From the Sector

Highlights Grow & Deliver (compared with Q3 2021)

• Revenue up 19% and 14% higher in constant currencies1, pricing up 13%
• ROS2 at 6.4% (2021: 10.0%), resulting from lower volumes and higher raw material and freight costs, as well as inflation on operating expenses
• Adjusted EBITDA at €283 million (2021: €325 million)
• Q4 2022 adjusted operating income expected below €150 million

Highlights Q3 2022 (compared with Q3 2021)

• Pricing up 13%, offsetting the increase of raw material and other variable costs. Volumes 5% lower, mainly due to destocking in the distribution channels in Decorative Paints in Europe and in Performance Coatings, as well as lower market demand in China
• Operating income at €168 million (2021: €226 million), includes €16 million negative impact from Identified items (2021: €15 million net negative impact) and €17 million negative from the retrospective hyperinflation impact of the first half-year of 2022. OPI margin 5.9% (2021: 9.4%)
• Adjusted operating income3 at €184 million (2021: €241 million); excluding the retrospective impact of hyperinflation accounting at €201 million
• Net cash from operating activities decreased to an inflow of €126 million (2021: inflow of €290 million)
• Net income attributable to shareholders at €84 million (2021: €164 million)
• EPS from total operations at €0.48 (2021: €0.89); adjusted EPS from continuing operations at €0.57 (2021: €0.93)
• Interim dividend of €0.44 per share (2021: €0.44 per share)

AkzoNobel CEO, Thierry Vanlancker, commented: “Our €201 million adjusted operating income excluding the retrospective impact of hyperinflation accounting bring our Q3 results in line with the market update issued at the end of September. Sharply increased macro-economic uncertainties negatively impacted consumer confidence. This resulted in destocking across several distribution channels in decorative paints Europe and performance coatings, while the market in China was impacted by the ongoing zero COVID-19 policy. Thanks to the strong commitment of our teams, we continue to offset the impact of raw material and freight cost inflation with pricing. We’ve now delivered cumulative pricing of 22% over the last two years. The macro-economic turbulence is expected to continue well into next year. We’ve therefore decided to suspend our targets for 2023 and will provide further guidance when announcing our full-year 2022 results. In the meantime, we will continue to focus on our margin management and cost reduction initiatives.”

• Continued focus on sizeable investments in innovation and sustainability.
• Underway in India, the acquisition of the Engineering Plastics business of Ester Industries Ltd. with the objective of keeping up the Group’s global growth trend

With total sales of EUR 1.508 million generated by over 30 production and sales units in Europe, Asia and America, RadiciGroup closed its 2021 financial year with positive results, despite the difficulties due to the lingering effects of the pandemic and the steep increase in the cost of raw materials and energy, especially during the latter part of the year.

The Group – led by brothers Angelo, Maurizio and Paolo Radici – continued to pursue its strategy of focusing on the core businesses considered to be strategic and synergistic, such as nylon chemicals, engineering polymers and advanced textile solutions, while, at the same time,  introducing new products, such as a line of personal protective equipment for medical and industrial use.

EBITDA reached EUR 268 million, and net income for the year was EUR 150 million.

Despite this situation, RadiciGroup considers it essential to continue making investments.

“In 2021, the Group invested EUR 53 million financed from cash flow,” Alessandro Manzoni, CFO of RadiciGroup, emphasized. “There was no impact on net financial position, which registered an improvement over 2020, as did all our balance sheet ratios."

Furthermore, in spite of the complexity of the period, in 2022 the Group shareholders have kept on with their significant investment plan aimed at strengthening RadiciGroup’s presence in global markets and improving its competitiveness.

Indeed, the Group has moved forward, according to plan, with the acquisition of the Engineering Plastics business of Ester Industries Ltd., an India-based company engaged for decades in the production of engineering polymers and listed on the Bombay Stock Exchange. RadiciGroup’s EUR 35 million investment in this transaction furthers the internationalization strategy of its High Performance Polymers business area.

