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Rieter Textile Systems: market revival in H2 of 2009

23
Mar '10
The impact of the economic and financial crisis was a dominant feature of the 2009 financial year for the Rieter Group. The unfavorable market conditions had an adverse influence on the trend of business at both divisions, and resulted in a substantial net loss. Despite a drastic slump in sales in the past two financial years totaling 1 973.8 million CHF – equivalent to some 50% – Rieter successfully ­defended its strong market position in the textile machinery and automotive supply businesses.

The difficult overall conditions subjected the group as a whole to a severe test. Rieter faced it successfully thanks to the strenuous efforts of management and personnel as well as thanks to the confidence of the shareholders. By focusing at an early stage on bolstering equity capital and managing liquidity, Rieter had a strong balance sheet with a sound equity ratio and positive net liquidity at year-end.

New orders received and sales by the group fell steeply in the year under review, but a slight recovery in the markets became apparent in the second half of the year. Rieter believes that activity in both sectors in which the group operates bottomed out before mid-2009. In the year under review Rieter made progress with the sustained improvement of its cost structure through restructuring and also took advantage of numerous opportunities for short-term cost economies. These measures in conjunction with improved capacity utilization due to higher volumes enabled the Rieter Group in the second semester to significantly reduce losses at operating and group level in the second half of 2009 compared to the first six months.

Investments in innovations and market development were reviewed against the backdrop of customers' restraint and prioritized to enable the projects of greatest strategic importance to be implemented nevertheless. With a strong market position and attractive products Rieter is thus well placed to benefit from the next upswing.

Due to the unfavorable market environment, which affected the first half in particular, orders received by the Rieter Group in the 2009 financial year as a whole were 24% lower at 1 935.1 million CHF. Order intake in the second six months was 9% higher than in the same period of the previous year and 30% higher than in the first half of 2009. This positive trend was attributable to a significant increase in orders received by both divisions. Over the year as a whole group sales fell more steeply than orders received. They were 38% lower (35% lower in local currencies) at 1 956.3 million CHF. In the second half of 2009 this figure was 21% lower than in the same period of the previous year and 17% higher than in the first half of 2009.

Rieter had already initiated extensive programs to cut costs and realign structures and processes in both divisions in summer 2008. Rieter continued these efforts with top priority in the year under review. Employee costs and operating expenses in particular were reduced substantially, thus the first successes in lowering the break-even point have become apparent. Initial positive effects of these programs in conjunction with strict cost discipline became apparent in the second half of 2009: after an operating result before special charges amounting to -136.5 million CHF was posted in the first half of 2009, this figure improved in the second half to -50.1 million CHF. For the year as a whole the operating result before interest and taxes (EBIT) amounted to -186.6 million CHF (+ 22.4 million CHF before special charges in 2008).


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