Business & Policy | News & Insights

Rieter Unveils ‘Next Level’ Program: Fueling Sales Excellence & Enhancing Customer Focus

Published: November 10, 2023

In July 2023, Rieter Group, the world’s leading supplier of systems for manufacturing yarn from staple fibres in spinning mills, introduced the “Next Level” performance program. The program aims to enhance sales excellence, sharpen customer focus, improve cost efficiency in production, and optimize fixed cost structures. The objective is to ensure the profitable and sustainable growth of the group, as well as enable Rieter to respond more effectively to the cyclicality of the machinery business.

As part of the program, Rieter plans to reduce around 300 positions in overhead functions across the group, primarily in Germany and Switzerland. These reductions, along with other market-related adjustments, will be implemented by the end of December 2023. The company anticipates that the restructuring efforts will result in one-off costs of approximately CHF 45 to 50 million in the 2023 financial year.

Despite the challenges posed by the market situation, Rieter reported cumulative sales of CHF 1,092.9 million in the first nine months of 2023, marking an 11% increase compared to the same period last year. However, sales in the third quarter of 2023 amounted to CHF 334.7 million, reflecting a decline from the previous year.

The Business Group Machines & Systems achieved total sales of CHF 749.6 million in the first nine months of 2023, representing an 18% growth. On the other hand, the Business Group Components reported sales of CHF 206.8 million, indicating an 11% decrease. The Business Group After Sales experienced a positive trend with a 13% growth and sales reaching CHF 136.5 million during the same period.

The order intake for Rieter in the first nine months of 2023 amounted to CHF 452.2 million, a significant decrease compared to the prior year. Orders in the third quarter of 2023 declined by 44% year-on-year to CHF 127.2 million. The company attributes this decline to restrained investment in new machinery, weakened demand for consumables and spare parts, and external factors such as rising interest rates and high energy and raw material prices.

Rieter remains cautiously optimistic about the market, expecting a gradual recovery in the course of the 2024 financial year. The company’s order backlog as of September 30, 2023, stands at approximately CHF 900 million, which will ensure good capacity utilization at its production facilities in the coming year.

One of the notable developments for Rieter is the successful completion of the sale of its Winterthur site in Switzerland to Allreal, Glattpark. The sale, which amounted to CHF 96.0 million, is expected to contribute positively to Rieter’s earnings before interest and taxes (EBIT), with a projected amount of around CHF 70 to 75 million. The proceeds from the sale also allowed for a reduction in net debt and an improvement in the equity ratio in the third quarter of 2023.

Looking ahead, Rieter anticipates below-average demand for new equipment in the upcoming months, and a recovery in demand for consumables, wear and tear, and spare parts towards the end of 2023. The company projects an EBIT margin of around 5 to 7% for the full year 2023, including positive special effects of less than 2%, with sales expected to remain at the previous year’s level of approximately CHF 1.5 billion.

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