Post MFA witnesses 'return in confidence' among textile industry, says Saurer Textile
26 Jul '05
3 min read
Leading textile maker Saurer Textile has informed the termination of the WTO Agreement on Textiles and Clothing (Multi-Fiber Agreement) caused great uncertainty in the world's textile markets. This was felt in the second half of 2004 and the first half of 2005, but is now slowly abating. However, the industry still has under-utilized capacity, mainly in China, which has been built up in recent years.
As expected, demand is strong in Transmission Systems, but not enough to offset the market weakness in the much larger textile division. In all this led to a lower order intake when compared to the first half of 2004, of EUR 764m (prior year without Surface Technology EUR 899m, 15 percent / also 15 percent after adjustment for acquisitions and currency effects) and sales of EUR 771m (prior year without Surface Technology EUR 781m, 1 percent / 2 percent after adjustment for acquisitions and currency effects). When compared to the second half of 2004 the difference is 3 percent in orders and 5 percent in sales. Orders on hand have risen since the start of the year by 3 percent to EUR 474m.
Their fixed costs were again significantly lower (TEMPUS program) and restructuring costs were reduced, which almost compensated for the loss in margin from reduced sales in their traditional business. The operating profit was EUR 41.9m (prior year EUR 43.1m, before income from the divested Surface Technology of EUR 16.4m). The profit from continuing operations increased from EUR 22.4m to EUR 23.6m. Non-recurring expense included therein amounted to EUR 2.1m, most of it incurred in the Textile division. Saurer's net cash position at June 30, 2005 was EUR 75m (December 2004 net cash EUR 141m). This reduction in net cash since the end of 2004 results from a compensation effect as previously reported for the exceptionally high cash flow at the year-end, together with cash used in 2005 to fund our various acquisitions in the Textile division.
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