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Market demand for Picanol Weaving Machines plunges in H1

23 Sep '08
5 min read

The net financial result amounted to -1.1 million euros compared to -0.6 million euros last year. The increase in financing expenses is due to rising financing expenses as a result of the decrease in liquid funds.

The taxation on profit amounted to 1.4 million euros compared to -4.1 million euros last year, at an effective tax rate of -51.27% compared to 38.77% last year. The Picanol Group ended the first half of the year with a net result of -1.3 million euros compared to 5.9 million euros over the same period in 2007.

The consolidated income statement per Segment Weaving Solutions
As announced when publishing the annual figures for 2007, the first half of 2008 was characterized by an extremely difficult market situation. The turnover of the Weaving Solutions division amounted to 141.7 million euros, a decrease of 27% compared to the same period last year. Worldwide, the demand for weaving machined declined substantially as a consequence of the general economic unrest.

The decline was even more pronounced in China, due to the introduction of an import tax on airjet weaving machines. Despite the continued competitive price pressure as a result of the weak position of the Japanese yen, Picanol succeeded in maintaining its sales margins, mainly due to a positive shift of the mix towards more rapier machines. The lower turnover, however, resulted in a decrease of the gross margin due to the fact that production costs did not reduce sufficiently in line with the sharp drop in turnover.

The aftermarket business was also influenced by the negative market situation. Sales of spare parts and – to a lesser degree – of accessories followed the decline in the sale of weaving machines.

The operating result of the Weaving Solutions division amounted to 7.2 million euros compared to 18.0 million euros last year.

The turnover of the OEM-division amounted to 60.7 million euros, a decrease of 9% against 2007. The increase of the sales to third parties (+9% versus the same period last year) was insufficient to compensate for the declining demand in the weaving machine division. In order to support the external growth, the construction of the new moulding line for Proferro was started. Due to the lower turnover, the operating result of the OEM-division remained lower than last year: 2.1 million euros compared to 4.4 million euros during the first half of 2007.

The Picanol Group made investments in fixed assets amounting to 5.8 million euros during the first half of the year. The net cash flow from financing activities increased considerably due to additional financing. Over the year 2007, a dividend of 1.475 million euros was allocated, of which 1.328 million euros was effectively paid out in 2008.

The Picanol Group does not expect an improvement in the market conditions during the second half of the year.

Picanol

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