• Order intake up 7% on previous year; orders amounting to CHF 401.6 million booked in fourth quarter 2019 (4th quarter 2018: CHF 119.0 million)
• As expected, sales significantly down on previous year, falling by 29% to CHF 760 million
• EBIT margin of 11.2% and net profit of 6.9% of sales, non-recurring profit contribution from sale of real estate in Ingolstadt (Germany)
• Proposed dividend of CHF 4.50 per share
In financial year 2019, Rieter recorded an order intake of CHF 926.1 million, which was 7% up on the prior-year period (2018: CHF 868.8 million). This development is attributable to a strong fourth quarter, in which Rieter booked orders totalling CHF 401.6 million (4th quarter 2018: CHF 119.0 million). At the end of 2019, the company had an order backlog of about CHF 500 million (December 31, 2018: about CHF 325 million).
In 2019, Rieter Group sales amounted to CHF 760.0 million (2018: CHF 1 075.2 million), which corresponds to a decrease of 29 % compared to the previous year.
EBIT Margin, Net Profit and Free Cash Flow
Rieter generated an EBIT margin of 11.2 % or CHF 84.9 million (2018: 4.0 % or CHF 43.2 million). This includes the non-recurring profit from the sale of real estate in Ingolstadt in the amount of CHF 94.5 million. As a result of the capacity adjustment and cost reduction measures, the number of employees decreased by 11 % to 4 591 (December 31, 2018: 5 134).
Net profit rose to CHF 52.4 million (6.9 % of sales) and thus was significantly higher than in the previous year (2018: CHF 32.0 million or 3.0 % of sales). The contribution from the sale of real estate in Ingolstadt had an impact of CHF 67.2 million (EUR 61.6 million) at the net profit level. Free cash flow in 2019 was CHF 42.3 million (2018: CHF 63.6 million). Net liquidity rose to CHF 162.1 million (December 31, 2018: CHF 150.2 million). The equity ratio as of December 31, 2019, was 47.8 % (prior year balance sheet date: 44.6%).
Sales by Region
The reporting year 2019 was characterised by the trade conflict between the USA and China, excess capacity in the spinning mills as well as political and economic uncertainties in regions of importance to Rieter. Against this background, sales in the Asian countries (without China, India and Turkey) amounted to CHF 293.5 million(-32%). In India, sales declined by 32% to CHF 99.9 million. Rieter’s sales in Turkey amounted to CHF 66.8 million (-57%).
At CHF 136.7 million, sales in China were 8% down on the previous year. In North and South America, sales declined only slightly to CHF 105.8 million (-3%). In the Europe region, sales fell by 13% to CHF 41.2 million, while in the Africa region, Rieter recorded a decline in sales to CHF 16.1 million (-55%).
Business Groups
In the Business Group Machines & Systems, sales of new machines were at a very low level in the 2019 reporting year, falling by 42% to CHF 389.0 million
(2018: CHF 669.3 million). The business group posted an EBIT of CHF -50.8 million (2018: CHF -9.7 million). This was due to the lower volume and expenditure on the ongoing innovation program. Machines & Systems received an order intake worth CHF 562.8 million, an increase of 20% compared to the previous year (2018: CHF 468.3 million). This is primarily due to the fourth quarter of 2019, in which an order intake worth CHF 307.0 million was booked. This figure includes orders from Cotton & Textile Industries Holding Company, Cairo (Egypt), for the delivery of ring and compact spinning systems, including installation services, of around CHF 165 million.
The Business Group Components recorded a drop in sales of 12% to CHF
230.2 million compared to the prior-year period (2018: CHF 262.3 million). This is attributable to the reluctance to invest in the markets, which primarily affected the business activities of SSM and Suessen. The wear and tear parts business continued at a normal level. At CHF 10.7 million, the business group generated a significantly lower EBIT compared to the previous year (2018: CHF 32.5 million). In addition to lower sales to third parties, this is due to the decline in sales from deliveries to Machines & Systems, which fell by 39 % to CHF 52.6 million (2018: CHF 86.2 million). At CHF 222.0 million, order intake at Components was down by 15 % compared to the previous year (2018: CHF 260.1 million), primarily in the Business Units SSM and Suessen.
With sales of CHF 140.8 million, the Business Group After Sales recorded a slight decline of 2 % compared to the previous year (2018: CHF 143.6 million). This is mainly attributable to the lower volume in the machine business and the associated lower demand for installation services. In the spare parts business, After Sales generated sales at the level of the previous year. The business group increased EBIT to CHF 23.2 million (2018: CHF 21.3 million). With an order intake of CHF 141.3 million, After Sales also recorded an increase of 1 % compared to the previous year (2018: CHF 140.4 million).
Innovations successfully launched
At ITMA 2019 in Barcelona (Spain), Rieter presented a comprehensive range of innovations for all four end spinning systems established on the market. The innovations aim to reduce raw material, energy and labour costs while increasing productivity and flexibility in the spinning mill. The strong demand for innovative solutions since the ITMA 2019 underlines Rieter’s technology leadership. Thus, the company has achieved another important milestone in the implementation of the company strategy. The innovation programme continues.
Ingolstadt Location
Rieter completed the sale of real estate in Ingolstadt (Germany) to GERCHGROUP AG of Düsseldorf (Germany) on September 13, 2019, which resulted in a one-time contribution of EUR 61.6 million at the net profit level. The Rieter employees in Ingolstadt will move into a new building in 2021.
Start of Construction of Rieter CAMPUS at the Winterthur Location
Rieter applied for a building permit for the Rieter CAMPUS at the end of 2019. The Rieter CAMPUS comprises a new Customer and Technology Center as well as an administration building. The Board of Directors of Rieter Holding Ltd. has decided provisionally to start construction work on the Rieter CAMPUS during 2020, subject to receiving the legal building permit in good time.
Dividends and Dividend Policy
At the Annual General Meeting on April 16, 2020, the Board of Directors will propose a dividend of CHF 4.50 per share.
Changes to the Group Executive Committee
Since May 1, 2019, Rieter Group has two new Group Executive Committee members: Kurt Ledermann is Chief Financial Officer and Rico Randegger is Head of the Business Group After Sales.
Board of Directors and Annual General Meeting
At the 128th Annual General Meeting held on April 4, 2019, the shareholders approved all motions proposed by the Board of Directors. The Chairman of the Board Bernhard Jucker and the Directors This E. Schneider, Michael Pieper, Hans-Peter Schwald, Peter Spuhler, Roger Baillod, Carl Illi and Luc Tack were confirmed for a further one-year term of office. This E. Schneider, Hans-Peter Schwald and Bernhard Jucker, the members of the Remuneration Committee who were standing for election, were also each re-elected for a one-year term of office.
Outlook
As already reported, Rieter expects sales and earnings in the first half of 2020 to be significantly below the prior year level. The positive market sentiment in the fourth quarter of 2019 has continued in the first two months of 2020; hence sales and operating results in the second half of 2020 are expected to be above the prior-year level. The capacity adjustment program announced in January 2020 is proceeding according to plan.
The effects of the Covid-19 virus, which cannot be definitively determined at the present time, will be relevant for the year as a whole. Rieter has taken the appropriate precautions to protect employees and to keep the promises made to customers wherever possible.