Rieter Textile Systems: market revival in H2 of 2009
23 Mar '10
6 min read
The progress made at both divisions in stemming losses and improving the cost structure in the second half of the year proves the effectiveness of the restructuring efforts. The operating losses at Textile Systems and Automotive Systems were more than halved in the second half of the year compared to the first.
In particular, the cost-cutting and restructuring programs also included various measures in the personnel sector. In order to adjust capacities to the lower order volumes Rieter utilized flexible working-time models, introduced short-time working at numerous facilities in Europe and reduced personnel capacity. A large number of managers and employees worldwide also deserve thanks for voluntarily waiving wage and salary entitlements in various forms.
At the end of 2009 the Rieter Group's worldwide workforce totaled 12 761 employees, a reduction of some 1 400 employees compared with a year earlier. In order to adjust capacity to the steep decline in demand Rieter has reduced the number of positions for permanent employees by a total of 2 700 and for temporary employees by some 1 000 since the end of 2007. The transfer of manufacturing operations to lower-cost countries has continued.
Rieter thus aims to exploit the cost advantages of these locations and also to get closer to customers operating in those markets, primarily in China and India. The buildup of permanent employee numbers in the second half of 2009 took place in the growth markets or – due to firmer sales – at Rieter Automotive in North America, where our subsidiaries adjusted very flexibly to the changes in market conditions.
In the period between 2007 and 2009 the compensation of the Board of Directors and the Group Executive Committee was reduced by some 50%, corresponding to total savings of 3 million CHF.
The net result amounted to -217.5 million CHF (-396.7 million CHF in 2008). Compared to the first half of 2009 the net loss halved in the second six months. This was mainly attributable to the reduced operating loss.
At the 2009 Annual General Meeting shareholders approved the proposal by the Board of Directors that no dividend should be paid for the 2008 financial year in the interests of preserving the capital of the Rieter Group. Instead of a dividend payment, options were allocated to shareholders on May 5, 2008, enabling them to purchase Rieter shares on attractive terms.
The issue of shareholder's options reinforced Rieter's capital base with an inflow of 46.7 million CHF. Since the group is reporting a loss for the year under review, the Board of Directors will propose to the Annual General Meeting on April 28, 2010, that no dividend should be paid for 2009.
The world market for textile machinery featured a steep downturn from spring 2008 until mid-2009. Demand declined because government stimulus programs to expand spinning capacity in large textile-producing countries expired and at the same time consumption of textiles in major sales markets such as the US and Europe contracted for economic reasons.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
