Rieter's Order Intake Shows Positive Trend In Second Half Of 2015

Company Performance

Rieter's Order Intake Shows Positive Trend In Second Half Of 2015

Rieter, a reputed textile machinery manufacturer, has reported significant increase in sales during the second half of year 2015. The company has three business groups, namely Machines & Systems, After Sales and Components. Both the After Sales and Components group has performed positively in key markets during 2015. Rieter's sales in 2015 amounted to CHF 1036.8 million compared to CHF 1 153.4 million in 2014 a decline of 10 percent. The decline in total sales was primarily contributed by the dwindling sales of Machines & Systems business group. However, considerable increase in sales was recorded at the Components and After Sales business groups helped improving total sales figures. Rieter's Order intake totalled CHF 801.6 million in 2015 as against CHF 1146.1 million in 2014. Order intake figures were 6% higher in the second half of the year than in the first six months owing to more positive momentum in the latter half. At the end of 2015, Rieter's order backlog amounted to approximately CHF 470 million. The company is expecting EBIT of 7% and a net profit of 4.8% of sales for the year as a whole.

Orders received and sales

Since January 2015, Rieter has intensified its focus on customers and their diverse needs throughout the lifecycle of the spinning machines. This strategy was adopted to generate greater customer satisfaction and stronger customer loyalty while reducing Rieter's exposure to the cycle. This new approach met with a very positive response from customers at recently concluded ITMA Show in Milan. For Rieter, the overall demand trend in 2015 was characterized by positive developments in the After Sales and Components business groups and a cyclical reluctance to invest in the Machines & Systems business. Following a low point in the third quarter, demand in the machinery business recovered toward the end of the year. Rieter's order intake was 6% higher in the second half of the year compared to the first half (CHF 388.3 million in H1, 2015 and CHF 413.3 million in H2, 2015). Total order intake amounted to CHF 801.6 million in 2015 (CHF 1 146.1 million in 2014).

Business group wise, order intake at the Components business group increased to CHF 217.7 million (up by 26% compared to the previous year. The After Sales business group posted order intake of CHF 126.3 million, the decline of CHF 14.2 million (-10%) compared to 2014 mainly attributable to the lower volume of orders for installations in the new machinery business. Order intake at the Machines & Systems business group for 2015 as a whole amounted to CHF 457.6 million, 45% lower than in previous year. Rieter's annual sales for 2015 totalled CHF 1 036.8 million compared to CHF 1 153.4 million in 2014. Sales increased by CHF 22.3 million (+13%) and CHF 12.3 million (+10%) at the Components and After Sales business groups, respectively, while a decline of CHF 151.2 million (-18%) was recorded at the Machines & Systems business group.

Markets

In 2015, Rieter again achieved the best sales results in Asian countries (without China, India and Turkey), with an increase of 19 percent compared to the prior year. In contrast, however, the propensity to invest declined in these countries in 2015. The market situation in China has eased slightly as a result of a government investment program being implemented in the province of Xinjiang. But sales amounted to CHF 139.8 million, 20% down on the prior year, while order intake was up on 2014 and above the level of sales. The Indian market was stable in 2015 and Rieter's sales were 9% (13% in local currency) higher at CHF 142.0 million. Order intake remained at the same level as in the prior year. In Turkey, Rieter's sales for the reporting year amounted to CHF 143.7 million. Order intake was at a very low level, but the first signs of recovery were observed toward the end of the year. Sales of CHF 200.6 million in North and South America in 2015 were at the same level as in the preceding year. Order intake was lower than in 2014 due to the more difficult economic situation in South America and the completion of the major investment projects in the USA. Sales in Africa was CHF 26.7 million which was below the previous year's level, while the reduced sales figure of CHF 60.2 million in Europe was mainly attributable to the sale of the Schaltag Group.