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Decline in 2008 orders received and sales: Rieter
30
Jan '09
The downward trend in orders received and sales at the Rieter Group continued in the 2nd half of 2008. As announced in December, orders of 2 561.6 million CHF received in the 2008 financial year were 37% lower than in the previous year, and sales of 3 142.5 million CHF were 20% lower. Both divisions were affected by the severe global drop in demand in their markets, but succeeded in maintaining their market position.

As a consequence of the financial crisis and the global economic downturn the declining trend of business in the first half of 2008 continued and intensified in the final six months of the year. In the 2008 financial year Rieter experienced a decline in demand that was unprecedented in its intensity and rapidity and for the first time affected both the textile machinery and the automotive supply business simultaneously.

The development in orders received was attributable primarily to the drop at the Textile Systems Division. The 20% decline in consolidated sales to 3 142.5 million CHF (3 930.1 million CHF in 2007) was less steep than that in new orders. This was due to the high level of orders in hand in the textile machinery business with which Rieter had started 2008, and a proportionately smaller decline in sales at Automotive Systems. Currency translation effects had a negative impact of some 3 percentage points on the development of group sales. Despite the difficult overall economic environment Rieter succeeded in maintaining – or in certain regions even improving – its market position in both divisions.

Rieter continued working on innovations at both divisions in the 2008 financial year in order to exploit its strong market position in the next cyclical upswing and expand it further with attractive products.

Textile Systems: strong decline in orders received
The trend of business at Rieter Textile Systems in 2008 was dominated by a cyclical downturn on the world market for textile machinery that had not been experienced by the industry for decades. The causes of this downswing were structural and cyclical. The dynamic expansion of the spinning industry in 2006 and 2007, especially in the principal markets of India, China and Turkey, had led to a boom in investment. This had also been driven by government incentive programs and resulted in yarn production capacity which significantly exceeds nearterm demand. The weakening effectiveness of these investment incentives, combined with a cyclical decline in fiber consumption in major sales markets such as the USA and more difficult credit conditions caused a rapid fall in customers' tendency to invest. Orders received by Rieter Textile Systems for staple fiber machinery since March 2008 have been substantially lower than in the previous year.

There was also a decline – even though less pronounced – in the market for technology components, which is generally more consistent than that for machinery. Demand for wear and tear components remained healthy.

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Rieter Management AG

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