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Rieter 1st half of 2020 severely impacted by COVID-19

Jul 28, 2020
Rieter 1st half of 2020 severely impacted by COVID-19

As reported on May 28, 2020, COVID-19 had a major impact on Rieter’s business in the first half of 2020. The COVID-19 pandemic led to a market situation where demand for the goods and services of all three business groups decreased significantly. The Business Group Machines & Systems is affected by the deferral by customers of investments and scheduled deliveries. At the same time, the demand for wear and tear and spare parts declined sharply, due to the suspension of production in many spinning mills around the world. This is reflected in the low order intake and sales of the Business Groups Components and After Sales. Hence, this exceptional market situation gave rise to losses in all three business groups in the first half of 2020.

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The Rieter Group posted an order intake of CHF 250.7 million. This corresponds to a reduction of 34 per cent (first half year 2019: CHF 378.3 million). Order intake in the Business Group Machines & Systems declined by 34 per cent, it also fell by 34 per cent in the Business Group Components and by 32 per cent in the Business Group After Sales. The order backlog as of June 30, 2020, was around CHF 490 million (June 30, 2019: CHF 295 million). Cancellations were less than 5 per cent.

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Sales amounted to CHF 254.9 million (first half year 2019: CHF 416.1 million), which represents a decline of 39 per cent compared to the previous year period. At Machines & Systems, sales decreased by 46 per cent. This was due to the low order intake in the first three quarters of the previous year and deferred deliveries. Sales fell by 29 per cent at Components and by 34 per cent at After Sales.

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EBIT, net profit, free cash flow and net liquidity
The cost cutting measures already implemented contributed among other things to a reduction in Selling, General and Administrative (SG&A) expenses of around CHF 10 million. Nevertheless, due to the lower volume, Rieter recorded a loss of CHF -55.0 million (before restructuring charges: CHF -46.9 million) at the EBIT level and a loss of CHF 54.4 million at the net profit level. Due to the buildup of inventories for deliveries in the second half of the year and the loss already mentioned, free cash flow was CHF -95.4 million.
As of June 30, 2020, Rieter had net liquidity of CHF 36.0 million, liquid funds of CHF 253.5 million and undrawn credit lines in the mid three-digit million range.