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Rieter's product portfolio matches demand in Asia
31
Oct '12
Overall, capacity utilization of spinning mills and margins continued to be stable and on a profitable level. However, downstream buying behaviour remained volatile. Financing for projects is becoming increasingly difficult, especially in China and India, leading to a generally more challenging market environment.

Rieter currently reckons in the second semester with a weaker trend in sales compared to the first semester. The decrease against the first semester is estimated at slightly above twenty percent due to the shift of machine orders into 2013, cancellations and lower component sales. Rieter expects the operating profitability (EBIT) in the second semester to follow the volume development and to show the effects of a less favorable product mix. The planned investment activity in growth projects and process improvements will further reduce the operating margin (EBIT margin) by around three percentage points. Rieter expects the operating profitability to be around break-even level in the second semester 2012. 
 
The Chinese market is generally weaker due to locked-in raw material prices, but looking for automation, upgrade in equipment and lower energy demand. In Turkey, the government incentive program has still not yet shown large effects. In the third quarter, India has seen a pickup in investment demand, with northern India showing more interest than in the southern states. 
 
“China and India will see an increase in demand for machinery and components”, Erwin Stoller said, “offering higher productivity and quality as well as lower energy consumption. Both Rieter’s current product portfolio and its innovation strategy address this demand. With the timely execution of our investment program 2012/2013 Rieter will be ready to profit from these trends.” 
 
In the third quarter, a pickup in order intake in the Indian market has been registered. A stable third-quarter order intake in China in a difficult market confirms the attractiveness of Rieter’s product portfolio. 
 
Overall, Rieter managed to increase its order intake in the third quarter compared to the average of the two previous quarters mainly thanks to larger machinery orders. The majority of these orders will be delivered in 2013.

Rieter


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