Rieter posts strong FY2017 results
Rieter posted an order intake of CHF 1,051.5 million in FY2017. This represents an increase of 16% compared to the previous year (increase of CHF 146.3 million). 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 per cent. Despite special effects, the companyâ€™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 FY2017. This represents an increase of 16% compared to the previous year (increase of CHF 146.3 million).
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 per cent. Despite special effects, the companyâ€™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 FY2017. This represents an increase of 16 per cent 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, Rieterâ€™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 per cent higher than the previous year (2016: CHF 945 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 per cent.
EBIT margin, net profit
FY2017 was characterised 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 per cent or CHF 51.8 million (2016: 6.0 per cent or CHF 56.5 million). The restructuring charges amounted to CHF 36 million. These are associated with the reorganisation of the Ingolstadt location (Germany). Consequently, at CHF 13.3 million (1.4 per cent of sales), the net profit is considerably lower than in the previous year (CHF 42.7 million or 4.5 per cent 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 Machinery and the demand driven increase of net working capital. The equity ratio as of December 31, 2017 was 43.6 per cent (December 31, 2016: 46.2 per cent).
Sales by Region
In the Asian countries (excluding China, India and Turkey), Rieter increased sales in the reporting year by 11 per cent to CHF 319.1 million. At CHF 184 million, a good level of sales was achieved in China, despite a slight decline of 1 per cent. Sales in India fell by 5 per cent to CHF 173.8 million. This development is attributable in particular to lower sales of technology components. Sales in Turkey fell by 16 per cent 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 per cent.
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 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 programme STEP UP
Rieter also forged ahead with the improvement programme STEP UP in FY2017. 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 programme continues. For example, the single-head drawframe 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. R&D expenditure increased to CHF 49.2 million (2016: CHF 48.0 million).
Rieter places a further priority on the digitisation 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 optimises the maintenance of spinning mills and their monitoring in relation to predictive maintenance.
In mid-2017, Rieter acquired the SSM Textile Machinery Division (SSM) from Schweiter Technologies AG in Horgen, Switzerland. SSM is the worldâ€™s leading supplier of precision winding machines in the fields of dyeing, weaving and sewing thread preparation and enjoys success in individual segments of filament yarn production. Assigned to the Business Group Components, the unit will further strengthen Rieterâ€™s components business.
Following the agreement with the Works Council, the restructuring at the Ingolstadt location is proceeding according to plan. Rieter will concentrate on the development of machines in Ingolstadt, and the previous production will be relocated to ÃšstÃ nad OrlicÃ in the Czech Republic. Overall, Rieter expects cost reductions of more than CHF 15 million from 2019 as a result of these measures.
In Winterthur, the intention is to create a modern location, concentrating the customer center, product and technology development, assembly and administration on an area of approximately 30 000 square meters. In October 2017, Rieter launched a study contract and awarded this to five renowned consultancy firms from the Canton of Zurich. These firms have until the end of March 2018 to submit their projects, which will then be assessed by a panel of judges. The final decision on the realisation of the project will be taken by the Rieter Board of Directors during 2018.
At the Annual General Meeting held on April 5, 2017, shareholders approved all motions proposed by the Board of Directors. They elected two new members to the Board of Directors, Carl Illi and Luc Tack. The members of the Board of Directors: Roger Baillod, Bernhard Jucker, Michael Pieper, This E. Schneider, Hans-Peter Schwald and Peter Spuhler were confirmed for a further one-year term of office. Chairman of the Board of Directors Erwin Stoller was no longer available to stand for re-election. The general meeting elected Bernhard Jucker as Chairman of the Board of Directors. This E. Schneider and Hans-Peter Schwald, the members of the Remuneration Committee who were standing for election, were also each re-elected for a one-year term of office. Chairman of the Board of Directors, Bernhard Jucker was elected as a new member of the Remuneration Committee.
In the first two months, demand has been on a stable level. Rieter expects this momentum to continue. With a stronger second semester, Rieter expects sales and profitability for 2018 to be above the level of 2017 (before restructuring charges). In the first semester of 2018, EBIT and net profit for the Group are expected at the level of the previous period due to the country and product mix at the Business Group Machines & Systems.