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Edited Transcript of RIEN.S earnings conference call or presentation 18-Jul-19 7:00am GMT

Half Year 2019 Rieter Holding AG Earnings Call

Winterthur Jul 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Rieter Holding AG earnings conference call or presentation Thursday, July 18, 2019 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Kurt Ledermann

Rieter Holding AG - CFO

* Norbert Klapper

Rieter Holding AG - CEO

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Conference Call Participants

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* Armin Rechberger

Zürcher Kantonalbank, Research Division - Analyst

* Henry Hillgarth

Quaero Capital SA - Fund Manager & Research Analyst

* Pascal Furger

Bank Vontobel AG, Research Division - Analyst

* Rolf Renders

Baader-Helvea Equity Research - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the semiannual report, media and analyst conference call. I am Sandra, the Chorus Call operator. (Operator Instructions) And the conference is being recorded. (Operator Instructions) At this time, it's my pleasure to hand over to Dr. Norbert Klapper. Please go ahead, sir.

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Norbert Klapper, Rieter Holding AG - CEO [2]

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Thank you very much. Good morning, ladies and gentlemen. Welcome to the call on the half year results 2019 of Rieter. I will walk you through the presentation now together with Kurt Lederman, who is sitting next to me. He will take over when it comes to the numbers, I will get started by the key messages. You have this on the first page of the presentation.

Order intake in the first half of 2019, CHF 378.3 million. This is more than what we had -- significantly more than what we had in Q4 '18. To remind you of that, we had CHF 120 million in Q4 '18, and the average of Q1 and Q2 now is at CHF 190 million, but still it’s far away from what we need to generate sales of CHF 1 billion.

The sales came out at CHF 416.1 million, which is 90% less than what we had in the previous year period. And as a result of the low sales, we have booked a loss -- on the EBIT line of CHF 1.2 million and on the net profit line of CHF 3.8 million.

As discussed and announced in March, we are implementing a cost-cutting program, and we are proceeding according to plan. You have seen our workforce numbers and Kurt will go -- will talk about that. Our innovation program, which is a very high priority for us has reached an important milestone in Barcelona at ITMA, where we had an overwhelming response from our customers on what we presented. I will come to that point later in the presentation. You already saw that we have signed a major contract with the holding companies of the Egyptian textile industry. We expect an order intake of CHF 180 million in the second half of 2019. We are moving ahead with the completion of the sale of our real estate in Ingolstadt. We expect the closing of the transaction in the third quarter as announced earlier. And the outlook that we have put together for today is unchanged compared to what we said in spring.

On the next page, you see the sales by region. And you see the picture is not very rosy. As you have already noticed, we see a decline, a little decline in North and South America compared to last year. We see the same in Europe. We see also a decline in China. In China, where we had already low numbers last year, based on the fact that the subsidies in Xinjiang came to an end in March last year, and the overcapacity in China has been broadly discussed already. We see a little higher -- a little growth in India, but based on a very low level. In Africa, we went down compared to '18. This will obviously change next year when we will get the sales from Egypt. And in Turkey, only CHF 24.5 million, but I guess, the situation in Turkey is well known to all of you.

In the Asian countries, which is our biggest market in this -- when we look at it from that perspective. We went down by CHF 35 million also except Vietnam and Pakistan, where we had growth. Uzbekistan is still on top of the list in that region, but not at the levels that we saw in 2018.

Now I'd like to hand over to Kurt, who will walk you through the financial highlights and the numbers.

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Kurt Ledermann, Rieter Holding AG - CFO [3]

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Thank you, Norbert. Welcome and good morning for the first time also from my side. To start with my presentation, let me take a few important key figures on this slide. Order intake continued to be low on average at CHF 190 million per quarter. This is somewhat above the fourth quarter of last year but still on a low level. Sales suffered with minus 19%, a bit less than order intake. This is due to the fact that we had a considerable backlog of CHF 325 million by the beginning of this business year. Currently, the backlog is at CHF 295 million, 9% below December 2018. The missing volume resulted in a reduced profitability and a negative EBIT and net profit. We reacted, as already announced, by capacity adjustment and cost-reduction measures. I will come back to this, will take you through the result of these measures later on in my presentation.

