From the Sector

• Michael Pieper is not standing for re-election
• Stefaan Haspeslagh will be proposed for election to the Board of Directors at the Annual General Meeting
• The change is related to the transfer of the shareholding of Artemis Beteiligungen I AG to Picanol Group

Michael Pieper, a member of the Board of Directors of Rieter Holding AG since 2009, has informed Rieter that Artemis Beteiligungen I AG has sold its 11.5% block of shares to the Picanol Group (Picanol NV), Belgium, and that he thus will not stand for re-election at the Annual General Meeting on April 15, 2021.

Michael Pieper has supported and helped to significantly shape the development of Rieter for more than ten years. He joined Rieter as a major shareholder in 2008, and since then has been strongly involved in the strategic realignment of the group.

“On behalf of the Rieter Group, I extend our sincere gratitude to Michael Pieper for his extremely successful and valuable work on the Board of Directors and, above all, for his commitment as a long-term major shareholder,” said Bernhard Jucker, Chairman of the Board of Directors of Rieter Holding AG.

The Board of Directors of Rieter Holding AG today announced its intention to propose Stefaan Haspeslagh for election to the Board of Directors at the Annual General Meeting on April 15, 2021.
Stefaan Haspeslagh (born 1958) holds a Master’s degree in Applied Economics from the University of Antwerp, Belgium. He has been Chairman of the Board of Directors and Chief Financial Officer of the Picanol Group (Picanol NV), Belgium, since 2010. In addition, Stefaan Haspeslagh has also been Chairman of the Board of Directors, Chief Operating Officer and Chief Financial Officer of the Tessenderlo Group NV, Belgium, since 2014. As a director of Cellpack NV, Belgium, he has been in office since 2001.

“Rieter welcomes the new major shareholder, Picanol NV. Luc Tack, majority shareholder and CEO of Picanol, has been a member of the Board of Directors of Rieter for four years. Stefaan Haspeslagh is characterized by broad, international management experience in the textile sector and is very well connected in the industry”, stated Bernhard Jucker, Chairman of the Board of Directors.

All other current members of the Board of Directors will stand for reelection at the Annual General Meeting.

Order Intake Continued to Recover in the Fourth Quarter of 2020:

• Order intake increased to CHF 215.1 million in the fourth quarter of 2020 and reached a total of CHF 640.2 million in the 2020 financial year
• As expected, sales of CHF 573.0 million in the 2020 financial year were significantly down on the previous year
• EBIT margin of around -15% and net profit of around -16% of sales expected
• First half of 2021 still heavily impacted by the COVID-19 pandemic
• Change to the Group Executive Committee

Rieter posted a globally and broadly supported order intake of CHF 215.1 million in the fourth quarter of 2020. Thus, the recovery that began in the third quarter of 2020 after the slump in demand in the second quarter continued (order intake second quarter: CHF 45.7 million, third quarter: CHF 174.4 million). Overall, Rieter’s annual order intake for the 2020 financial year totaled CHF 640.2 million, which corresponds to a decrease of 31% compared to the previous year.

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

As expected, as a consequence of the economic effects of the COVID-19 pandemic, the Rieter Group closed the 2020 financial year with considerably lower sales than in the previous year. According to the first, as yet unaudited figures, total sales of CHF 573.0 million were achieved, which corresponds to a decrease of 25% compared to the previous year (2019: CHF 760.0 million).

Order Intake by Business Group
All three business groups were affected by the slump in demand in the second quarter of 2020 due to the COVID-19 pandemic. Despite the recovery in order intake in the third and fourth quarters of 2020, the weak second quarter was only partially offset.

The Business Group Machines & Systems was particularly hard hit by the effects of the pandemic, with a year-on-year decline of 35%. The Business Groups Components and After Sales each recorded a 24% reduction in order intake.*

Sales by Business Group
The exceptional market situation in 2020 gave rise to a significant decline in sales in all three business groups. Accordingly, reluctance to invest and deferred deliveries by customers caused sales in the Business Group Machines & Systems to decline by 24% compared to the previous year.

Due to COVID-19, a large number of spinning mills stopped production worldwide. This led to low demand for spare parts and wear parts, especially in the second and third quarters of 2020. Accordingly, compared to the previous year, sales in the Business Groups Components and After Sales fell by 24% and 27% respectively in the 2020 financial year.*

Sales by Region
With the exception of Turkey, all regions were affected by the low demand as a consequence of the COVID-19 pandemic.*

EBIT Margin and Net Profit
In the 2020 financial year, Rieter anticipates an EBIT margin of around -15% (2019: 11.2%) and net profit of around -16% of sales (2019: 6.9%). As of December 31, 2020, Rieter had liquid funds of exceeding CHF 280 million and unused credit lines in the mid three-digit million range.

