The Rieter car parts and textile machinery company reported on Friday that net profit for the first half of the year fell by 19 per cent to SFr668 million ($40.17 million) due to lower financial income and higher tax payments. However, sales rose 15 per cent to SFr1.63 billion.

The Winterthur-based company said in a statement that it would be a "great challenge" to top last year's net profit in 2001. Rieter posted a 2000 net profit of SFr146 million on sales of SFr2.93 billion.

The company said it expected sales and operating profit to rise this year, although sales growth would probably slow in the second half due to the slowdown in major economies, while weakness in financial markets would also undercut profit.

Automotive division sales in the first half of 2001 rose to SFr1.01 billion, up by eight per cent in Swiss franc terms over the comparable period last year. Sales grew mainly due to what Rieter described as "large delivery volumes for new models".

It said that while automotive production stagnated in Western Europe and fell in North America, it increased its automotive systems sales. This was largely due to demand for Rieter's car noise reduction systems.

The company said that pressure by automotive companies on suppliers to keep prices down was weighing, adding that profitability in its auto division had not reached its target.

Sales in Rieter's textile division totalled SFr606 million, up by 29 per cent over the same period last year.

swissinfo with agencies

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