018. The ongoing trade war between the US and China would possibly open up new opportunities for cotton textile exports from India. Alternate schemes for promoting exports are being devised which would improve the competitiveness of the products. These alternate schemes are expected to be WTO compatible.

India is the second largest textile exporter in the world. Today, cotton yarn and fabric exports account for over 23 per cent of India’s total textile and apparel exports. Banking institutions have been instructed to give in-principle approvals to loans in 59 minutes for small and medium units.

There is a suggestion that cotton yarn and fabrics be included under the ROSL scheme as these products also face the incidence of state levies as in the case of made-ups and garments. The ROSL scheme currently covers only state levies. However, there are also central levies, the burden of which exporters have to bear. To make exports competitive, these central levies are also sought to be refunded under a new scheme.

Other proposals are to include cotton yarn under the MEIS and to hike the MEIS for fabrics from two per cent to four per cent.

Micro, small and medium enterprises (MSMEs) in India have been granted a host of benefits like a portal which is empowered to grant them loans of up to a crore in less than an hour.Access to credit, access to the market, technology upgradation, ease of doing business, and a sense of security for employees are some of the other benefits.

It is expected these will go a long way in mitigating the problems of small businesses. GST-registered enterprises will get a two per cent rebate on an incremental loan of up to a crore. The interest subvention on pre and post shipment credit for exports by micro, small and medium enterprises has been increased from three per cent to five per cent.

A Rs 6000 crore package has been announced for technological upgradation of these enterprises. About 20,000 hubs and 100 tool rooms will be developed around the country for this. Mandatory sourcing by PSUs from small enterprises has been increased to 25 per cent from the previous limit of 20 per cent.

Pucblic sector companies have to buy at least three per cent of their purchases from women entrepreneurs. All companies with a turnover of more than Rs 500 crores have to join the Trade Receivables e-Discounting System so that MSMEs don’t face troubles in cash flow.

The like-to-like sales of Fast Retailing’s Uniqlo chain in October 2018 plummeted 10 per cent as did its total sales figure. The higher-than-expected temperatures in Japan dented demand for its autumn/winter collection. It also seemed to have depressed customer footfall and the number of items each shopper who did buy actually went home with.

It’s become almost a tradition that October causes headaches for fashion retailers. In 2017, a number of otherwise-buoyant businesses around the world saw their autumn season turning negative as summer-like temperatures continued while their coats and knits appeared on store shelves and stayed there.

And the extent of the impact of the ‘wrong’ temperatures can be seen clearly when chains that are otherwise-successful, such as Uniqlo, suffer as much as those who are struggling generally.

Last year marked the seventh year of DyStar’s journey towards reducing production footprint by 20 per cent for every ton of production. This goal encompasses the resources used for production including energy, water, and raw materials as well as addresses their corresponding outputs – greenhouse gas emissions, waste and wastewater.

Intensive efforts are underway to ensure that the company’s less efficient acquisitions are provided the essential support to align with the rest of the company. As a part of DyStar’s long-term goal to imbed sustainability across the industry, the company will also be focusing on expanding its sustainability services. This includes the opening of more Texanlab offices, an ISO 17025 certified, specialised testing laboratory across South Asia to provide end-to-end solutions throughout the whole supply chain.

To encourage and facilitate sustainable practices among its suppliers, DyStar also conducts sustainability-related supplier surveys. To help meet clients’ demand and demonstrate its responsibility and care in the food and beverages industry, DyStar is implementing a supplier diversity program to support businesses in the US that are at least 51 per cent owned by minority groups, women, veterans and people with disabilities.

The latest latest Better Buying survey reveals apparel brands are hammering suppliers on price harder than ever. Prices received for orders do not cover the cost of social, environmental, quality, and other compliance requirements. Retailers and brands don’t realize increased financial pressure on suppliers raises the risk of business failure, supply disruption, and environmental and human catastrophe. They don’t realize it is impossible to make tangible improvements to things like living wages and working conditions if they do not ease the financial pressure placed on suppliers. Better Buying is a global initiative that provides retailers, brands, and suppliers a cloud-based platform to obtain data-driven insights into purchasing activities. The latest dataset shows that 55 per cent of suppliers had been affected by high-pressure cost negotiation strategies.

One way forwards is retailers and brands stop focusing on reducing costs while ignoring the implications on suppliers. The use of questionable negotiation strategies has also increased. Some of the negotiation strategies include: not paying for samples, not paying on time or not paying the full price as indicated in a purchase order. Fewer than 80 per cent of orders received from retailers or brands are priced to cover the cost of social, environmental, quality, and other compliance requirements.

North American retailers forecast more consistently and accurately than European retailers, which enhances the ability of suppliers to plan their production. What’s needed is for retailers and brands to work on streamlining their operations, create stronger partnerships with suppliers and monitor their efforts over time.