First Half of 2021 Still Heavily Impacted by the COVID-19 Pandemic
Thanks to the improved capacity utilization, Rieter is planning short-time working in only a few areas in the first half of 2021. Nevertheless, Rieter expects sales in the first half of 2021 to be below the break-even point.*

Change to the Group Executive Committee
With effect from March 1, 2021, the Board of Directors of Rieter Holding Ltd. has appointed Roger Albrecht as Head of the Business Group Machines & Systems and a member of the Group Executive Committee.*

Annual General Meeting April 15, 2021
The 2021 Annual General Meeting of Rieter Holding Ltd. will take place in Winterthur on April 15, 2021.*

*See attached document for more information.

• License agreement concluded for promising technology
• Integration into the digital spinning suite ESSENTIAL
• Implementation of digital strategy further advanced

The Rieter Group concludes a license agreement with WW Systems on November 5, 2020 and will integrate the Brazilian company's promising product into its digital spinning suite ESSENTIAL. "OptCotton" from WW Systems offers the only software system worldwide that enables an even blend of cotton for the spinning process. With this cooperation, Rieter is taking an important step forward in implementing its digital strategy and offering its customers further added value in yarn production.

"OptCotton" eliminates variations in quality between cotton blends that are being prepared for the spinning process. In this way, standardized quality yarn can be produced efficiently in the spinning process. From the arrival of the bales in the warehouse to their use in the blowroom line, “OptCotton” manages the entire blending process with no need for categorization. This results in increased efficiency in storage and logistics as well as machine performance.

Integration into the digital spinning suite ESSENTIAL
By integrating this solution, Rieter strengthens its digital spinning suite ESSENTIAL. Access to bale-related fiber data and raw material information opens up new possibilities for controlling the spinning mill. In combination with the existing modules ESSENTIALbasic, ESSENTIALmonitor, ESSENTIALmaintain and ESSENTIALpredict, this optimizes the entire spinning process and raises digital intelligence to a new level.

August, 18 2020 Rieter has placed a bond of CHF 75 million with a term of four years and a coupon of 1.55%. This serves to partially refinance the existing bond of CHF 100 million, which is due on September 29, 2020. The bond was issued by Commerzbank. The bond will be listed on the SIX Swiss Exchange.

• Bestellungseingang mit 250.7 Mio. CHF um 34% unter Vorjahr
• Umsatz mit 254.9 Mio. CHF um 39% unter dem ersten Halbjahr 2019
• EBIT von -55.0 Mio. CHF, vor Restrukturierungsaufwendungen von -46.9 Mio. CHF
• Umsetzung COVID-Krisenmanagement und Restrukturierungen plangemäß
• Stärkeres zweites Halbjahr 2020 erwartet

COVID-19 hat das Rieter-Geschäft im ersten Halbjahr 2020 stark beeinträchtigt und zu einer Marktsituation geführt, in der die Nachfrage in allen drei Geschäftsbereiche stark zurückgegangen ist. Der Geschäftsbereich Machines & Systems ist von der Verschiebung von Investitionen und Auslieferungen durch Kunden betroffen. Gleichzeitig ging die Nachfrage nach Verschleiß- und Ersatzteilen sehr deutlich zurück, da weltweit die Produktion in vielen Spinnereien ausgesetzt wurde. Dies schlägt sich in niedrigen Auftragseingängen und Umsätzen der Geschäftsbereiche Components und After Sales nieder. So führte diese außergewöhnliche Marktlage im ersten Halbjahr 2020 zu Verlusten in allen drei Geschäftsbereichen.

Der Rieter-Konzern verbuchte einen Bestellungseingang von 250.7 Mio. CHF. Dies entspricht einem Rückgang von 34% (1. Halbjahr 2019: 378.3 Mio. CHF). Der Bestellungseingang im Geschäftsbereich Machines & Systems ging um 34% zurück, im Geschäftsbereich Components sank er ebenfalls um 34% und im Geschäftsbereich After Sales um 32%. Der Bestellungsbestand per 30. Juni 2020 betrug rund 490 Mio. CHF (30. Juni 2019: 295 Mio. CHF). Die Stornierungen lagen unter 5%.

