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Striking sales growth in 2011 - The Rieter Group
21
Mar '12
The Rieter Group reached a historical turning point in spring 2011. Shareholders adopted the proposal by the Board of Directors to separate the group and for its two divisions – Textile Systems and Automotive Systems – to operate in future as independent companies, each with its own stock market listing.

Following the completion of the separation, Rieter is an industrially focused supplier of machinery and components for staple fiber spinning mills. It conducts the business of the former Rieter Textile Systems Division in two business groups, Spun Yarn Systems (machinery business) and Premium Textile Components (components business). Rieter is reporting results to December 31, 2011, for the first time in respect of a full financial year in this new structure.

The 2011 financial year as a whole was encouraging for Rieter. The company again reported striking sales growth and a significant increase in the operating result and net profit. Orders received were 34% lower than in the extraordinarily strong preceding year, achieving a good level of 958.3 million CHF. Rieter therefore still has a healthy level of orders in hand. Sales revenues increased by 22% to 1 060.8 million CHF.

The increase in local currencies amounted to 27%. Rieter posted a disproportionately strong increase in the operating result, which rose by 49% from 75.7 million CHF to 112.6 million CHF. This is equivalent to 10.8% of corporate output.

Net profit increased to 119.0 million CHF, equivalent to 11.4% of corporate output (82.9 million CHF and 9.9% in 2010). The Board of Directors is proposing that a dividend of 6.00 CHF be paid for the 2011 financial year out of the reserve from capital contributions. Rieter expanded its market position in the year under review and has a strong balance sheet.

On this sound basis Rieter intensified its investment activities in 2011, especially in the large Asian growth markets and the development of products to meet the needs of specific markets. Rieter will continue intensified investment activity through the 2012 financial year to lay the foundations for further profitable growth.

In 2011 the disruption on the financial markets, the currency crisis in Europe and the resulting strength of the Swiss franc created the most dramatic situation for the Swiss economy since the 1970s. Rieter held its own well overall in this difficult environment. The company has systematically assumed a global focus since the 1990s.

By transferring manufacturing operations to customers' markets, in particular to India and China, and also through existing facilities in European countries, Rieter is exploiting the cost benefits of these locations and at the same time limiting currency risks.

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.

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