Despite this turmoil and the seasonal increase in net working capital, Rieter's balance sheet is solid on both sides, a strong cash position as well as an equity ratio of 46%. The lower order intake is mainly attributable to the weak machinery business. Overcapacity in spinning mills, the trade conflict between the U.S. and China and general uncertainties in various markets didn't and still don't really stimulate investments.

The Components business is mainly suffering from the lower volumes in the market for new machines and systems. Please note that the part of this business goes to Rieter's own business group Machines & Systems and is included there. For details on total sales volume of the business group components, please refer to the segment reporting in the semiannual report on Page 14. However, in the first quarter, the business of Components with wear and tear parts for spinning mills was running on a good level. After sales had to face a similar situation. The spare parts business for spinning mills was running on a good level, while missing installation volume lowered the order intake. The currency impact, overall, on order intake was negligible.

As expected, the low order intake in Q4 2018 had -- that continued in 2019 left its skid mark in the sales of the business group Machines & Systems. The sales of this business group was 27% below last year's period. Sales of Components with minus 11% suffered from the low volume in the business with new machines to third party as well as intercompany, as I just mentioned. Sales of wear and tear parts were at a good level. Sales of the business group After Sales went down by 3%, similar to the Components business sales of spare parts to spinning mills was on a good level and the -- additionally, the installation volume was still on a decent level, too. The currency impact on sales was insignificant in total as well as for the single business group.

Basically 2 effects influenced the operating result of all business groups in the first half of 2019. First, lower fixed cost absorption due to lower volume, as mentioned and explained before. Second, capacity adjustment and cost reduction measures partly compensated these volume effects.

Machines & Systems as well as Components had the highest reduction in volume, and as a result, the respective drop in EBIT. After sales, however, managed to increase the operating result despite slightly lower volumes. The one-off effect shown here on the corporate includes proceeds from the sale of a property in Germany. It also includes the dissolution of provisions. However, in the reporting period, restructuring cost and impairment losses on tangible fixed assets at the comparable level were recorded. Hence, the net effect on group EBIT was minor.

As said before, there was a huge effort in the group to counter the lower volumes with capacity adjustments and cost-reduction measures. Overall, full-time equivalents could be reduced by almost 12%. This includes blue-collar as well as white-collars in all regions. The result of these measures can be seen in the P&L.

Despite the huge volume reduction, the margin could almost be kept stable on 27%. Additionally, the structural cost, general and admin expenses could be lowered by more than 10% or CHF 12 million. As announced, we did however not reduce our efforts to maintain innovation at a high level. Consequently, R&D remained at previous year's level.

With this, I pass the word on to Norbert. Thanks very much for listening.

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Norbert Klapper, Rieter Holding AG - CEO [4]

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Thank you, Kurt. I'm on the page Innovation at ITMA #1 now. What you see here is the rotor spinning process setup that we presented in Barcelona. You see the card machine, C 80, which is new. The RSP-Module 50, which is new also. Then the 2 new rotor spinning machines. Most of you know that we have lost some ground over the last 2 or 3 years in rotor spinning to our competitors. And the ambition here is and was to set up a process and new machines, which are not me-too products but a step ahead of competition. And based on the customer feedback that we received at ITMA, I guess we have achieved that target.

In -- on the next page, you see the ring spinning process that we presented in Barcelona. You see the new comber E 90, the new roving frame F 40. These 3 compacting devices, which make it very easy to turn the ring spinning machine and into a compact spinning machine and vice versa. With 3 different technologies, this was received extremely well by our customers because it gives them a lot of flexibility. The G 38, which is the backbone of our ring spinning process, and the ROBOspin, the piecing robot for the ring spinning machine, which -- what it does is, when you have a yarn break on the machine, which happens every now and then, this piecing robot repairs this yarn break automatically. Today, this is a manual operation, which requires operator intervention. This -- I mean, all of these innovations have been received very positively by our customers, the ROBOspin made it on the talk of the town list. And it's not for sure. We had queues of customers standing in front of our booth to have a look at this machine. And it's an opportunity on the installed base of retail machines, obviously, and at the same time, a differentiator when it comes to selling new machines.

On the next page, we have, again, the award ceremony, the signing ceremony of the large contract from Egypt. We are very happy that the holding company has entrusted us with this huge program, which is very important for Egypt. We are currently in the process of doing the detailed scheduling with our Egyptian partners. And I guess, this is the biggest contract Rieter has ever received.

