Swiss Rieter Textile Systems provides half yearly results
Swiss Rieter Textile systems has received 40 % less orders in 2012 as compared to the same period of2011 and sales diminished by 6 %, EBIT dropped by 44 % and the EBIT margin declined from 11.7 % to 7,0 %. Also the Premium Textile Components orders slipped 38 %, sales dropped 23 % and the margin declined from 21.9 % to 9.3 %
Group orders declined by 40 % and group sales by 9 % and group EBIT by 55 %, but the overall impression is that the Group managed well the very difficult market situation and goes ahead with its announced investment program for 2012-13.
Order intake amounted to CHF 404.1 million but it has to be added that Rieter received more orders than in the second half of 2011. Sales achieved a total of CHF 487.3 million and operating profit (EBIT) declined from CHF 70.6 million to CHF 32.0 million or 7.2 % (12.8) of corporate output and net profit settled at CHF 21.9 million or 5.0 % (16.8 %) of corporate output but 2011 had a non-recurring capital gain of 42.3 million.
Global economic slowdown and uncertainties affected the markets for short-stable fibre machinery and components in China and Turkey and demand in India remained weak due to industry-specific reasons. Yarn inventories – high in summer 2011 – continued to decline. The overall margin situation at spinning mills level improved however with regional differences.
Rieter’s Spun Yarn Systems and Premium Textile Components were affected by a downturn but order intake was higher than in the second half of 2011 and was broad-based in geographical terms. The most important orders came from China, Turkey and other Asian countries including Indonesia and Pakistan. Also customers from the Near and Middle East and Africa placed further substantial orders for staple-fibre machinery and technological components, whereas orders from India remained at a very low level. Orders on stock that will be reflected in sales of 2013 reached more than CHF 515 (over CHF 840) million at the end of June 2012. Rieter maintained its strong market position worldwide and especially in China.
Regarding sales of CHF 487.3 million or -9% were booked from Turkey, China and other Asian countries and sales in China increased by 17 %, but sales in India halved. Corporate output was 20 % lower due to the decline in order volume and amounted to CHF 441.1 million.
Spun Yarn Systems recorded an order intake of CHF 330.0 million or -40 %, and sales were 6 % lower and totalled CHF 400.6 million. Rieter is one of the world’s largest suppliers of compontents for short-staple spinning mills and its Premium Textile Components Business Group recorded CHF 74.1 million of new orders or 38 % less, however business with spinning mill customers was more dynamic than that with machinery manufacturers. Sales decreased by 23 % to CHF 86.7 million and the operating profit was CHF 9.3 million or 7.9 % of corporate output.
Rieter employed at the End of June 2012 a global workforce of 4679 (4725) and due to the decline in orders Rieter reduced the number of temporary employees from 1893 to 800.
The two major trade shows in China and Turkey whre Premium Tetile Components presented important new products by Bräcker, Graf, Novibra and Suessen brands created high customers’ interests.
In view to innovation a customer has installed a large integrated system featuring J 20 airjet spinning machines, both spinning preparation and the final spinning process. The J 20 airjet spinning machine was in the focus of interest at ITMA Asia in Shanghai (PRC).
The project for global standardisation of business processes is on schedule as well as all projects in the investment programs are operationally and financially on track.
Rieter expects heterogeneous market development throughout 2012 and finds it difficult to forecast textile machinery industry developments for the current year. Also currency exchange rate development, consumer sentiment in Europe and North America, fibre consumption growth in Asia and raw material prices are unpredictable. Rieter further expects a weaker trend in sales in the second semester as compared to the first half of the ongoing year and profitability in the second half will follow volume development and due to the planned investment activity in growth projects and process improvements a further reduction of the operating profit is foreseeable and estimated at three percent.