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Technology/Machinery

Rieter reports profit decline in 2016

Sales decreased to CHF 945.0 million, mainly due to the sluggish demand for machinery and systems in the second half of 2015.

14th March 2017

Innovation in Textiles
 |  Winterthur

Clothing/​Footwear, Interiors, Sports/​Outdoor

In 2016, the company achieved CHF 42.7 million in net profit, compared to 49.8 million in 2015, recording a 14% decline. Sales decreased to CHF 945.0 million, mainly due to the sluggish demand for machinery and systems in the second half of 2015. In spite of the 9% decline in sales, Rieter achieved an EBIT margin of 6.0% (CHF 56.5 million) and a net profit of 4.5% of sales (CHF 42.7 million).

In the full year, order intake rose by 13% year-on-year to CHF 905.2 million. In the first half of 2016, orders were at a good level of CHF 510.7 million, mainly driven by solid demand from Turkey. In the second half of the year, the dynamism in Turkey and India slowed significantly due to increasing political uncertainties, with the result that orders declined to CHF 394.5 million.

Sales by region

Both in China and India, Rieter significantly increased sales in the year under review, by 33% to CHF 186.5 million and by 28% to CHF 182.1 million, respectively. In the other Asian countries, sales declined by 12%, but remained at a good level of CHF 286.3 million. In North and South America, following the completion of deliveries of large orders in the previous year, sales declined to CHF 86.6 million (CHF 200.6 million in 2015).

In Turkey, a large portion of the good order intake from the first half year was delivered on schedule by the end of the year. Despite this, sales in Turkey fell to CHF 119.4 million, a reduction of 17% compared to the previous year. In Europe, sales decreased to CHF 40.9 million, due to the disposal of the Schaltag group in July 2015.

Business groups

The Machines & Systems Business Group recorded sales of CHF 603.4 million and EBIT of CHF 3.6 million, thus compensating for a large portion of the market-related volume effect on earnings. At CHF 591.6 million, order intake was well above the previous year.

After Sales generated EBIT of CHF 25.5 million on sales of CHF 141.6 million. The lower result is due to investments relating to the further expansion of the business. Order intake of CHF 135.2 million was 7% above the previous year (CHF 126.3 million in 2015).

Components increased sales to third parties to CHF 200.0 million and improved EBIT to CHF 35.1 million. Order intake of CHF 178.4 million was below the previous year’s CHF 217.7 million due to the lower volume of major orders from China and India.

Improvement programme STEP UP

Rieter made significant progress towards the implementation of the STEP UP programmr. Rieter had launched the programme in 2014 to strengthen innovative power, expand the after-sales business and optimise the cost base.

Rieter presented an important innovation in 2016 with the new single-head draw frame generation RSB-D 50. Rieter’s UPtime Maintenance Solution, an online expert training system for monitoring and optimising maintenance in the spinning mill, represents a further step towards the digitalisation of the spinning industry. Research and development expenditure increased to CHF 48.0 million (CHF 46.6 million in 2015).

The measures launched in 2015 to reorganise production and sustainably increase profitability are almost completed at the Winterthur location. Rieter plans to relocate production from the Ingolstadt site in Germany to the Usti site in the Czech Republic.

Outlook

Despite low visibility in the sales markets, Rieter expects sales and profitability for 2017 to be at the level of the previous year (before restructuring costs).

Rieter intends to create a modern location in Winterthur, concentrating the customer centre, product and technology development, assembly and administration on an area of approximately 30,000 square meters. The necessary planning process is under way. In a later phase, work will begin on developing the remaining area of around 70,000 square meters.

www.rieter.com

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