On the next slide, you see the Rieter property in Ingolstadt, which we are in the process of selling. The closing process is on track. We expect it's -- the process to be closed by -- in Q3, and the extraordinary net profit to come in by that time.

And coming to the next page, outlook. As I said, it's unchanged compared to what we said in March, the new -- the demand for new machines remained at a low level in the first half of 2019. Rieter does not anticipate a significant upturn in the market in the second half year period.

For the full financial year compared to the previous year, Rieter expects a significant decline in sales, EBIT and net profit, not taking into consideration the extraordinary income, which we expect from the transaction in Ingolstadt. The cost-cutting measures that we have started and introduced are in implementation will continue to be implemented. You saw in our numbers that we have already reduced 8% of our workforce. The goal is to make a reduction of 5% of the positions on a sustainable basis, and we are well on track with that.

Rieter is focusing on the successful market launch of the innovations, which were presented and received positively by the customers at ITMA '19 in Barcelona. We see an opportunity here against the market trend, but it's too early to say what this would -- will really mean in our numbers.

So far the presentation, we are open for questions now.

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Questions and Answers

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Operator [1]

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(Operator Instructions).

The first question comes from (inaudible), [ABC Partners].

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Unidentified Analyst, [2]

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We wanted to understand a big factor, what you see as the main driver for the decline in orders? And what you see or expect to be the catalyst for -- going back to -- on a growth trajectory?

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Norbert Klapper, Rieter Holding AG - CEO [3]

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Thank you very much for the question. There is 2 main drivers I'd like to highlight. So let's say, we talk about 3. So the first one is the situation in China and Southeast Asia, which is mainly impacted by the trade war. The trade war, this is how the Chinese call it, has an impact on the investment sentiment in China and in the surrounding countries in a very big way. It creates a lot of uncertainty. And so customers, investors into spinning mills are holding back their investments to wait for the outcome of the trade war. I guess they could live with either outcome going back to the situation we had before the trade war or a completely different picture. What they are waiting for is a decision, and the decision is not there yet. And I don't expect a decision to be made in the very near future. That is my personal assessment. Second thing is the overcapacity in the market, there is overcapacity in the spinning industry, and this overcapacity has to disappear in one or the other way and match with the demand curve again. You might have seen recent publications from India, which clearly express the point of overcapacity for the Indian market, but it's not an Indian problem alone, there is also other countries impacted. The last big investment wave, as you all know, went into China into the Xinjiang province. And the third point is the political unrest that we see outside the trade war, and this refers, for example, to Turkey. You've seen the numbers from Turkey. Sales of not even CHF 25 million, an average year for retail in Turkey over the last couple of years was a level of CHF 150 million on an annual basis. So you see what's missing there. And yes, well, is there a solution? Is there a -- the change in the situation to be expected in the near future? We are skeptical about that, and that is why the outlook looks the way it is.

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Operator [4]

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The next question comes from Armin Rechberger, ZKB.

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Armin Rechberger, Zürcher Kantonalbank, Research Division - Analyst [5]

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You mentioned about -- or you gave some explanations regarding corporate, the positive CHF 3.9 million there, and last year it was minus 1.5%. Can you explain it again? It was a little bit too fast for me, sorry. And then ROBOspin, just detail when will it be available? You said you had huge interest there, but as far as I know, it's just in the prototype stadium now. So when can I buy it? Egypt, you stressed the point there was nothing booked at all from this big contract, is that correct? Even not for Components or some after sales business, you have to prepare already some maybe installations or something just to make sure absolutely nothing was booked for the Egypt contract, right?

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Norbert Klapper, Rieter Holding AG - CEO [6]

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So Kurt, would you take the first one?

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Kurt Ledermann, Rieter Holding AG - CFO [7]

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So if I understand correctly, you're referring to my slide where other -- corporate others one-off effect, that's from minus 1.5 million last year to 3.9 million this year. And this year, it includes 2 things, one is the proceeds from sale of property in Germany. It's a small part of this Ingolstadt property in Germany. And the other part is dissolution of provisions no longer used. But I said, these provisions, they are absorbed by other provisions built up, they are not related to these provisions or the provisions for restructuring and restructuring costs as well as impairment losses on tangible fixed assets. And they are altogether at a comparable level. But not all booked in corporate. So they are somewhere in the other business groups. But on a total level, the dissolution of the provision was absorbed with another extraordinary special cost of this one-off cost of this period. So this was the argument.

