WINTERTHUR, Switzerland — October 20, 2023 — Rieter’s cumulative sales in the first nine months of 2023 amounted to 1,092.9 million Swiss francs ($1,223 million) (2022: 987.4 million Swiss francs ($1,104 million)), an increase of 11 percent compared to the prior-year period. In particular, supply bottlenecks eased slightly, which allowed more machines to be delivered than in the same period last year. Sales in the third quarter of 2023 were 334.7 million Swiss francs (Q3 2022: 366.8 million Swiss francs ($410 million)).
The Business Group Machines & Systems generated total sales of 749.6 million Swiss francs ($839 million) in the first nine months of 2023 (+18 percent). The Business Group Components posted sales of 206.8 million Swiss francs ($232 million), 11-percent lower than in the corresponding period of the previous year, while the Business Group After Sales recorded growth of 13 percent to 136.5 million Swiss francs ($153 million) in the first nine months of 2023.
Order intake
Order intake in the reporting period was characterized by restrained investment in new machinery in almost all regions except China. Demand for consumables, wear & tear and spare parts continued to weaken due to the slowdown in spinning mill capacity utilization. Rising interest rates and high energy and raw material prices also had a dampening effect.
In this market environment, the Rieter Group received orders totaling 452.2 million Swiss francs ($506 million) in the first nine months of 2023 (2022: 1,095.8 million Swiss francs ($1,226 million)). In the third quarter of 2023, orders decreased by 44 percent year-on-year to 127.2 million Swiss francs ($142 million) (2022: 226.4 million Swiss francs ($253 million).
Rieter expects the market to have bottomed out in the year 2023 and anticipates a gradual market recovery in the course of the 2024 financial year.
Order backlog
As of September 30, 2023, Rieter has an order backlog of around 900 million Swiss francs ($1,007 million) (September 30, 2022: 2,000 million Swiss francs ($2,238 million)). The current order backlog will allow good capacity utilization at the production facilities into the coming year. The cancellation rate in the reporting period was within the usual range, averaging around 5 percent of the order backlog, with a slight downward trend.
“Next Level” performance program on track
In July 2023, the Group launched the “Next Level” performance program aimed at strengthening sales excellence, sharpening customer focus, improving cost efficiency in production and optimizing fixed cost structures. By taking these measures, Rieter intends to create the basis for providing an even more agile response to the cyclical nature of the machinery business. The objective of the planned initiatives is to ensure the profitable and sustainable development of the group.
The performance program includes provisions for the net reduction of approximately 300 positions in overhead functions across the group, primarily in Germany and Switzerland. The consultation processes initiated with the employee representatives in Ingolstadt (Germany) and Winterthur (Switzerland) were completed in the third quarter of 2023. The majority of these workforce reductions are expected to be implemented by the end of December 2023.
Due to the current market situation, further market- and volume-related adjustments in the range of 400 to 600 positions will be necessary, mainly in production. However, the actual number of positions to be reduced depends on the order intake in the coming months.
Rieter continues to expect that the strategic and operational measures initiated will result in one-off restructuring costs of around 45 to 50 million Swiss francs, which will impact earnings in the 2023 financial year.
Rieter site, Winterthur
The sale of the site at Klosterstrasse in Winterthur (Switzerland) to Allreal, Glattpark (Switzerland) for 96.0 million Swiss francs ($107 million) was successfully completed on September 26, 2023. Rieter anticipates a positive EBIT contribution of around 70 million to 75 million Swiss francs ($78 million to $84 million). The proceeds from the sale permitted a further reduction in net debt and an improvement in the equity ratio in the third quarter of 2023.
Outlook for the full year 2023 confirmed
As announced on July 20, 2023, in view of the economic situation and the ongoing cyclical market weakness, Rieter continues to expect below-average demand for new equipment in the coming months. A revival is not anticipated until the end of 2023 at the earliest. Likewise, Rieter believes that demand for consumables, wear & tear and spare parts will not recover until towards the end of 2023.
For the full year 2023, Rieter expects an EBIT margin of around 5-7 percent (including positive special effects of less than 2 percent) and sales at the previous year’s level of around 1.5 billion Swiss francs ($1.7 billion).
Posted: October 20, 2023
Source: Rieter Holding Ltd.
