Posted November 4, 2014

 

Editor’s note: Rieter issued the following press release on October 30:

 

WINTERTHUR, Switzerland – Following an investment program in 2012-13 and the resulting enhancement of its global presence, Rieter is setting new priorities in the implementation of its strategy.

 

The strategic objective of being the world’s leading supplier of short-staple spinning systems offering the full range of machines, components and parts remains unchanged. Rieter will continue to differentiate itself through its systems expertise, value-creating, innovative solutions, after-sales excellence and the worldwide availability of its product and service offering.

 

The priorities for the next three years will be the further reinforcement of its innovative capabilities and the expansion of its product and service offering, especially in parts and components. Additional resources for research and development are being budgeted for this purpose. Rieter will also take action to optimize the utilization of existing capacity, improve product margins and reduce structural costs.

 

Rieter will thus be in the position to continue deriving above-average benefit from the market trend in demand towards products featuring higher levels of automation, productivity and energy-efficiency. Rieter intends to grow faster than the market.

 

Adjusted medium-term financial targets

 

At the same time Rieter will create shareholder value with its medium-term profitability target of an EBIT margin of about 10 percent of sales and a RONA (Return On Net Assets) of about 14 percent. With ongoing annual growth in fiber consumption of 2 percent to 3 percent, the present currency environment, current raw material prices and its existing product and service portfolio, Rieter believes it can achieve its profitability target in the medium term with sales of some 1.3 billion CHF. Rieter intends to distribute some 30 percent of net profits as dividends.

 

Market environment and outlook

 

Spinning mills’ narrowing margins due to declining raw material and yarn prices in the third quarter have resulted in a slowdown in market momentum, especially in Turkey, the Asian countries (without China and India) and Latin America. The slightly positive momentum in India was maintained in the third quarter, while the restraint in China continued. The lower overall utilization of spinning mill capacity has also resulted in reduced demand for spare and wear and tear parts. In this more challenging market environment Rieter recorded accumulated order intake of slightly over 900 million CHF up to the end of the third quarter.

 

Source: Rieter