RATIONAL AG - Earnings Release 2017

News Details

Corporate | 30 October 2017 07:00

Rational AG continues successful business performance

DGAP-News: RATIONAL AG / Key word(s): Quarterly / Interim Statement

30.10.2017 / 07:00

The issuer is solely responsible for the content of this announcement.

Rational AG – Statement on the first 9 months of 2017

Landsberg am Lech, 30 October 2017

Rational AG continues successful business performance

– Sales revenues up 17% on previous year – growth driven by Americas

– Gross margin of 61%

– EBIT margin still on the high level of 26%

– 72% equity ratio

– 93 million euros in operating cash flow

– Good development in both segments

– 131 new employees hired

– Outlook details specified – record investments expected

Sales revenues up 17% on previous year – growth driven by Americas

Rational continued its successful performance of the first six months also in the third quarter, generating sales revenues of 178.1 million euros (2016: 153.1 million euros). This equates to growth of 16% in the third quarter, leaving the growth rate for the nine-month period at the high level of 17%. After nine months, sales revenues amounted to 509.2 million euros (2016: 436.1 million euros).

In North America, sales revenues grew by 25% in the third quarter and by 34% in the nine-month period. Here, business with chain customers in particular was very successful, while street business also performed well.

Sales revenues in the Latin America region were also considerably higher than in the prior-year period, expanding by 27% in the third quarter and by 37% in the nine-month period. In addition to a very good performance in general, orders from major customers and the recovery of the Brazilian market had a particularly positive impact on sales revenues.

In Europe (excluding Germany), sales revenues were up by a total of 15% in the third quarter. In the nine-month period, the region grew by 12%. As in the first six months, key growth drivers were the southern European markets of Spain and Italy. Following stagnating sales revenues in the first half of the year, the UK returned to slight growth in the third quarter. Moreover, developments were positive in markets that had been weighed down by political influence in the past. For example, Russia, Greece and Turkey experienced faster-than average growth in the nine-month period.

Following encouraging growth in the first half of the year, the Asia region expanded by 10%, and thus more slowly than the general average, in the third quarter. This resulted in cumulative revenue growth of 17%. All the region’s markets recorded increases in sales revenues, and in particular, the development of business with local regional customers in the Chinese market was encouraging.

In Rational’s home market of Germany, sales revenues for the quarter were up 16% year-on-year, and growth of 9% was recorded for the nine-month period. The combi steamer segment has already more than recovered from its first quarter backlog. VarioCooking Center(R) business continued to be extremely successful in Germany, expanding by 23% in the first nine months.

Business volumes in the rest of the world grew by 15% in the quarter just ended. In the nine-month period, the region was up 13%. It benefited in particular from a significant increase in business with a partner in Australia.

As in the first half of the year, the currencies of relevance to Rational fell significantly year-on-year in the third quarter. As a result, sales revenue performance in the year to date has been negatively impacted by exchange rate fluctuations. This development was mainly attributable to the weakness of the pound sterling. Adjusted for these factors, sales revenues increased by 18% in the nine-month period.

Gross margin of 61%

In the first nine months of 2017, Rational achieved gross profit of 310.5 million euros (2016: 269.5 million euros). This equates to an increase of 15% compared with the previous year. At 61%, the gross margin was slightly below the high level of the previous year (2016: 62%). This decline is mainly attributable to an increase in commodity costs, which had been expected.

EBIT margin still on the high level of 26%

EBIT (earnings before interest and taxes) stood at 132.3 million euros, 14% up on the previous year (2016: 116.3 million euros).

While, as expected, manufacturing costs rose faster than sales revenues, the increase in operating costs was slightly below average. Operating costs rose by 15%, compared with the first nine months of 2016, to 174.6 million euros (2016: 151.3 million euros).

The increase in costs was largely attributable to sales and service, which saw a rise of 13% to 128.5 million euros (2016: 113.6 million euros). By increasing capacities, the investments were mainly directed towards strengthening the global sales and service organisation and expanding central marketing and service processes.

Research and development costs incurred for the continuous improvement of products and services rose by 30% to 24.1 million euros over the previous year (2016: 18.5 million euros). Development costs of 0.4 million euros were capitalised in the first nine months of 2017 (2016: 1.8 million euros). Adjusted for this effect, research and development expenses increased by 20%.

After nine months, general administration expenses amounted to 22.0 million euros, up 14% on the prior-year period (19.2 million euros).

There was a noticeable negative impact on EBIT from translation effects on foreign currency positions as at the balance sheet date. These effects account for a significant portion of other operating expenses and income, reducing nine-month earnings by 4.1 million euros. In the prior-year period, the negative effect had amounted to 2.1 million euros.

An EBIT margin of 26% was achieved after nine months (2016: 27%). Adjusted for negative currency effects, the EBIT margin of 27% is the same as in the previous year.

72% equity ratio

At 72% (2016: 72%) on 30 September 2017, the equity ratio was at its usual high level. Liquid funds, at 239.2 million euros (2016: 240.9 million euros), represented around 45% of total assets (2016: 49%).