• Revenue Increases to HK$8,316 Million with Net Profit After Tax Surging Significantly
• Recording a Turnaround to HK$381 Million
• Re-Establishes ESPRIT’s Market Leadership

ESPRIT HOLDINGS LIMITED has announced its audited financial annual results for the year ended 31 December 2021, highlighted by a significant increase in both revenue and profit attributable to shareholders of the Company to HK$8,316 million and HK$381 million respectively, in which the profit attributable to shareholders of the Company also recorded a turnaround versus the loss attributable to shareholders of the Company of HK$414 million for the six months ended 31 December 2020. Gross profit margin was 48.6%, 7.0% higher than the Corresponding Period. Please refer to the Company’s results announcement for the Current Year for further details.

Such financial improvement was attributable to various reasons, including (i) the new infrastructure and strategies instituted by the current management team; (ii) improvement in sales with higher gross profit margin; (iii) positive results of efficient cost control measures; (iv) improved inventory management; and (v) growth in E-commerce.

Although revenue in the Current Year was affected by lockdowns in the Company’s major European markets during the first quarter of 2021, and due to increased restrictions on entry requirements into stores during the fourth quarter of 2021, the Group generated revenue via three main channels: E-commerce, wholesale, and owned retail stores. As the ESPRIT brand website and third-party E-commerce partners continued to trade during lockdown, a large portion of the Group’s sales were generated online. This business model allowed it to mitigate some of the negative impacts of the Pandemic in the retail segment. Another driver of growth came from selling fewer discounted products from the Company’s retail business compared to 2020.

The Group has not forgotten the ESPRIT mission and long-standing commitment to sustainability. The Company has continued to work tirelessly towards developing cutting-edge materials that set new standards in terms of environmental sustainability. The Company has formulated and further advanced its ESG strategies to establish ESPRIT as an industry pioneer. Such strategies involve the greater use of sustainable fibers, developing new and innovative product options that support a circular economy, and ensuring environmental awareness is a key message that underpins all of the Group’s projects. To achieve these objectives, the Management has identified four key pillars of growth (Sourcing and Procurement; Marketing and Product; IT, Internet, and E-commerce; and The ESPRIT Brand Story) that are paramount in maintaining the loyalty of existing ESPRIT patrons and attracting new customers.

Looking ahead, the global economy is anticipated to be negatively affected by the lingering effects of the coronavirus pandemic and the conflict in Ukraine. The already unstable logistics industry and disrupted supply chain will likely be further impacted, which in turn will result in higher logistic service costs. Despite the unfavorable global economic outlook, the Group believes that under the leadership of its current management and with the support of dedicated staff members, the Company is on track to ongoing profit growth.

Financial Year 2020

As a consequence of the COVID-19 pandemic, Rieter closed the 2020 financial year with sales of CHF 573.0 million, which corresponds to a decrease of 25% compared to the previous year (2019: CHF 760.0 million). Due to the low sales volume, a loss of CHF 84.4 million was recorded at the EBIT level while at the net profit level the loss was CHF 89.8 million. In view of the loss in the 2020 financial year, the Board of Directors proposes that shareholders waive the payment of a dividend for 2020.

Order intake of CHF 640.2 million in the 2020 financial year was 31% down on the previous year (2019: CHF 926.1 million). Following the significant slump in demand in the second quarter of 2020 (CHF 45.7 million), order intake recovered in the third quarter (CHF 174.4 million) and improved further in the fourth quarter (CHF 215.1 million).

At the end of 2020, the company had an order backlog of about CHF 560 million (December 31, 2019: about CHF 500 million).

Business Groups
Sales of the Business Group Machines & Systems amounted to CHF 295.8 million in 2020, which corresponds to a decrease of 24% compared to the previous year. Due to the low volume and taking into account the expenditure on the ongoing innovation program, the business group recorded a loss of CHF 72.4 million at the EBIT level. Order intake in the reporting year was CHF 363.9 million (-35% compared to the previous year).

The Business Group Components with sales of CHF 174.3 million (-24% compared to the previous year) achieved a profit of CHF 1.4 million at the EBIT level before restructuring charges. EBIT after restructuring charges was CHF -5.5 million. The order intake with CHF 169.1 million (-24% compared to the previous year) was just below sales.