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Norbert Klapper, Rieter Holding AG - CEO [8]

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Okay. So -- and I'm going to take the one on ROBOspin and Egypt. Egypt, we have not booked anything from this Egypt contract yet. We expect the order intake to be booked in the second half of 2019, and we expect sales to be booked in 2020 and 2021. The split of sales between '20 and '21 is not clear yet because what we are doing at the moment is we are doing the scheduling of the program with our Egyptian partners, and of course to what extent this order turns into sales in the 2 different years depends on the implementation schedule and that is what is still -- what we are still working on. And ROBOspin, I mean, I really hope that you are going to buy one or 2, yes, and they will be available next year. We will start selling ROBOspin next year, early next year.

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Operator [9]

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(Operator Instructions). Gentlemen, so far there are no more questions.

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Norbert Klapper, Rieter Holding AG - CEO [10]

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Is that really true? Okay.

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Operator [11]

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We have now a registration from Rolf Renders, Helvea.

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Rolf Renders, Baader-Helvea Equity Research - Research Analyst [12]

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I was just wondering if you happen to end up underlying with a loss this year. Could you say something about the consequence for the dividend, what you expect? And then maybe I better just [gulp] 3 questions. Are you able to give an update on the long-term targets or the mid-term targets? And can you clarify a bit more about this overcapacity in light to the assumed 12-year replacement cycle? Is anything changed there? Or like -- that will be good to understand.

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Norbert Klapper, Rieter Holding AG - CEO [13]

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Yes. Let's go through each step-by-step. A loss this year. It is our goal to make a profit this year. Not taking into consideration the extra profit from Ingolstadt. We will see whether we will be able of achieving that. It depends, obviously, on how the business will go in the second half in the -- of 2019. That is our goal. That is what we are working towards. The dividend, well, we will make the decision, the shareholder meeting, we'll make the decision in March on the dividend. But based on the fact that we will have an extra profit in that amount, in that order of magnitude that we reported a couple of times, this might have an impact on the dividend discussion, let me put it this way. Long-term targets, there will be no midterm targets this year because we are focused on maneuvering on getting Rieter through this difficult market situation and not losing focus on strategy implementation. That is our goal for this year. And we know that midterm targets at the moment don't match with what you see in our numbers, and we are aware of it, but we have set a priority together with our Board of Directors. And the priority is, let's manage the difficult market situation and at the same time make sure that Rieter doesn't lose focus on strategy implementation. And the overcapacity, that is a very difficult question. What is the impact of the overcapacity on the replacement cycle? I mean the overcapacity might need to go away -- I mean in an ideal world, what goes out of business is old spindles, which have their -- which are older than 10, 12 years. So that would match with the replacement cycle in a certain way. But is that going to happen exactly that way? Very difficult to say. We will watch the situation very closely. We are in close contact to our customers. And as you know, not all spinning mills in the world are Rieter spinning mills.

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Rolf Renders, Baader-Helvea Equity Research - Research Analyst [14]

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And then maybe last question. Any update on possibilities to acquire something interesting in this difficult period for the industry?

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Norbert Klapper, Rieter Holding AG - CEO [15]

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We are watching it very closely. And you know that what we are looking for. And we are looking for -- in particular, for opportunities in the Components area. And we are working diligently on our list and see whether we can find an opportunity to make an acquisition. It is, as you know, many of these companies are family-owned businesses, so there might be a window of opportunity based on the current market situation, but we have nothing to report on that. We are close to it.

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Operator [16]

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The next question comes from Pascal Furger, Vontobel

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Pascal Furger, Bank Vontobel AG, Research Division - Analyst [17]

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First question, Component. So here I understand lower volumes and so forth, but still the CHF 6 million EBIT, it's really at the all-time low. So it's a bit tough for me to understand, if you could give here some more color. Just looking at basically what SSM reported as an EBIT on a half year basis, what happened here? Or did you buy SSM at their absolute peak of the cycle? And then maybe second question, restructuring. So do you still expect mid-single digit million amount this year, which will be booked? And considering that markets remain where they are, are you prepared to take more measures given these depressed markets? Maybe last question, just a follow-up on this larger order from Egypt, could you share with us about when do you expect a prepayment so that we can see this order intake this Q3 or Q4? And what do you expect in terms of split by the 3 divisions from this large order?

