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Striking sales growth in 2011 - The Rieter Group
21 Mar '12
6 min read
Rieter's order intake of 958.3 million CHF in 2011 was 34% lower than the very high figure (1 454.6 million CHF) recorded in the previous year. In local currencies the decline amounted to 31%. This downturn was particularly apparent as of the second quarter and affected both business groups. However, the slowdown had less of an impact on the components business (Premium Textile Components Business Group) than the machinery business (Spun Yarn Systems Business Group).
Some customers postponed or canceled orders as a consequence of the disruption on the raw material and yarn markets. Cancelations affected orders placed in the peak year of 2010 in particular. 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. South Korea, Indonesia, the USA, Brazil, Pakistan and Bangladesh were also important markets. 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 has positioned itself well and made the right investment decisions in earlier years.
The high level of orders in hand from the previous year, which had continued to grow in the first quarter of 2011, utilized Rieter's production capacity to its limits, resulting in long delivery lead times. The situation eased in the course of 2011 and Rieter was able to supply customers faster again. Sales rose by 22% compared with the previous year, to 1 060.8 million CHF (870.4 million CHF in 2010).
On December 31, 2011, Rieter employed a workforce of 4 695, compared with 4 395 a year earlier. Rieter engaged additional temporary personnel, also at its plants in China and India, in order to cope with the high level of orders in hand. At year-end these totaled 1 157 employees, equivalent to 20% of the entire workforce.
Rieter achieved disproportionately strong growth in profitability through high capacity utilization and attractive products. The operating result before interest and taxes (EBIT) increased from 75.7 million CHF to 112.6 million CHF, corresponding to growth of 49%.
The operating margin rose to 10.8% of corporate output, compared to 9.0% in the previous year. Lower sales by the Premium Textile Components Business Group, increased pressure on margins in business invoiced in Swiss francs and higher capital spending on projects to expand capacity in China and India and for innovations and process improvements resulted in a lower operating return in the second six months of the year.
Rieter's net profit also increased significantly in the year under review, although the financial result was depressed by exchange losses and impairment of financial assets. The higher operating result and a capital gain contributed to this outcome. Net profit amounted to 119.0 million CHF or 11.4% of corporate output (82.9 million CHF and 9.9% in 2010).
The capital gain of 47.3 million CHF arose from the reduction in Rieter's equity interest in Lakshmi Machine Works in India, which was announced on April 1, 2011. Earnings per share on continuing operations therefore amounted to 25.86 CHF (15.63 CHF excluding the capital gain). Return on net assets (RONA) since the separation was thus 19.8% (13.1% excluding the capital gain).
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Some customers postponed or canceled orders as a consequence of the disruption on the raw material and yarn markets. Cancelations affected orders placed in the peak year of 2010 in particular. 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. South Korea, Indonesia, the USA, Brazil, Pakistan and Bangladesh were also important markets. 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 has positioned itself well and made the right investment decisions in earlier years.
The high level of orders in hand from the previous year, which had continued to grow in the first quarter of 2011, utilized Rieter's production capacity to its limits, resulting in long delivery lead times. The situation eased in the course of 2011 and Rieter was able to supply customers faster again. Sales rose by 22% compared with the previous year, to 1 060.8 million CHF (870.4 million CHF in 2010).
On December 31, 2011, Rieter employed a workforce of 4 695, compared with 4 395 a year earlier. Rieter engaged additional temporary personnel, also at its plants in China and India, in order to cope with the high level of orders in hand. At year-end these totaled 1 157 employees, equivalent to 20% of the entire workforce.
Rieter achieved disproportionately strong growth in profitability through high capacity utilization and attractive products. The operating result before interest and taxes (EBIT) increased from 75.7 million CHF to 112.6 million CHF, corresponding to growth of 49%.
The operating margin rose to 10.8% of corporate output, compared to 9.0% in the previous year. Lower sales by the Premium Textile Components Business Group, increased pressure on margins in business invoiced in Swiss francs and higher capital spending on projects to expand capacity in China and India and for innovations and process improvements resulted in a lower operating return in the second six months of the year.
Rieter's net profit also increased significantly in the year under review, although the financial result was depressed by exchange losses and impairment of financial assets. The higher operating result and a capital gain contributed to this outcome. Net profit amounted to 119.0 million CHF or 11.4% of corporate output (82.9 million CHF and 9.9% in 2010).
The capital gain of 47.3 million CHF arose from the reduction in Rieter's equity interest in Lakshmi Machine Works in India, which was announced on April 1, 2011. Earnings per share on continuing operations therefore amounted to 25.86 CHF (15.63 CHF excluding the capital gain). Return on net assets (RONA) since the separation was thus 19.8% (13.1% excluding the capital gain).
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