The Business Group After Sales achieved sales of CHF 102.9 million (-27% compared to the previous year) and a positive EBIT of CHF 1.8 million. Order intake was CHF 107.2 million (-24% compared to the previous year). Over 60% of spinning mills were shut down in the second quarter of 2020, with a corresponding impact on the demand for spare parts.

Dividend
Due to the loss of CHF 89.8 million at the net profit level in the 2020 financial year, the Board of Directors proposes that shareholders waive the distribution of a dividend.

Outlook
Rieter expects the market recovery that began in the second half of 2020 to continue in 2021. The company expects an order intake in the first half of 2021 exceeding that of the previous half year (second half of 2020: CHF 389.5 million). Thanks to the improved capacity utilization, Rieter is planning short-time working in only a few areas in the first half of 2021. Nonetheless, as already announced, Rieter still anticipates that sales in the first half of 2021 will be below the break-even point. In connection with the high order backlog at the beginning of 2021, Rieter expects an operating profit for the full year 2021.

• All motions approved
• Dividend of CHF 4.50 agreed
• COVID-19

In relation to participation in the Annual General Meeting on April 16, 2020, the Board of Directors of Rieter Holding Ltd. arranged exclusively written or electronic voting and the granting of power of attorney to the independent proxy. In taking this approach, the Board of Directors relied on Article 6a, lit. b of Ordinance 2 of the Swiss Federal Council (Measures to Combat the Coronavirus of March 16, 2020). Physical participation by the shareholders was therefore not possible. The Annual General Meeting was held on the premises of Rieter Holding Ltd. at the company’s headquarters in Winterthur.

At the Annual General Meeting of Rieter Holding Ltd. on April 16, 2020, the independent proxy represented a total of 2 025 shareholders who hold 64.3% of the share capital.

A dividend of CHF 4.50 per share was agreed. The shareholders approved the proposed maximum total amounts of the remuneration of the members of the Board of Directors and of the Group Executive Committee for fiscal year 2021.

The Chairman of the Board, Bernhard Jucker, and the members of the Board of Directors This E. Schneider, Michael Pieper, Hans-Peter Schwald, Peter Spuhler, Roger Baillod, Carl Illi and Luc Tack were confirmed for an additional one-year term of office.
Furthermore, This E. Schneider, Hans-Peter Schwald and Bernhard Jucker, the members of the Remuneration Committee who were standing for election, were also each re-elected for a one-year term of office.

Shareholders also adopted all other motions proposed by the Board of Directors, namely approval of the annual report, the financial statements and the consolidated financial statements for 2019, and formal approval of the actions of the members of the Board of Directors and those of the Group Executive Committee in the year under review. In addition, the authorized capital was extended for a further two years.

COVID-19
At present, it is not possible to predict how the global COVID-19 pandemic will affect Rieter’s sales and earnings in the first and second half of 2020, and thus also for 2020 as a whole.

Rieter therefore refrains from providing an outlook for financial year 2020 and will issue the relevant information as part of the semi-annual report on July 16, 2020.
The company has taken the necessary measures to protect employees and to meet commitments to customers as far as possible.

Thanks to long-standing customer relationships, a focus on innovation, global positioning and the company’s financial stability, Rieter will successfully overcome the challenges.

The Board of Management of SGL Carbon SE (ISIN: DE0007235301) has decided not to hold the Annual General Meeting on April 22, 2020, as planned, but to postpone it to a later date.

The cancellation of the Annual General Meeting convened for April 22, 2020, is due to the latest measures taken by the federal government, the federal states and municipalities in connection with the spread of the coronavirus (SARS-CoV-2) as well as the assessment of the Robert Koch Institute and the relevant authorities that in the following weeks infections in Germany will likely increase further. In this situation, the Board of Management decided not to hold the event on April 22, 2020, in the interest of protecting the health of our shareholders, our employees, and our service providers involved in the Annual General Meeting.

The Company will reschedule the Annual General Meeting to a later date in 2020. SGL Carbon SE will monitor the situation closely in the coming weeks and, depending on the further development of the infections, will invite its shareholders to a new date for the Annual General Meeting.