Rieter Reports Drops in Sales & Profits

The Rieter Group closed the 2019 financial year with considerably lower sales than in the previous year.
According to the first, unaudited figures, total sales fell 29% from the previous financial year to CHF 760.0 million. Meanwhile, the order intake rose by 7% to CHF 926.1 million.
According to the company, 2019 was characterized by the trade conflict between the U.S. and China, excess spinning capacities, as well as political and economic uncertainties in regions of importance to Rieter.
The Business Group Machines & Systems posted a sales decline of 42% to CHF 389.0 million, as sales of new machines were at very low levels.
In the Business Group Components, the 12% decline in sales to CHF 230.2 million is also due to a lower order intake as a consequence of reluctance to invest. This affected the business activities of SSM and Suessen. The wear and tear parts business continued at a normal level.
The 2% year-on-year decline in sales of the Business Group After Sales is mainly attributable to the lower volume in the machinery business (low demand for installation services).
The market situation was also reflected in sales in India, Turkey and other Asian countries excluding China. Sales in China as well as North and South Americas remained at the previous year level.
The Business Group Machines & Systems posted an order intake of CHF 562.8 million, an increase of 20% compared to the previous year. This is primarily due to the fourth quarter of 2019, in which an order intake of CHF 307.0 million was booked. This figure includes orders from the Cotton & Textile Industries Holding Company, Cairo (Egypt), for the delivery of compact and ring spinning systems in the amount of around CHF 165 million.
At the end of 2019, Rieter’s order backlog amounted to about CHF 500 million, as compared with about CHF 325 million at the end of the previous year.
Sales and earnings in the first half of 2020 are expected to be significantly lower than the previous year due to the low order intake in the 2019 financial year. The Rieter Group is planning further measures to adjust capacities due to structural changes in the market situation. This concerns the locations in Winterthur (Switzerland), Suessen and Gersthofen (both Germany), Enschede (Netherlands) and Boskovice (the Czech Republic).
In the Business Group Machines & Systems, the assembly of machines will be discontinued in Winterthur, which is expected to affect 87 jobs out of a total of 980 jobs in Switzerland. In the Business Group Components, a total of 90 jobs are likely to be lost at Suessen, Gersthofen, Boskovice and Enschede.
With these measures, Rieter aims to cut running costs by around CHF 15 million from 2021. For the implementation of the adjustment measures, Rieter anticipates non-recurring expenses of approximately the same amount in 2020.
In financial year 2019, Rieter anticipates an EBIT margin of around 11% (2018: 4.0%) and net profits of around 7% of sales (2018: 3.0%). This includes the nonrecurring profit contribution from the sale of real estate in Ingolstadt in the amount of around 60 million euro at the net profit level.

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