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Norbert Klapper, Rieter Holding AG - CEO [18]

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Okay. Thank you, Pascal, for the question. RCO, I'd like to draw your attention to the total sales of RCO. You'll find it in the spreadsheet that we have distributed together with a media release, and here you find the explanation. In half year 1 '18, total sales of RCO was CHF 182 million. Half year 1 '19, we had CHF 148 million. And the difference is CHF 35 million of volume, that is CHF 34 million in volume, which is missing in this business group. And the vast majority of this comes from the supplies to RMS and not from the suppliers to third party. And out of the CHF 34 million, if you apply the average margin of this business of, let's say, 30%, you arrive at CHF 10 million margin, which is missing. And here you've got the explanation on the low EBIT number of RCO. Coming to SSM, yes, I mean, we bought SSM in a good year and we knew that, yes. SSM is exposed to the machinery and equipment cycle like -- the same way like RMS, we knew that it happens this year, okay, it's not nice. We are managing our way through it. We stay focused on innovations. We do the cost-cutting exercises the same way we do it in RMS. But it's not a surprise to us that in a year when our spinning machinery business is low, SSM also has a dip, yes. It's not a surprise to us. We knew that when we made the acquisition that this might come and it's the same mechanism that applies to the business of the spinning machines. More measures. We -- what we do now is we complete what we have announced in March. We do this over the summer. And then we look at the business in the second half of the year, and if the business is not developing the way we anticipated today, we might have to think about additional cost reduction things and measures. I cannot say today that this is not going to happen. It depends on what the market and our market share are looking like in the third -- in the second half of this year. And the split on the order intake by quarters. I'm not smart enough to tell you that we will see how that works. So far, we assume that we will completely book this order in the second half of 2019. And the split of the order by business groups. I guess, Kurt, you have worked on that, right?

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Kurt Ledermann, Rieter Holding AG - CFO [19]

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Yes. It's 80% RME -- RMS, 10% Components -- 15% Components and 5% of...

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Norbert Klapper, Rieter Holding AG - CEO [20]

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RAS, yes. Does that answer your question?

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Kurt Ledermann, Rieter Holding AG - CFO [21]

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Sorry, I have to correct. It's 85% RMS, 5% RAS and 10% Components.

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Norbert Klapper, Rieter Holding AG - CEO [22]

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Okay. Good

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Kurt Ledermann, Rieter Holding AG - CFO [23]

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Sorry about that.

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Operator [24]

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We have a follow-up question from Armin Rechberger, ZKB.

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Armin Rechberger, Zürcher Kantonalbank, Research Division - Analyst [25]

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Well, ITMA was very important, and I won the -- I got the impression that you were quite confident with the outcome of the ITMA in Barcelona. Can we -- can you -- on a scale from 1 to 10 -- can you say how happy you are with the outcome of ITMA and especially in comparison with the last ITMA in -- it was in Italy, in Milan?

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Norbert Klapper, Rieter Holding AG - CEO [26]

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My level of happiness is at the very high end of your scale both on when I look at the event itself and also when I look to it -- at it in comparison to 2015. You can always improve, yes, so I would never say I'm at 10, but I'm close to 10. And I mean my level of happiness is one thing, what really matters is what the feedback of our customers is. And we saw a level of discussions, a level of feedback and acknowledgment and also excitement about the things that we presented, which I have not seen in my time with Rieter before. And that is what makes me that happy.

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Armin Rechberger, Zürcher Kantonalbank, Research Division - Analyst [27]

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And this manifests also already on bookings or it's just a feeling in your guts?

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Norbert Klapper, Rieter Holding AG - CEO [28]

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No. I mean now when we push -- we'll come to shove when we talk about the first contracts and down payments to come in and so forth. I expect the first order intakes to materialize later this year. I expect the first sales of the new machines in 2020. And I expect the full impact of this program to be reflected in our numbers in '21.

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Operator [29]

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The next question comes from Henry Hillgarth, Quaero Capital.

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Henry Hillgarth, Quaero Capital SA - Fund Manager & Research Analyst [30]

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Just a couple of questions. One, you mentioned India, and I was just hoping for a little bit of elaboration on the overcapacity in India and how it differs from China? And then the other point is, maybe if you could help us understand your outlook on Components and after sales. And last question is really now given that you have this large Egyptian order, does that change in any way the -- your expectations for working capital? And how you're managing that till the end of the year?

