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Rieter Group reports weaker demand for textile machinery

06
May '08
The Rieter Group has revised its expectations downward for the current financial year in light of the fact that the markets for textile machinery in particular are developing less favorably than previously expected. There are also signs of a more severe downturn in vehicle production in Rieter's main markets.

Based on current exchange rates, Rieter now foresees a significant decline in sales and a decrease in operating margins. Rieter Textile Systems posted record figures for orders received, sales and operating earnings in 2007. However, demand has been weakening since the fourth quarter of 2007, and suffered a steep decline in March and April 2008.

The main reason for this downturn is the currently subdued business outlook for Asian spinning mills. New orders received by Rieter Textile Systems in the first four months were therefore more than 50% lower than in the previous year.

Since any substantial improvement is not expected to materialize before the end of 2008, sales are forecast to be significantly lower than previously envisaged, especially in the second half of the year. Rieter will therefore make appropriate adjustments in light of this situation.

In the first four months vehicle production in Rieter's main markets in the US/Canada and Western Europe was some 5% lower than a year earlier. Due to this and to currency translation effects during this period Rieter Automotive Systems posted a decline in sales revenues of some 4%. Rieter has therefore intensified the cost-cutting efforts already initiated, but is also negotiating with customers regarding price adjustments.

This situation means that operating earnings will not equal the previous year's figure. The structural measures already announced with regard to the manufacturing sites in Western Europe and North America as well as improvement projects in England will continue to be pursued.

Rieter Management AG


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