Rieter Performs Above Par In Financial Year 2017

Company Performance

Rieter Performs Above Par In Financial Year 2017

• Order intake grows by 16% to CHF 1 051 million

• Sales increases by 2% to CHF 966 million

• Order backlog rises by CHF 100 million to CHF 540 million

• EBIT margin of 5.4% (before restructuring charges) and net profit of 1.4% of sales

• Proposed dividend of CHF 5.00

A significant increase in order intake and order backlog at the end of the year marked the 2017 financial year. In terms of sales, Rieter posted a slight increase. The EBIT margin before restructuring charges was 5.4%. Despite special effects, the company’s dividend policy and solid financial position allow the payment of an attractive dividend. Therefore, the Board of Directors proposes to the shareholders to leave the dividend unchanged at CHF 5.00.

Rieter posted an order intake of CHF 1 051.5 million in the 2017 financial year. This represents an increase of 16% compared to the previous year (increase of CHF 146.3 million). Thus, the upturn that began in the first half of 2017 continued. At the end of 2017, Rieter’s order backlog was some CHF 100 million higher than the previous year at around CHF 540 million (December 31, 2016: around CHF 440 million).

At CHF 965.6 million, total sales were 2% higher than the previous year (2016: CHF 945.0 million). Compared to sales of CHF 415.2 million in the first half year, Rieter posted strong growth in the second half year to CHF 550.4 million, due in particular to a large increase in deliveries in the Business Group Machines & Systems and the acquisition of SSM Textile Machinery. Thanks to a global presence and a comprehensive product and service portfolio, Rieter again achieved a market share of around 30%.

EBIT Margin, Net Profit and Free Cash Flow

The 2017 financial year was characterized by improved profitability in the Business Group After Sales and weaker, volume-related results in the Business Groups Machines & Systems and Components. With slightly higher sales than in the previous year, Rieter recorded an EBIT margin (before restructuring charges) of 5.4% or CHF 51.8 million (2016: 6.0% or CHF 56.5 million). The restructuring charges amounted to CHF 36 million. These are associated with the reorganization of the Ingolstadt location (Germany). Consequently, at CHF 13.3 million (1.4% of sales), the net profit is considerably lower than in the previous year (CHF 42.7 million or 4.5% of sales). Free cash flow amounted to CHF -101.3 million, mainly due to the cash outflow of CHF 100.2 million for the acquisition of SSM Textile

Sales by Region

In the Asian countries (excluding China, India and Turkey), Rieter increased sales in the reporting year by 11% to CHF 319.1 million. At CHF 184.0 million, a good level of sales was achieved in China, despite a slight decline of 1%. Sales in India fell by 5% to CHF 173.8 million. This development is attributable in particular to lower sales of technology components. Sales in Turkey fell by 16% to CHF 100.1 million in 2017, mainly due to the sluggish order intake for new machines in the first half of the year. Orders in the USA and Brazil led to sales of CHF 114.7 million in the North and South America region, an increase of 32%.

Business Groups

In terms of sales, the Business Group Machines & Systems posted a slight decline to CHF 589.5 million (2016: CHF 603.4 million) and an EBIT (before restructuring charges) of CHF 0.8 million (2016: CHF 3.6 million). Order intake rose to CHF 668.2 million (2016: CHF 591.6 million).

The Business Group After Sales generated an EBIT (before restructuring charges) of CHF 27.9 million (2016: CHF 25.5 million) on sales of CHF 146.3 million (2016: CHF 141.6 million). With stable installation volume, growth was driven by spare parts and after sales services. Order intake in what continues to be a demanding market increased to CHF 154.8 million (2016: CHF 135.2 million).

The Business Group Components increased sales thanks to the acquisition of SSM Textile Machinery (CHF 49.1 million) to CHF 229.8 million (2016: CHF 200.0 million); at CHF 30.8 million, however, the EBIT margin was lower compared to the previous year (2016: CHF 35.1 million). The strong second half-year could not fully compensate for the first half-year. The order intake was significantly higher than the previous year at CHF 228.5 million (2016: CHF 178.4 million), with the acquisition of SSM Textile Machinery contributing CHF 42.5 million to this positive growth from the second half of the year.

Improvement Program STEP UP

Rieter also forged ahead with the improvement program STEP UP in the 2017 financial year. Strengthening innovative capacity and the after sales and components business as well as increasing profitability through cost reduction remain the top priorities.

The systematic implementation of the current innovation program continues. For example, the single-head draw frame RSB-D 50 was launched successfully in 2017. In 2018, Rieter will present a new ring spinning machine and a new compact spinning machine. In the Business Groups After Sales and Components, innovations that enjoy strong demand are also regularly launched on the market. Research and development expenditure increased to CHF 49.2 million (2016: CHF 48.0 million).

Rieter places a further priority on the digitization of spinning mills. Thanks to the combination of profound expertise in spinning mills with technologies from the digital world, the UPtime Maintenance Solution has emerged as the digital expert system that optimizes the maintenance of spinning mills and their monitoring in relation to predictive maintenance.