WINTERTHUR, Switzerland— March 9, 2022 — The 2021 financial year was characterized by a rapid market recovery. As market and technology leader, Rieter succeeded in this environment in posting a record order intake, significantly increased sales compared with the previous year despite the bottlenecks in the supply chains, and generated an EBIT margin of 4.9 percent. This success is based on the investments in innovation and competitiveness of Rieter in recent years. Crisis management in the 2020 pandemic year, which aimed at benefiting from the expected market recovery after the pandemic, was also a contributing factor.
With the acquisition of three businesses from the Saurer Group, a further milestone in the implementation of the strategy has been achieved. The acquisition strengthens Rieter’s market position by completing the ring and compact-spinning system. With the laying of the foundation stone for the Rieter CAMPUS in September 2021, an important prerequisite for the expansion of the company’s technology leadership has been created.
Order Intake and Sales
The exceptionally high order intake of 2,225.7 million Swiss francs ($2,632 million) (2020: 640.2 million Swiss francs or $679 million) is broadly supported at the global level. It is based on a catch-up effect from the two prior years and a regional shift in demand for new machines and systems. Rieter believes that a major reason for this shift is the development of costs in China. This is leading to increased investment outside China, but also to investment in the competitiveness of Chinese spinning mills. The orders came primarily from Turkey, India, Latin America, Uzbekistan, China and Pakistan.
At the end of 2021, the company had an order backlog of around 1,840 million Swiss francs ($1,952 million) (December 31, 2020: around 560 million Swiss francs or $594 million).
Rieter closed the 2021 financial year with sales of 969.2 million Swiss francs ($1,028 million), which corresponds to an increase of 69 percent compared to the previous year (2020: 573.0 million Swiss francs or $608 million).
EBIT, Net Profit and Free Cash Flow
The profit at the EBIT level in the 2021 financial year was 47.6 million Swiss francs ($50.5 million), which represents 4.9-percent of sales. At the net profit level, a profit of 31.7 million Swiss francs ($33.6 million) accrued, which corresponds to 3.3 percent in relation to sales.
Free cash flow at 128.1 million Swiss francs ($135.9 million) is a result of the positive developments in earnings and net working capital.
The acquisition of three businesses from the Saurer Group for a purchase price of 321.4 million Swiss francs ($341 million) resulted in net debt of 161.9 million Swiss francs ($171.8 million); as of December 31, 2020, net liquidity amounted to 41.3 million Swiss francs ($43.8). At December 31, 2021, liquid funds amounted to 249.4 million ($264.6 illion) (2020: 283.2 million Swiss francs, or $300.5 million).
The equity ratio as of December 31, 2021, was 27.6 percent (previous year’s reporting date: 36.4 percent).
Sales by Region
Sales increased in all regions, with the exception of Africa. The highest growth of 126.0 million Swiss francs ($133.7 million) compared to 50.8 million Swiss francs ($53.9 million) in the previous year was achieved in India, followed by North and South America with 149.9 million Swiss francs ($159 million) in 2021 compared to 66.4 million Swiss francs ($70.5 million) in the previous period, and the Asian countries excluding China, India and Turkey with 318.7 million Swiss francs ($338.1 million) (2020: 184.8 million Swiss francs or $196.1 million). In Turkey, Rieter increased sales to 182.3 million Swiss francs ($193.4 million) (2020: 122.0 million Swiss francs, or 129.4 million), in China to 135.3 million Swiss francs ($143.6 million) (2020: 92.8 million Swiss francs, or $98.5 million) and in Europe to 43.3 million Swiss francs ($45.9 million) (2020: 38.4 million Swiss francs, or $40.7 million). In Africa, sales were below the prior-year level at 13.7 million Swiss francs ($14.5 million) (2020: 17.8 million Swiss francs, or $18.9 million).
Despite the well-known challenges in the supply chain, the Business Group Machines & Systems posted an order intake of 1,708.6 million Swiss francs ($1,813 million)(2020: 363.9 million Swiss francs, or $386.1 million) and achieved sales of 590.3 million Swiss francs ($626.3 million), double the previous year’s figure (2020: 295.8 million Swiss francs, or $313.8 million). Ring and compact-spinning systems, on whose customer benefits Rieter has worked intensively in recent years, were particularly in demand.
