Rieter, Switzerland, has reported a 34% increase in net profit – up from CHF 157.4 million in 2006 to CHF211.5 million in 2007. Group sales increased by 12% to CHF3.93 billion.

Markets served by the group’s two divisions, Textile Systems and Automotive Systems, recorded significant growth. The company commented that the investment climate in the world market for textile machinery was very favourable in the first six months of last year in particular.

Rieter’s Textile Systems division reported record orders received, sales and operating result. Comparing like-for-like, orders received in 2007 hit a high of CHF 1.70 billion versus CHF 1.61 in 2006. Demand was strongest in the first-half, easing in the second-half. Sales increased by 18% to a record CHF1.57 billion vs. CHF1.33billion in 2006.

A favourable product mix, good capacity utilization and cost discipline contributed to a high operating margin in the division. Operating profit was (before interest and taxes) was CHF 200.7 in 2007 vs. CHF 92.7 in the prior year. Rieter commented that the profitability of its Textile Systems division was also improved by the disposal of the loss making manmade fibre machinery business at the end of 2006.

The Automotive Systems division continued its sales growth trend of the past five years but operating income fell in the face severe pressure exerted by customers on suppliers’ prices as well as the rising cost of materials and energy.

Sales increased by 8% to CHF 2.36 billion. Operating income was CHF 91.6M. in 2007 vs. CHF 94.7M. in 2006.

Looking ahead, Rieter says that it expects demand for textile machinery in the 2008 financial year to develop at a lower level than in the two very good preceding years. Vehicle output will increase worldwide in 2008, but will probably decline in North America.

Sales, after adjustments for currency movements and divestments, are expected to be about the previous year’s level. Assuming increasingly weak levels of economic activity and due to additional costs incurred in establishing manufacturing capacity in the growing markets of both divisions, Rieter expects a somewhat lower operating result than in the previous year. However, the growth prospects for sales and earnings at both divisions remain positive in the medium and long term, says the company.

Source: www.itmalive.com