Winterthur, Switzerland -- Rieter Group sales for 2008 declined by 20 percent to CHf 3142.5 million ($2718 million), as previously announced by the Swiss specialist in automotive acoustics.
Its operating result before special charges, interest and taxes was CHf 22.4 million, and the group, which also has a textile machinery systems business, suffered a corporate loss of CHf 396.7 million for the year.
This loss is mainly attributable to special charges for restructuring, provisions and goodwill impairment and the financial result, Rieter pointed out.
Discussing these figures, Rieter said they "bore clear traces of the consequences of the global economic downturn." After achieving record figures in the previous year, Rieter said, the group recorded significantly lower orders received, sales, operating result and net result in 2008,
Not only has Rieter had to cope with a drop in demand that is "unprecedented in its intensity and rapidity," the group has also seen both divisions - textile machinery and the automotive component supply business - affected simultaneously for the first time. Its strategic position in two very different markets had previously "enabled diverging cyclical influences to be balanced," said Rieter, but the 2008 economic downturn affected all Rieter's important markets at the same time.
Rieter started restructuring in summer 2008 to adjust to the new conditions in its market.
Globally, the textile machinery business started slowed significantly in spring 2008, and this continued and intensified in the second half of the year, Rieter said.
Rieter's automotive component supply business was affected by the crisis in the US automobile industry and the economic slowdown in Europe, especially in the second six months.
Despite these constraints, Rieter succeeded in maintaining its market position in both divisions and even expanding it in Latin America.
Both Rieter divisions have a global presence and a broad basis in terms of their products and customer relationships.
Rieter's extensive restructuring programme has measures being implemented systematically in both divisions, including:
• flexible working-time, and short-time working in Europe and North America
• a worldwide reduction in employees to adjust the workforce to lower volumes.
• plant closures and structural adjustments in the US, Spain, Germany, Italy and France.
Rieter cut its workforce to 14 183 worldwide, some 9 percent less than at the end of 2007 and ended the contracts of 1500 temporary employees -- not included in these totals.
In automotive, Rieter said, North America saw a significant reduction in vehicle output in the first half of 2008, which later spread to Europe and South America, and to a lesser extent Asia. Automotive parts suppliers, who have "struggled for years with severe pressure on prices and margins," saw "a massive drop in production volumes," the company commented.
Despite this, Rieter maintained its position in Western Europe and North America and expanded in Asia, exploiting its broad customer portfolio and innovative products.
In the second half, Rieter also managed production start-ups of aerodynamic underfloor modules incorporating its innovative lightweight 'Ultra Silent' technology, which allows significant reductions in vehicle CO2 emissions.
Rieter's automotive unit had sales of CHf 2022 million in 2008, compared to CHf 2363 million in 2007, as a consequence of the market turbulence.
Earnings (EBITDA) declined to CHf -7.3 million, while EBIT was also depressed by the radical restructuring, including plant closures and transfers of manufacturing facilities to low-cost locations in eastern Europe and Asia (CHf 195.0 million), and by impairment charges on goodwill of CHf 48.7 million. As a result, Rieter Automotive Systems posted an operating loss of CHf 251.0 million compared to an operating profit of CHf 91.6 million in 2007.
As well as investing in new locations where major customers are installing plants, Rieter said its automotive unit is "making vigorous efforts to adjust its network of production sites to the structural changes in the industry worldwide."
Innovations in automotive such as the Rieter Ultra Silent fibre material are attracting considerable interest from customers.
Rieter concluded that 2009 "will be a challenging year," since prospects in both automotive and textile machinery are subdued and highly uncertain. Rieter expects declining demand in both divisions, and consequent operating losses. Maintaining a sound balance sheet and adequate liquidity are therefore top priorities.
In the medium term, Rieter believes that demand will increase in both divisions, in line with global trends. "As market leaders with an innovative product portfolio, both divisions are very well positioned to benefit from the next upswing," the company concluded.