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Trailblazers | March 2017

Rieter reaps 28% rise in sales in India

Both in China and India, Rieter significantly increased sales, by 33 per cent to CHF 186.5 million and by 28 per cent to CHF 182.1 million, respectively. In the other Asian countries, sales declined by 12 per cent.

The Rieter Group achieved an order intake of CHF 905.2 million in the 2016 financial year. This represents an increase of 13 PER CENT compared to the previous year (CHF +103.6 million). Sales amounted to CHF 945.0 million (2015: CHF 1 036.8 million) and as expected were 9 PER CENT down on the previous year. The development in order intake was heavily influenced by the Business Group Machines & Systems. The business groups Components and After Sales increased their sales compared to the previous year. At the lngolstadt site, Rieter intends to focus in the future on the development of machines and the provision of technical support for the after-sales business.

Market environment and order intake

The market environment in financial year 2016 was characteriSed by strong demand in the first half year (CHF 510.7 million) and by mixed dynamics in the individual countries and product categories in the second half year (CHF 394.5 million). The lower demand in the second half of the year, especially in the Business Group Machines & Systems, was attributable to increasing political uncertainties in the main markets of Turkey and India. Thanks to the strong global presence and the broad and technologically advanced product range, Rieter achieved orders amounting to CHF 905.2 million in the full financial year 2016.

This positive development was mainly driven by the Business Group Machines & Systems. In the new machine business, order intake rose by 29 per cent to CHF 591.6 million (2015: CHF 457.6 million). The business group achieved pleasing growth in India thanks to major orders for the compact system K 42. In China, despite a slight upturn in the second half of the year, the value of orders received was less than the previous year. In the other Asian countries, especially thanks to Uzbekistan, Pakistan and Bangladesh, Machines & Systems realized slightly higher orders. In Turkey, Machines & Systems achieved a markedly higher order volume due to the good demand in the first half year. Orders from the Americas declined year-on-year. Demand for rotor spinning systems fell sharply.

In the year under review, the Business Group After Sales increased its orders by 7 per cent to CHF 135.2 million (2015: CHF 126.3 million). After Sales achieved this through increased orders for spare parts and services, and a larger order volume for installations in the new machine segment. In geographical terms, growth was broad-based. The business group achieved particularly dynamic growth in Turkey and India. However, in the American markets, which are significant for After Sales, the business group recorded a slight decline in orders due to the lower utilization of regional spinning mills.

In the Business Group Components, order intake fell by 18 per cent to CHF 178.4 million, compared to the exceptionally strong previous year (2015: CHF 217.7 million). The order intake in the American countries developed positively thanks to a large order in Mexico. In the other Asian countries, order intake was slightly below the previous year. By contrast, compared to the particularly dynamic financial year 2015, customers in China and India showed restraint in the awarding of major contracts.

At the end of 2016, Rieter’s order backlog amounted to around CHF 440 million (December 31, 2015: around CHF 470 million).

Rieter’s sales amounted to CHF 945.0 million in 2016 (2015: CHF 1 036.8 million), which represents a decline of 9 per cent compared to the previous year.

This development is mainly attributable to the subdued course of business at Machines & Systems in the first half of the year, while the business groups After Sales and Components showed a slight increase compared to 2015.

Sales by region

Both in China and India, Rieter significantly increased sales in the year under review, by 33 per cent to CHF 186.5 million and by 28 per cent to CHF 182.1 million, respectively. In the other Asian countries, sales declined by 12 per cent, but remained at a good level of CHF 286.3 million. In North and South America, following the completion of deliveries of large orders in the previous year, sales declined to CHF 86.6 million. In Turkey, a large portion of the good order intake from the first half year was delivered on schedule by the end of the year. Despite this, sales in Turkey fell to CHF 119.4 million, a reduction of 17 per cent compared to the previous year. In Europe, sales decreased to CHF 40.9 million (2015: CHF 60.2 million) due to the disposal of the Schaltag group in July 2015.

Reorganisation of the Ingolstadt site

At the lngolstadt site, Rieter intends to focus on the development of machines and the provision of technical support for the after-sales business. Productions shall be transferred to Rieter’s Usti site in the Czech Republic. By this means, Rieter intends to increase its competitiveness and conclude the reorganization of production, which is a consequence of the capacity build-up in China and India.

Spare parts logistics shall be awarded to a service provider within the framework of a European solution. With this step, Rieter aims to achieve a significant reduction in delivery times and create the conditions for further growth. Order processing for spare parts shall be concentrated at the Winterthur site.

The development of machines and technical support for the after-sales business, which remain in Ingolstadt, are to be housed in a new building, which will provide optimal support for the development work and cooperation between the two areas.

The concept envisages the reduction of around 220 jobs at the Ingolstadt site. At the end of December 2016, Rieter had 360 employees in Ingolstadt. Once the measures are complete at all affected sites, a cost reduction of CHF 15-20 million is expected from 2019. Rieter anticipates that one-off expenditure in the mid-double-digit million range will be required for implementation purposes over the next two years.

The consultation process with the employees’ representatives will begin shortly. For the year as a whole, Rieter expects an EBIT margin of 6 per cent and a net profit of 4.5 per cent of sales.

Meanwhile, the Board of Directors of Rieter Holding AG has appointed Serge Entleitner to the Group Executive Committee of the Rieter Group with effect from April 6, 2017. Serge Entleitner takes over the management of the Business Group Components from Werner Strasser, who, at his own request, takes well-deserved retirement on April 30, 2017. He will resign as a member of the Group Executive Committee with effect from April 6, 2017.

After obtaining an MBA degree from the University of Innsbruck, Serge Entleitner started his professional career at Saurer Sticksysteme AG. Most recently, he was responsible for the Business Area Consumer Foods at Bühler AG. He has broad experience in the successful development and management of international capital goods business.

Werner Strasser began his career at Rieter in 1994. He headed the Business Group Components since 2002 and has been a member of the Group Executive Committee since 2011. The Board of Directors would like to thank Werner Strasser for his extraordinary contribution to the development of the components business and the Rieter Group and wishes him all the best for the future.

The 2017 Annual General Meeting of Rieter Holding Ltd. will take place on April 5 at the Eulach-Hallen in Winterthur, Switzerland.

Rieter is the world’s leading supplier of systems for short-staple fiber spinning. Based in Winterthur (Switzerland), the company develops and manufactures machinery, systems and components used to convert natural and manmade fibers and their blends into yarns. Rieter is the only supplier worldwide to cover spinning preparation processes as well as all four end spinning processes currently established on the market. With 15 manufacturing locations in nine countries, the company employs a global workforce of some 5 022, about 20 per cent of whom are based in Switzerland.

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