Winterthur, Switzerland - Swiss specialist in automotive acoustic parts and textile machinery Rieter Group said in an 8 Dec statement that, "The grave financial and economic crisis has had a severely negative impact on the textile machinery and automobile markets." In recent weeks in particular, "demand for vehicles has collapsed worldwide," the Winterthur-headquartered group said.
As a result, sales and profits in 2008 will be "well short of forecasts made to date," Rieter said.
In its Automotive Systems business, which makes acoustic parts based on polyurethane, Rieter said the turmoil in the market in recent weeks, "has resulted in a significant reduction in delivery requests by customers, for both passenger cars and trucks."
While demand and output by the automobile industry in North America had already declined in the first half of 2008, manufacturers in Europe, Asia and South America have now also been affected by the global economic downturn. Rieter therefore foresees a decline in sales of more than 15 percent in 2008 compared with the previous year and a significant reduction in operating profit before special charges compared with estimates to date.
In the textiles business, things seem, with "no signs of a recovery," Rieter said. Orders received and sales in 2008 are expected to decline by some 65 percent and 30 percent, respectively, compared with 2007.
Rieter is implementing its existing extensive restructuring programme of capacity cuts and transfer of manufacturing operations more rapidly, to adjust the costs to the declines in volume at both divisions.
This includes short-time working at many sites in Europe and North America as well as redundancies worldwide. The restructuring will allow significant reductions in capital expenditure and reduced working capital.
Rieter expects consolidated sales in 2008 to be more than 20 percent lower and operating profits to be significantly reduced compared with the previous year's figure.
Restructuring will cost some CHF 250 million ($218 million) with impairment charges on goodwill amounting to some CHF 100 million. The unsettled markets mean no forecast can be made for 2009, said Rieter.
Rieter generated sales of CHF 3930 million in 2007, with some 15 000 employees worldwide: its textile unit accounted for CHF 1567 million, and its automotive business for CHF 2363 million of this.