Der Umsatz erreichte 254.9 Mio. CHF (1. Halbjahr 2019: 416.1 Mio. CHF), was einem Rückgang von rund 39% gegenüber der Vorjahresperiode entspricht. Bei Machines & Systems ging der Umsatz wegen des niedrigen Bestellungseingangs in den ersten drei Quartalen des Vorjahres und verschobener Lieferungen um 46% zurück. Der Umsatz bei Components sank um 29% und der Umsatz von After Sales um 34%.
Mit Ausnahme der Türkei war der Umsatz in allen Regionen von der COVID-19-Pandemie gekennzeichnet. In Indien fiel der Umsatz im Vergleich mit dem ersten Halbjahr 2019 wegen des Lockdowns um 73% auf 17.7 Mio. CHF. In den asiatischen Ländern, in China sowie in Nord- und Südamerika sanken die Umsätze zwischen 44% und 49% verglichen mit dem ersten Halbjahr 2019. In Afrika ging der Umsatz um 20% zurück. Europa lag leicht über Vorjahresniveau. Die Türkei verbesserte sich signifikant von einem sehr niedrigen Niveau im Vorjahr (1. Halbjahr 2019: 24.5 Mio. CHF) auf 51.1 Mio. CHF im ersten Halbjahr 2020. Dieser Aufschwung steht auch im Zusammenhang mit den Innovationen, die Rieter auf der ITMA in Barcelona im Juni 2019 präsentierte.

Im Juni 2020 registrierte das Unternehmen Anzeichen einer Markterholung. Rieter beobachtet die Kapazitätsauslastung von mehr als 600 Spinnereien weltweit. Anfang April 2020 lag der Anteil produzierender Spinnereien bei rund 40%. Ende Juni 2020 verbesserte sich dieser Anteil auf ein Niveau von rund 80%.

• 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.

• Order intake up 7% on previous year; orders amounting to CHF 401.6 million booked in fourth-quarter 2019 (4th quarter 2018: CHF 119.0 million)
• As expected, sales significantly down on previous year, falling by 29% to CHF 760 million
• EBIT margin of 11 .2% and net profit of 6.9% of sales, non - recurring profit contribution from sale of real estate in Ingolstadt (Germany)
• Proposed dividend of CHF 4. 5 0 per share

In financial year 2019, Rieter recorded an order intake of CHF 926.1 million, which was 7% up on the prior-year period (2018: CHF 868.8 million). This development is attributable to a strong fourth quarter, in which Rieter booked orders totaling CHF 401.6 million (4th quarter 2018: CHF 119.0 million). At the end of 2019, the company had an order backlog of about CHF 500 million (December 31, 2018: about CHF 325 million).

In 2019, Rieter Group sales amounted to CHF 760.0 million (2018: CHF 1 075.2 million), which corresponds to a decrease of 29% compared to the previous year.

EBIT Margin, Net Profit and Free Cash Flow

Rieter generated an EBIT margin of 11.2% or CHF 84.9 million (2018: 4.0% or CHF 43.2 million). This includes the non - recurring profit from the sale of real estate in Ingolstadt in the amount of CHF 94.5 million. As a result of the capacity adjustment and cost reduction measures, the number of employees decreased by 11% to 4 591 (December 31, 2018: 5 134).

Net profit rose to CHF 52.4 million (6.9% of sales) and thus was significantly higher than in the previous year (2018: CHF 32.0 million or 3.0% of sales). The contribution from the sale of real estate in Ingolstadt had an impact of CHF 67.2 million (EUR 61.6 million) at the net profit level. Free cash flow in 2019 was CHF 42.3 million (2018: CHF 63.6 million). Net liquidity rose to CHF 162.1 million (December 31, 2018: CHF 150.2 million ). The equity ratio as of December 31, 2019, was 47.8% (prior-year balance sheet date: 44.6%).

• Verträge über zusätzliche Projekte in Kairo unterzeichnet
• Auftragsvolumen beträgt rund 30 Millionen Schweizer Franken
• Auftragseingang im ersten Halbjahr 2020 erwartet

Am Swiss-Egyptian Investment Forum, das heute in Kairo (Ägypten) stattfand, unterzeichneten die Cotton & Textiles Holding Company und Rieter zusätzliche Verträge im Zusammenhang mit dem Modernisierungsprogramm für die ägyptische Textilindustrie.

