COVID-19 Has Major Impact on Rieter’s H1 Business

Rieter reported that the COVID-19 pandemic led to a market situation where demand for the goods and services of all of its three business groups decreased drastically during January-June 2020.

The business group of Machines & Systems was affected by the deferral by customers of investments and scheduled deliveries. Demand for wear & tear and spare parts sharply declined due to the suspension of production at many spinning mills around the world. This is reflected in the low order intake and sales of the business groups of Components and After Sales. This exceptional market situation gave rise to losses in all three business groups in the first half of 2020.

The group’ order intake during January-June 2020 fell 34% from the year before to CHF 250.7 million. The order intake for Business Group Machines & Systems declined by 34% to CHF 129.2 million, it also decreased by 34% for Business Group Components to CHF 76.7 million, and by 32% for Business Group After Sales to CHF 44.8 million. The order backlog as of June 30, 2020 was around CHF 490 million, as compared with CHF 295 million a year ago. Cancellations were less than 5%.

Sales dropped 39% to CHF 254.9 million. The sales of Machines & Systems sharply decreased by 46% to CHF 119.9 million, due to the low order intake in the first three quarters of the previous year and deferred deliveries. The sales of Components declined by 29% to CHF 87.7 million, and by 34% for After Sales to CHF 47.3 million.

With the exception of Turkey, sales in other regions were affected by the COVID-19 pandemic. January-June 2020 sales in India decreased by 73% to CHF 17.7 million due to lockdowns, along with those in China by 49% to CHF 37.0 million, and Asian countries excluding China, India and Turkey by 47% to CHF 87.4 million. Sales in North and South Americas declined by 44% to CHF 30.9 million, together with sales in Africa by 20% to CHR 7.2 million. Meanwhile, sales in Europe rose 2% to CHF 23.6 million. With sales of CHF 51.1 million, Turkey showed a significant improvement from the previous year’s extremely low level of CHF 24.5 million, which is also associated with the innovations that Rieter presented at ITMA 2019 in Barcelona.

Already implemented cost cutting measures contributed to a reduction in Selling, General and Administrative (SG&A) expenses of around CHF 10 million. Nevertheless, the lower volumes resulted in losses of CHF 55.0 million (before restructuring charges: CHF 46.9 million) at the EBIT level, and net losses of CHF 54.4 million.

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