The Rupp Report: Rieter Is Going Strictly Textile

Some weeks ago, the Rupp Report reported about the preliminary results of the Switzerland-based
Rieter Group
(See ”
Rupp Report: Rieter Is Back With Success
,” www., February 8, 2011)
. The preview was quite positive and was
confirmed today at Rieter’s presentation of its annual financial results. Also confirmed was a
rumor that existed for several months – and even years, but with an unforeseen result: The
automotive part of the Rieter Group will not be sold, but the two group members will be separated
into two independent stock-listed companies: Rieter AG, comprising the current Rieter Textile
Systems; and Autoneum Holding AG, comprising the current Rieter Automotive Systems.

Back To Profitability

Erwin Stoller, executive chairman of the Board of Directors, opened the press conference with
some positive remarks. He said the group succeeded with its turnaround after two consecutive years
of losses with a break-even successfully lowered, some new products and further positive
strengthening of its activities in growth markets such as China, India and Turkey. Large demand
volume also came from Bangladesh, Brazil, Indonesia, South Korea, the United States and Uzbekistan.
Both the machinery and the components businesses showed strong increases in incoming orders for

In Europe, Rieter employed temporary personnel to increase capacity. In China and India, new
plants began production. Stoller mentioned the company continued to invest in innovation and access
to new markets in the crisis years in order to be prepared for the upswing with attractive products
and an enhanced presence in growth regions. “However,” he said, “compared to the year 2007 the
sales for 2010 are still 34 percent below that record year. Sales in the second half were slightly
higher than in the first six months and totaled 2,585.8 million Swiss francs, compared to 1,956.3
million Swiss francs in 2009.”


But the most important news was the announcement that the Rieter Group will be separated into
two independently owned and managed stock-listed companies, as mentioned above. The surprise was
not the separation, but the way it will be done. Stoller mentioned that this separation is subject
to the approval of the 2011 Annual General Meeting (AGM) on April 13, 2011.

Rieter outlined the following plan in its announcement:

  • Subject to AGM approval, Rieter Holding will change its corporate purpose and distribute the
    shares of the entity holding the business of its Automotive Systems division to its shareholders in
    the form of a special dividend. The name of the new company will be Autoneum Holding AG.
  • The new company Autoneum will be listed on the SIX Swiss Exchange as of mid-May 2011.
    Hans-Peter Schwald is expected to be nominated as Chairman of the Board, Martin Hirzel as CEO, Urs
    Leinhäuser as CFO and Deputy CEO.
  • The current Rieter Textile Systems Division will continue to trade as an independent company
    under the name of Rieter (symbol RIEN).

After completion of the separation, the Rieter Executive Team is expected to comprise Erwin
Stoller, executive chairman; Peter Gnägi, head of the Spun Yarns Systems business group; Werner
Strasser, head of the Premium Textile Components business group; Joris Gröflin, CFO; and Thomas
Anwander, general counsel.

Rieter’s announcement also outlined the following with regard to share distribution and

  • Subject to the approval of the separation by the 2011 AGM, each Rieter Holding shareholder will
    receive one registered Autoneum Share for each Rieter Holding Share held at the Cut-off Date in the
    form of a special dividend. Holders of Rieter Holding Shares will not pay any consideration for
    such Autoneum Shares.
  • Upon completion of the separation, the Autoneum Shares are expected to be listed and traded on
    the SIX in accordance with the Main Standard. The Rieter Holding Shares will remain listed on the

No Big Changes

According to Rieter, one important result of the separation will be the greater strategic and
operational flexibility of each company, allowing both to profit from further development potential
and growth opportunities, for example, through partnerships or cooperations. Stoller said the
separation will not have a big impact on current operations and business activities: “Already in
the past, both companies operated as separate business units with their own management teams and
organizations; and there was no synergy effect at all. Thanks to this split, both companies can
work in a more independent business environment and are in a better position to find additional
strategic partners. And the moment with these positive results couldn’t be better for a
separation.” Having said that, Stoller also mentioned there is absolutely no need to release any
personnel, stating, “The proposed separation is not expected to result in any job losses.”

The newly formed Autoneum will continue to offer innovative and cost-effective
noise-reduction and heat-management solutions that will enhance vehicle comfort and value. Autoneum
supplies a broad portfolio of products to major automotive original equipment manufacturers
worldwide through its four regional business groups covering Europe; North America; Asia; and South
America, the Middle East and Africa.

The Future

For 2011, Rieter expects sales to increase substantially. However, nobody knows the
consequences of natural disasters such as the crisis in Japan, or political turmoil such as what is
occurring in North Africa. Rieter expects further operating margin improvement compared with 2010
overall, primarily owing to higher textile machinery and technology components volumes. Rieter also
plans to invest further to speed production plant expansion in Asia and thereby enhance its market
position in China and India.

“This is a historic moment for Rieter,” Stoller said. “In 1915 Rieter also produced turbines,
bridges, sewing machines, even weaving looms and many more products. These products were abandoned,
and after World War I, Rieter started booming. I am convinced that this new structure will lead us
to new heights.”

March 22, 2011