In Anwesenheit von H.E. Hisham Tawfik, Minister of Public Business Sector of the Egyptian Government, und dem Schweizer Bundesrat Guy Parmelin, Vorsteher des Eidgenössischen Departements für Wirtschaft, Bildung und Forschung, wurden die Verträge von Dr. Ahmed Moustafa, Chairman Cotton & Textiles Holding Company, und Dr. Norbert Klapper, Chief Executive Officer Rieter, unterzeichnet.

Das Gesamtvolumen der Verträge beläuft sich auf rund 210 Millionen Schweizer Franken, einschliesslich der Verträge, die an der ITMA 2019 in Barcelona unterzeichnet wurden und ein Volumen von rund 180 Millionen Schweizer Franken umfassen.

Rieter erwartet, dass der gesamte Auftrag als Auftragseingang im ersten Halbjahr 2020 verbucht wird. Bisher wurden 165 Millionen Schweizer Franken verbucht.

Dr. Klapper freute sich sehr über die feierliche Unterzeichnung: «Der nächste Schritt des heute vereinbarten Programms unterstreicht die starke Partnerschaft zwischen der Cotton & Textiles Holding Company und Rieter. Ich danke unseren ägyptischen Partnern für das Vertrauen, das sie Rieter weiterhin entgegenbringen. Wir werden unser Bestes tun, um die Cotton & Textiles Holding Company bei der erfolgreichen Umsetzung des Modernisierungsprogramms zu unterstützen.»

• Order intake of CHF 524.5 million after nine months
• Order intake for a major project from Egypt booked in October 2019
• Market situation remains challenging
• Real estate sale in Ingolstadt successfully completed
• Outlook 2019

The cumulative order intake recorded by Rieter Group in the first nine months of 2019 of CHF 524.5 million (2018: CHF 749.8 million) was down by 30% compared to the prior-year period. In the third quarter of 2019, order intake was CHF 146.2 million (Q3 2018: CHF 238.0 million).

Order Intake for a Major Project from Egypt Booked
On October 7, 2019, Rieter booked the order intake for the first six projects with Cotton & Textile Industries Holding Company, Cairo (Egypt) of around CHF 165 million. This amount is thus not included in the figures for the third quarter of 2019 and will positively affect the fourth quarter. The sales are anticipated to be realized in the 2020/2021 financial years. The order includes deliveries of compact and ring spinning systems and it is part of a comprehensive modernization program for the Egyptian textile industry.

Market Situation Remains Challenging
The demand for new machinery remained at a low level in the third quarter of 2019. The primary reasons are existing overcapacity in the spinning mills, the trade conflict between the USA and China, as well as political and economic uncertainties in other regions of importance to Rieter. Rieter's market share continues to be at the level of around 30%.

Real Estate Sale in Ingolstadt Successfully Completed
Rieter completed the real estate sale in Ingolstadt (Germany) to GERCHGROUP of Düsseldorf (Germany) on September 13, 2019. Rieter expects a non-recurring profit contribution from this transaction on a net profit level of around EUR 60 million.

Outlook 2019
Rieter estimates significantly lower sales for the year 2019 as a whole compared to 2018, and expects a significant drop in the result from the ongoing business. EBIT and net profit are anticipated to be significantly above the levels of the previous year due to the non-recurring profit contribution from the sale of real estate in Ingolstadt (Germany). The cost-cutting measures introduced have been implemented to a great extent.

Graf introduces at ShanghaiTex three novelties for the textile market: a new card clothing with up to 30% longer lifetime, a height adjustable comb and a helpful solution for card clothing management.
MULTISHARP, the unique wear resistant alloy for card clothings, increases the lifetime of metallic card clothings on the cylinder by up to 30%. Additionally, the work load of the maintenance team can be minimized by providing longer service cycles and less unplanned downtimes.

The yield on raw material can be increased without compromising the quality requirements – thanks to the continuous height adjustability of the new combs series. The continuous and exact gap setting between nipper and circular comb on each individual combing head provides customers a new level on raw material utilization. Additionally, the maintenance people will appreciate the comfortable and easy installation of the circular comb.

With the card clothing management the overall investment costs can be reduced. This is based on minimizing the operational expenses including optimizing the overall equipment effectiveness. Graf’s card clothing management prolongs the lifetime of flexible flats by up to three times without comprising on the quality parameters throughout the entire life cycle.