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Rieter: order intake affected by market disruption
02
Feb '12
Rieter recorded pleasing growth in the 2011 financial year. Sales rose by 22% to 1060.8 million CHF. Orders received were 34% lower than the exceptionally strong outcome in the previous year, but remained at a healthy level (958.3 million CHF).

Rieter thus still has a good backlog of orders in hand. The figures as of December 31, 2011, are the first reported by Rieter for a full financial year in the new structure which came into effect on May 13, 2011, following the separation of the Rieter Group. Since then Rieter has been an industrially focused supplier of machinery and components for staple fiber spinning mills. Rieter will publish final figures and its annual report on March 21, 2012.

The boom in demand on the world market for textile machinery and components experienced in 2010 continued in the first quarter of 2011. The investment climate started to cool off as of the second quarter. The high cost of cotton and declining yarn prices intensified pressure on spinning mills' margins and liquidity.

The second half of the year was also dominated by uncertainty due to the trend in raw material prices and prospects for the global economy. As of the second quarter the market retreated to a lower level compared with the previous year. Demand for yarns also declined in 2011. However, spinning mills were able to reduce yarn inventories to some extent again in the second half of the year.

Orders totaling 958.3 million CHF received by Rieter in 2011 were 34% lower than the very high figure recorded in the previous year (-31% in local currencies).

The decline occurred in particular as of the second quarter and affected both Business Groups. While orders received by Spun Yarn Systems were 36% lower at 775.0 million CHF, at Premium Textile Components they declined by 22% to 183.3 million CHF (-34% and -17% respectively in local currencies). Generally speaking, the components business is less subject to market cycles than the machinery business.

Some customers postponed or canceled orders as a consequence of the disruption on the raw material and yarn markets. Most cancelations affected orders placed in the peak year of 2010. Rieter therefore adjusted its order book by a total of 112.6 million CHF in the second half of 2011. Excluding cancelations, orders received in the second half of the year amounted to 399.6 million CHF. Orders in hand at year-end were slightly over 600 million CHF.

China, Turkey and India were the sources of the largest volume of orders. Other important markets were South Korea, Indonesia, the USA, Brazil, Pakistan and Bangladesh. All in all Rieter further expanded its market position worldwide in the year under review and gained market share with attractive products. In China and India Rieter strengthened its market position with a specific offering for the local markets. This shows that Rieter positioned itself well and made the right investment decisions in earlier years.

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