93 million euros in operating cash flow

In the first nine months of the current fiscal year, the cash flow from operating activities was 93.1 million euros (2016: 87.2 million euros). The higher earnings had a positive effect. This was partially offset by a larger decrease in amounts payable to suppliers than in the prior-year period.

The cash flow from investing activities includes investments in property, plant and equipment and in intangible assets. After nine months, these investments amounted to 19.5 million euros (2016: 18.6 million euros). They related primarily to new construction work and renovations to increase production capacities at the Landsberg location.

The cash flow from financing activities essentially reflects the dividend of 113.7 million euros distributed in May (2016: 85.3 million euros).

Good development in both segments

The Rational segment, which represents the production and sale of the SelfCookingCenter(R) and the CombiMaster(R) Plus, grew its segment sales revenues by 16% in the first nine months to 470.7 million euros (2016: 404.3 million euros). The segment EBIT was 126.3 million euros (2016: 112.3 million euros).

The Frima segment produces and markets the VarioCooking Center(R). Frima continued its successful growth of the previous year in the nine-month period, posting an above-average increase in sales revenues of 21% compared with the Group. Frima generated total sales revenues of 39.8 million euros (2016: 33.0 million euros). Segment earnings stood at 5.9 million euros in the period under review (2016: 4.0 million euros).

131 new employees hired

Around 190 new posts are to be created worldwide in fiscal year 2017. The focus is in particular on further expanding the global sales and service organisation. 131 new employees had been added as at the end of September 2017, just under half of them in Germany. A large proportion of the new jobs have been created in sales and sales-related functions. Capacity was also added in technical service and manufacturing.

Outlook details specified – record investments expected

The vast majority of Rational and Frima customers are so satisfied with the products and services that they would buy them again at any time and also recommend them to friends and colleagues. This rating was confirmed in relation to the market launch of the new products. Given the very high market potential and the solid forecasts for the global economy, the Executive Board of Rational AG believes that, as before, the company is well placed to keep on growing successfully.

Performance in the third quarter was again very positive, and the outlook for the rest of the year is good. For this reason, the Executive Board of Rational AG has now provided a more specific sales revenue growth forecast of around 13% for fiscal year 2017.

Rational’s Executive Board expects the negative impact of exchange rate movements to continue in the fourth quarter. Given the combined effect of the record investments planned in production capacities at the Landsberg location and costs calculated for the rest of the fiscal year, management therefore assumes an EBIT margin at the lower end of the range between 26% and 27% for 2017.

Contact:

Rational Aktiengesellschaft

Stefan Arnold / Head of Investor Relations

Tel. +49 (0)8191 327-2209

Fax +49 (0)8191 327-72 2209

E-Mail: [email protected]

www.rational-online.com

Editorial note:

The Rational Group is the global market and technology leader for thermal preparation of food in professional kitchens. The company, founded in 1973, employs more than 1,800 people, around 900 of whom are in Germany. Rational was floated in the Prime Standard of the German stock market in 2000 and is currently represented in the SDAX.

The company’s principal objective is to offer maximum customer benefit at all times. Internally Rational is committed to the principle of sustainability, which is expressed in its policies on environmental protection, leadership, job security and social responsibility. Numerous international awards bear witness to the high quality of the work done by Rational’s employees year after year.


In m EUR	9M 2017	9M 2016	Change in percent
Sales revenues	509.2	436.1	+17
Gross profit	310.5	269.5	+15
Gross margin in percent	61.0	61.8	–
EBIT	132.3	116.3	+14
EBIT margin in percent	26.0	26.7	–
Profit or loss after taxes	101.0	88.8	+14
Earnings per share (in EUR)	8.88	7.81	+14


In m EUR	Q3 2017	Q3 2016	Change in percent
Sales revenues	178.1	153.1	+16
Gross profit	108.0	94.0	+14
Gross margin in percent	60.6	61.4	–
EBIT	48.5	42.7	+13
EBIT margin in percent	27.2	27.9	–
Profit or loss after taxes	37.0	32.6	+13
Earnings per share (in EUR)	3.26	2.87	+13

Disclaimer:

This quarterly statement contains forward-looking statements that are based on assumptions and expectations at the time the statement is published. They are subject to risks and uncertainties and the actual results may differ significantly from those in the forward-looking statements. Many of these risks and uncertainties are determined by factors that are outside the influence of Rational AG and cannot be assessed reliably at present. They include future market conditions and economic trends, the actions of other market players, and legal and political decisions. Rational AG is also not obligated to publish revisions to these forward-looking statements in order to reflect events or circumstances that have occurred after they were published.

30.10.2017 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.

The issuer is solely responsible for the content of this announcement.

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Language:	English
Company:	RATIONAL AG
	Iglinger Straße 62
	86899 Landsberg a. Lech
	Germany
Phone:	0049 8191 327 2209
Fax:	0049 8191 327 722209
E-mail:	[email protected]
Internet:	www.rational-online.com
ISIN:	DE0007010803
WKN:	701080
Indices:	SDAX
Listed:	Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Munich, Stuttgart, Tradegate Exchange