Rieter reported that its sales during January-June 2018 sharply increased by 24% year-on-year to CHF 515.3 million. This increase resulted from organic growth of the Business Groups Machines & Systems and After Sales and the acquisitive growth of the Business Group Components.
The first-half order intake grew 3% to CHF 511.8 million. At the end of the first half of 2018, Rieter had an order backlog of around CHF 540 million – similar to that at the 2017 year end.
Despite higher sales in the first half of 2018, Rieter reported a lower EBIT margin. While earnings in the Business Group Components developed positively, the Business Group Machines & Systems posted a decline in profitability. The EBIT margin was 2.7% with EBIT of CHF 14.1 million (down from CHF 16.0 million).
As expected, net profits of CHF 10.9 million (2.1% of sales) matched those of the first half of 2017 (CHF 10.9 million or 2.6% of sales).
Sales in Asian countries (not including China, India and Turkey) sharply increased by 80% to CHF 200.1 million. In particular, Uzbekistan, Bangladesh, Vietnam and Indonesia developed positively. Sales in China slightly decreased by 1% to CHF 82.6 million; with the phasing out of the subsidy program in the western province of Xinjiang, the demand for machinery declined. Sales in India fell 36% to CHF 60.2 million, although demand for machinery improved significantly. Sales in Turkey increased by 19% to CHF 58.3 million. However, the positive momentum in order intake weakened again towards the end of the reporting period. Orders in the U.S. and Brazil led to sales of CHF 59.6 million in the North and South American regions, an increase of 39%.
The Business Group Machines & Systems achieved sales growth of 19% to CHF 303.9 million. The EBIT of Business Group Machines & Systems of minus CHF 14.8 million was lower than in the previous year period, despite higher sales, predominantly because of the unfavorable product mix. The order intake of CHF 297.7 million was 8% below the previous year’s level of CHF 325.2 million.
On July 18th, Rieter signed a contract to acquire 25% of Electro-Jet S.L., thus strengthening their ring spinning system. Based in Gurb (Spain), Electro-Jet generated annual sales of around 25 million euro in 2017, and employs around 135 people. Through this acquisition, Rieter has secured a long-term competitive solution in the field of flyers (roving frames). The joint development of innovative products is also planned as part of the strategic partnership. The transaction is subject to the approval of antitrust authorities.