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Norbert Klapper, Rieter Holding AG - CEO [31]

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Thank you. India, overcapacity. Kurt, this one you distributed a press article, which we have from India, right?

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Kurt Ledermann, Rieter Holding AG - CFO [32]

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Was from Financial Times, India.

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Norbert Klapper, Rieter Holding AG - CEO [33]

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Yes. Financial Times, India. You'll find the answer to your question well described in this little article. We are -- you know that we have talked about overcapacity for quite some time. And now it makes -- it hits the press also, yes. The reason in India, why they talk about overcapacity is that the yarn exports to China went down significantly. That is the biggest -- the major reason for what we see there. And India has been an important yarn exporter to China. And this number of -- the amount of exports went down significantly, and that creates this overcapacity situation in India. We -- in China, the situation is not as transparent. But what we know from our customers is that there is mills which are not working around the clock. In this business model normally you work on 7 days, 24 hours. We know that a couple of mills have stopped machines. And this is -- the situation in China, as I said, is not as transparent as in India or it has become transparent in India recently. But we are of the impression that in China, it's not very much different from what we see in India.

Components and after sales. Yes, What I can say about the outlook is that the business with the spinning mills, as Kurt pointed out in his presentation, is at normal levels. So we expect this to move on at normal levels. You see that in RAS, this business is dominant. That is why their numbers are what they are in the first half of this year. In Components, there is the second dimension, we already talked about that. This is the supplies when it comes to selling new machines to Rieter, and this business will continue to be at a low level. So in Components, we will move on at the level that we have seen in the first half of the year based on the assumption that the business with the spinning mills will continue to run at normal levels. And the Egyptian working capital impact. Well, if we can -- if we would be able to book our order intake in the next couple of weeks based on a schedule that would result in shipments to Egypt early next year, yes, then we might have an impact on inventory in particular, yes. We would build up inventory to make sure that we can supply in early -- that we would be able to supply to Egypt in the early 2020, but it's too early to say that because we have -- we don't know the schedule yet. So it's hard to say at the moment whether we will have an impact. And if yes, what the impact would be.

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Kurt Ledermann, Rieter Holding AG - CFO [34]

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Yes. Maybe I can add that on the liability side of the balance sheet, we would then also see advanced payments from customers who absorbed this at least partly because the order intake is only booked if you get the advanced payments. And it's just a general amount to net working capital. It's always at the balance sheet day. For me, much more important is the average over the year and the peak over the year to manage the balance sheet.

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Henry Hillgarth, Quaero Capital SA - Fund Manager & Research Analyst [35]

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Just a question on the after sales. A few years ago, you were pointing out that you only serviced about 40% of your machines, can you tell us what percentage of your machines you service today? And what level you can actually get to in the future and whether this will be a growth driver of that business with high profitability?

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Norbert Klapper, Rieter Holding AG - CEO [36]

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We have -- we are still at the level between 40% and 50% of the total potential that the Rieter installed base offers in terms of spare parts, yes. What -- the growth we have seen in the last couple of years goes back to an improvement of the market share and also to new services, which we have introduced, which have not been there before. Obviously, the compacting solutions and the ROBOspin robot offers an additional potential to do business on the installed base.

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Operator [37]

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(Operator Instructions) Gentlemen, so far we have no more questions.

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Norbert Klapper, Rieter Holding AG - CEO [38]

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So thank you very much. I cannot say it was a pleasure walking you through these numbers because of course we hate to report a loss. At the same point in time, the loss is a result of a couple of conscious decisions that we have been making in connection with the market situation that we find ourselves in. What is important to us is that we can continue to implement our strategy, including the major cornerstone, which is our innovation program. And we have achieved that and at the same point in time, the second thing which is important in the light of what I just said is that we remain to be -- to keep the -- that we can keep the ability to ramp up the business when the market is coming back. And that is what we have achieved so far. It's as we had said, we hate to report a loss. But in the light of the market situation and the priorities that we have set that is what came out. And we will continue to work on achieving our goal to report profit by the end of this year, not taking into consideration the extra profits from Ingolstadt. As I said, it will depend on how the business develops for the last couple of months. Thank you very much.

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Kurt Ledermann, Rieter Holding AG - CFO [39]

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Thank you very much.

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Operator [40]

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Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.