Textile machinery firm Rieter's profit declines in H1 (Switzerland)

Rieter Group releases result for the first half of 2012. Higher order intake than in the second half of 2011 – lower sales, as expected – profitability reduced by lower volumes and the investment program – investment program 2012/2013 on track.

Order intake amounted to 404.1 million CHF; this was 40% lower than the very strong figure for the first half of 2011. However, in the first half of 2012 Rieter received more orders than in the second half of 2011. Sales of 487.3 million CHF in the reporting period were 9% lower than in the same period of the previous year, as expected.

The operating profit before interest and taxes declined from 70.6 million CHF to 32.0 million CHF due to reduced volumes and higher investment activity. This figure corresponds to 7.2% of corporate output (12.8% in the first half of 2011). Net profit was 21.9 million CHF, equivalent to 5.0% of corporate output (91.0 million CHF or 16.5% in the first half of 2011, when a non-recurring capital gain accounted for 42.3 million CHF of the total).

In the period under review, Rieter completed major steps in the investment program 2012/2013 announced in the spring. The company has achieved the interim targets it aimed for and is on track with this program. The first half of 2012 was characterized by widely diverging trends in the geographical markets of relevance for Rieter.

Global economic uncertainties affected the markets for short-staple fiber machinery and components in China and Turkey; in India, demand remained weak also due to industry-specific reasons. Yarn inventories, which were still very large last summer, continued to decline. The overall margin situation at spinning mills improved, although regional differences persist.

Compared with the extraordinarily strong period in the previous year, orders received by Rieter declined in the first six months of 2012 by 40% to 404.1 million CHF. Both of Rieter’s business groups – Spun Yarn Systems (machinery, spare parts and service business) and Premium Textile Components (components business) – were affected by this downturn.

However, order intake was higher than in the second half of 2011 and was broad-based in geographical terms. Rieter booked the most orders in China, Turkey and other Asian countries including Indonesia and Pakistan. Customers in the Near & Middle East and Africa placed further substantial orders for staple-fiber machinery and technology components.

In contrast, order intake in the important Indian market remained at a very low level. Orders in hand, some of which will be reflected in sales in 2013, totaled more than 515 million CHF at the end of the first six months (over 840 million CHF at the end of the first half of 2011).