Rieter: Cost increases and supply bottlenecks...
Rieter

Cost increases and supply bottlenecks impact earnings

(Source: Rieter)
(Source: Rieter)

In the first half of 2022 (H1/2022) Rieter was able to achieve a high order intake and a significant increase in sales thanks to its innovative product portfolio and the completion of the ring- and compact-spinning system.
The textile machinery manufacturer Rieter Holding AG, Winterthur/Switzerland, posted an order intake of CHF 869.4 million (-10.9%), which included CHF 176.6 million from the businesses acquired in 2021/2022. Demand has thus returned to normal compared with the exceptionally high figure for the prior-year period, but remains well above the average figure for the last 5 years of around CHF 570 million (H1/2021: CHF 975.3 million). The company had a record order backlog of more than CHF 1.2 billion (June 30, 2021: CHF 1.14 billion).
Sales lay at CHF 620.6 million, which included CHF 68.9 million from the businesses acquired in the years 2021/2022 (H1/2021: CHF 400.5 million). As a result, sales were significantly higher than in the prior year period, although pre-produced deliveries, which mainly affected the Business Group (BG) Machines & Systems, in the 3-digit million range had to be postponed H2/2022. The reasons for the postponements were the Covid lockdown in China and supply chain bottlenecks.
The regional shift in demand with increased development of spinning capacities outside China and simultaneous investments in the competitiveness of Chinese spinning mills is continuing. In this context, Rieter is benefiting from its technology leadership, innovative product portfolio and the completion of the ring and compact spinning system through the acquisition of the automatic winding machine business.
The largest order intakes came from India, Turkey, China, Uzbekistan and Pakistan.
Despite the higher sales, the significantly higher costs for materials and logistics, the additional costs to compensate for material bottlenecks and the charges from the 2021/2022 acquisition resulted in a loss of CHF 25.2 million (net profit), of which CHF 17.6 million was due to acquisition.
Rieter is implementing an action plan to increase sales and profitability. The package includes 2 main focal points: Firstly, Rieter is continuing to implement price increases systematically and is working to improve the margin quality of the order book to compensate for cost increases in materials and logistics.
Secondly, Rieter works closely with key suppliers and develops alternative solutions to eliminate material bottlenecks as far as possible and thus secure deliveries.
Rieter expects EBIT and net profit for 2022 to be below the previous year's level despite significantly higher sales. This is due to significant cost increases and expenses in connection with the acquisitions in 2021/2022. Global cost increases continue to pose a risk to the development of profitability despite the price increases already implemented.

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