The Cotton & Textiles Holding Company and Rieter signed additional contracts related to the modernization program for the Egyptian textile industry.
The total volume of the contracts sums up to around 210 million Swiss Francs, including the contracts which had been signed at ITMA 2019 in Barcelona and which represent a volume of around 180 million Swiss Francs. Rieter expects the full amount of orders to be booked as order intake in the first half year of 2020. So far, 165 million Swiss Francs have been booked.
Order volume is around 30 million Swiss francs
Chief Executive Officer of Rieter, Dr. Norbert Klapper was very pleased at the signing ceremony: “The next step of the program we agreed upon today underlines the strong partnership between the Cotton & Textiles Holding Company and Rieter. I would like to thank our Egyptian partners for the confidence they continue to place with Rieter. We will do our best to support the Cotton & Textiles Holding Company in making the modernization program a success.”
Rieter Group evaluates financial year 2019
The Rieter Group closed the 2019 financial year, as expected, with considerably lower sales than in the previous year. According to the first, unaudited figures, total sales of CHF 760.0 million were achieved, which is 29% down on the previous year (2018: CHF 1 075.2 million). At CHF 926.1 million, order intake was 7% higher than in the prior year period (2018: CHF 868.8 million). Rieter will publish the full annual financial statements and the 2019 Annual Report on March 10, 2020.
Sales by Business Group
As already reported, 2019 as a whole was characterized by the trade conflict between the USA and China, excess capacity in the spinning mills as well as political and economic uncertainties in regions of importance to Rieter.
Thus, in the Business Group Machines & Systems, with a decline of 42% in the 2019 reporting year, sales of new machines were at a very low level.
In the Business Group Components, the 12% decline in sales compared to the same period in the previous year is also due to the lower order intake as a consequence of reluctance to invest. Above all, this affected the business activities of SSM and Suessen. The wear and tear parts business continued at a normal level.
The 2% year-on-year decline in sales in the Business Group After Sales is mainly attributable to the lower volume in the machinery business (low demand for installation services).
The market situation described above is also reflected in sales in the Asian countries, in India and Turkey. Sales in China as well as North and South America remained at the prior year level.
Order Intake by Business Group
The Business Group Machines & Systems posted an order intake of CHF 562.8 million, an increase of 20% compared to the previous year. This is primarily due to the fourth quarter of 2019, in which an order intake of CHF 307.0 million was booked. This figure includes orders from Cotton & Textile Industries Holding Company, Cairo (Egypt), for the delivery of compact and ring spinning systems in the amount of around CHF 165 million.
In the Business Group Components, order intake of CHF 222.0 million was down by 15% compared to the previous year. Due to weaker macroeconomic conditions, order intake in the fourth quarter of 2019 was CHF 49.1 million, lower than in the previous quarters. Overall, the decline in the year under review can be attributed to a low level of investment by customers in the Business Units SSM and Suessen.
With an order intake of CHF 141.3 million, the Business Group After Sales recorded a year-on-year increase of 1%. The fourth quarter of 2019, in contrast, with an order intake of CHF 45.5 million, was significantly higher than the previous quarters, which is largely attributable to the installation services for the Cotton & Textile Industries Holding Company project in Cairo (Egypt).
First Half of 2020 Expected to Be Significantly Lower Than Previous Year in Terms of Sales and Earnings.
Further Capacity Adjustment Measures Introduced
The Rieter Group is planning further measures to adjust capacities due to structural changes in the market situation. This concerns the locations Winterthur (Switzerland), Suessen and Gersthofen (both Germany), Enschede (Netherlands) and Boskovice (Czech Republic).
In the Business Group Machines & Systems, the assembly of machines is to be discontinued at the Winterthur location. This is expected to affect 87 jobs out of a total of 980 jobs in Switzerland.
In the Business Group Components, a total of 90 jobs are likely to be lost at the locations Suessen, Gersthofen, Boskovice and Enschede. The consultation processes with employee representatives begin today, January 29, 2020.
With these measures, Rieter aims to cut running costs by around CHF 15 million from 2021. For the implementation of the adjustment measures, Rieter anticipates non-recurring expenses of approximately the same amount in 2020. The goal remains to successfully implement the ongoing innovation program and to be able to respond quickly to increasing demand.
Annual General Meeting of April 16, 2020
The 2020 Annual General Meeting of Rieter Holding Ltd. will take place this year on April 16, 2020, at the Eulachhalle arena in Winterthur, Switzerland.