Winterthur, Switzerland - Rieter Group, a supplier of automotive acoustic parts and textile machinery, has revised its expectations downward for the current financial year in light of the fact that markets in textile equipment are developing less favourably than expected. But Rieter cautioned as well that, "there are also signs of a more severe downturn in vehicle production in Rieter's main markets."
Based on current exchange rates, Rieter said it "now foresees a significant decline in sales and a decrease in operating margins."
In the first four months of 2008, Rieter said, vehicle production in its main markets in the US/Canada and western Europe was some 5 percent lower than a year earlier. As a result, and combined with currency translation effects, Rieter Automotive Systems posted a decline in sales revenues of some 4 percent.
The group, which specialises in automotive acoustic systems, has "intensified the cost-cutting efforts already initiated," but is also negotiating with customers on price adjustments.
Operating earnings will not equal the previous year's figure, Rieter warned.
The group said it its automotive group is continuing with structural measures already announced for manufacturing sites in western Europe and North America, as well as improvement projects in the UK.
Rieter Textile Systems posted record orders received, sales and operating earnings in 2007, but the group said demand has been weakening since the fourth quarter of 2007, and showed a steep decline in March and April 2008. The main reason for this downturn is the currently subdued business outlook for Asian spinning mills. New orders received by Rieter Textile Systems in the first four months were therefore more than 50 percent lower than in the previous year, said the group.
Rieter Group had sales of CHf 3930 million ($3450 million) in 2007, with some 15 000 employees worldwide. Automotive Systems accounted for CHf 2363 million and Textile Systems for CHf 1567 million of this total.