The order intake of the Business Group Components was 296.0 million Swiss francs ($314 million), 75 percent above the previous year’s level (2020: 169.1 million Swiss francs, or $179.4 million). Against the backdrop of successful strategy implementation and good capacity utilization at spinning mills worldwide, sales increased to 231.5 million Swiss francs ($245.6 million) (2020: 174.3 million Swiss francs, or $184.9 million).
The Business Group After Sales recorded an order intake of 221.1 million Swiss francs ($234.6 million), 106-percent higher than the previous year (2020: 107.2 million Swiss francs, or $113.7 million). Sales reached a level of 147.4 million Swiss francs ($156.4 million) (2020: 102.9 million Swiss francs, or $109.2 million). The positive evolution of the Business Group After Sales was also significantly influenced by successful strategy implementation and good capacity utilization at spinning mills around the world.
Acquisition of three Saurer businesses
Effective from December 1, 2021, Rieter is consolidating the components businesses acquired from Saurer. With the acquisition of Accotex (elastomer components for spinning machines) and Temco (bearing solutions for filament machines), Rieter is strengthening its market position in the components business.
The acquisition of the third business from Saurer (automatic winder) completes and thus considerably increases the attractiveness of Rieter’s ring and compact-spinning system. This acquisition marks an important milestone in the implementation of the company’s strategy as an innovative systems supplier. The transaction is expected to be finalized in the first half of 2022.
On September 8, 2021, at the Winterthur location, the foundation stone was laid for the Rieter CAMPUS, which includes a customer and technology center as well as an administration building. With the Rieter CAMPUS, the company is creating a state-of-the-art and creative working environment, ensuring access to cutting-edge European technology and enhancing its ability to attract young talent. Thus, the Rieter CAMPUS will make an important contribution to the implementation of the innovation strategy and to the enhancement of the company’s technology leadership position.
In view of the profit of 31.7 million Swiss francs ($33.6 million) at the net profit level in the 2021 financial year, the Board of Directors proposes to the shareholders for 2021 the distribution of a dividend of 4.00 Swiss francs per share ($4.24). This corresponds to a payout ratio of 57 percent.
Changes to the Group Executive Committee
With effect from March 1, 2021, the Board of Directors of Rieter Holding AG appointed Roger Albrecht as Head of the Business Group Machines & Systems and a member of the Group Executive Committee.
Board of Directors and Annual General Meeting
At the 130th Annual General Meeting held on April 15, 2021, the shareholders approved all motions proposed by the Board of Directors. The Chairman of the Board Bernhard Jucker and the Directors This E. Schneider, Hans-Peter Schwald, Peter Spuhler, Roger Baillod, Carl Illi and Luc Tack were confirmed for a further one-year term of office. Stefaan Haspeslagh was newly elected to the Board of Directors for a one-year term of office. This E. Schneider, Hans-Peter Schwald and Bernhard Jucker, the members of the Remuneration Committee who were standing for election, were also each re-elected for a one-year term of office.
Changes to the Board of Directors
The two members of the Board of Directors, Luc Tack and Stefaan Haspeslagh, resigned from Rieter’s Board of Directors with effect from August 30, 2021.
Rieter anticipates a gradual normalization of the demand for new systems in the coming months. The company expects demand for wear and spare parts to remain at a good level due to high capacity utilization at spinning mills.
For the full year 2022, due to the high order backlog and the consolidation of the businesses acquired from Saurer, Rieter anticipates sales of around 1,500 million Swiss francs ($1,592 million). Sales in the second half of 2022 are expected to be higher than in the first half of the year.
The realization of sales from the order backlog continues to be associated with risks in relation to the well-known bottlenecks in the supply chains, the ongoing pandemic and the geopolitical uncertainties. Despite the price increases already implemented, the rise in global costs poses a risk to the development of profitability.
The Board of Directors and the Group Executive Committee wish to thank all Rieter employees for their great dedication under the very difficult conditions in financial year 2021. It was only possible to cope with the rapid market recovery, the bottlenecks in the supply chains and the ongoing COVID pandemic thanks to the great commitment of the employees and their loyalty to Rieter. Our customers, suppliers and business partners who for their part had to overcome major challenges also deserve a big thank you for their loyalty to the Rieter Group. We express our heartfelt thanks to the Rieter shareholders for their trust and hope to be able to welcome them again in person at the Annual General Meeting next year.
Posted: March 9, 2022