RATIONAL AG - Earnings Release 2017

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Corporate | 3 May 2017 10:30

RATIONAL AG: Successful Start to Fiscal Year 2017

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

03.05.2017 / 10:30

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

Rational AG – Statement on the First Quarter of 2017

Landsberg am Lech, 3 May 2017

Rational AG – Successful Start to Fiscal Year 2017

– Group-wide sales revenues increase by 22 percent

– Growth driven by Americas

– 61 percent gross margin

– 27 percent EBIT

– 78 percent equity ratio

– 12 million euros in operating cash flow

– Good development for both segments

– 75 new employees hired

– Outlook confirmed

Group-wide sales revenues increase by 22 percent – growth driven by Americas

Rational got off to a very good start in fiscal year 2017, growing sales revenues in the first quarter by 22 percent to 165.7 million euros (2016: 135.7 million euros).

Sales revenues increased 58 percent year on year in North America (U.S. and Canada), where business with chain customers in particular was very successful. Sales revenues in Latin America also rose sharply (+53 percent), with all markets in this region making a contribution. Apart from a very good trend in general, sales revenues there were influenced by orders from larger customers. In addition, the SelfCookingCenter (R) was launched in Brazil in the first quarter of 2017, which also had a positive impact in this period.

In Europe (excluding Germany), sales revenues were up by a total of 18 percent. As in previous years, the main growth drivers were Southern European markets; however, countries such as the UK or Turkey, which suffered from political influences last year, also contributed to this growth.

Asia also made a good start to the year, with sales revenues 23 percent up on the previous year. In particular, the largest markets in the region – Japan and China – performed positively. In Japan, business with a major partner was very successful again; sales revenues from VarioCookingCenter (R) also increased again there.

Sales revenues in our home market of Germany were 5 percent down year on year. Whereas FRIMA was able to continue its success of the previous year by growing sales revenues by

22 percent, the figure for Rational was 10 percent lower than the year before. This was mainly attributable to the very high level of sales revenues in the same quarter of the previous year, which was due to the fact that many customers brought forward purchases when a price increase was announced in March 2016.

Business volumes in the rest of the world grew by 18 percent. In particular, Australia grew above average – albeit compared with a relatively weak first quarter in 2016.

This high growth in the first quarter of 2017 was enabled by the overall good business trend and, in particular, positive special effects. These include high levels of new orders at overseas subsidiaries at the end of 2016 as a result of the launch of SelfCookingCenter (R) which were not shipped and invoiced until 2017. Other orders were brought forward by customers and were received earlier than expected. In particular, markets that have a higher price level also grew strongly, and the first quarter of 2017 had more working days on the calendar, and hence more invoicing days, which likewise had a positive impact on sales revenues.

The performance of the currencies of relevance to Rational largely cancelled each other out year on year and led overall to a slight increase in sales revenues.

61 percent gross margin

In the first quarter of 2017, Rational generated a gross profit of 101.1 million euros

(2016: 83.9 million euros). This equates to an increase of 21 percent compared with the previous year. At 61 percent, the gross margin remained at the high level of the previous year

(2016: 62 percent). Negative effects due to the expected increase in commodity prices and the forecast above-average growth in small, lower-margin appliances – in particular the SelfCookingCenter (R) XS – could not be fully offset by the good business performance in markets with a higher price level.

27 percent EBIT margin – adjusted for special effects, at previous year’s level

EBIT (earnings before interest and taxes) stood at 44.1 million euros, 37 percent up on the previous year (2016: 32.2 million euros). An EBIT margin of 27 percent was achieved in the first three months (2016: 24 percent).

The rise in EBIT and the corresponding increase in the EBIT margin are mainly due to the very good sales trend coupled with a below-average increase in operating costs. The latter rose compared to the first quarter of 2017 by 9.2 million euros or 19 percent to 58.3 million euros

(2016: 49.1 million euros). The increase in costs was largely attributable to sales and service, which saw a rise of 19 percent to 43.8 million euros (2016: 36.9 million euros). The investments were mainly directed towards strengthening the global sales and service organisation by increasing capacities and expanding central marketing and service processes.

Research and development costs incurred for the continuous improvement of products and services rose by 32 percent to 7.5 million euros over the previous year (2016: 5.7 million euros). Development costs of 0.1 million euros were capitalised in the first quarter of 2017

(2016: 0.8 million euros). After adjustment for this effect, 16 percent or 1.1 million euros more was spent on research and development in the first quarter of 2017.

After three months, general administration expenses amounted to 7.0 million euros, up 8 percent over the previous year (2016: 6.5 million euros).

There was a noticeable positive impact on EBIT by 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 and increased earnings by 1.1 million euros in the first quarter of 2017. In the prior-year period, the negative effect had a very clear impact of 2.6 million euros.

Adjusted for exchange rate influences, the EBIT margin was 26 percent, around the level of the previous year’s margin after exchange rate adjustments.

78 percent equity ratio

At 78 percent (2016: 78 percent) on 31 March 2017, the equity ratio was at its customary high level. Liquid funds, at 291.6 million euros (2016: 264.8 million euros), represented around 53 percent of total assets (2016: 54 percent).

12 million euros in operating cash flow

In the first three months of the current fiscal year, cash flow from operating activities was 11.5 million euros (2016: 8.2 million euros). The higher earnings had a positive effect. However, there were negative effects as regards receivables compared to the same quarter of the previous year.

The cash flow from investing activities includes investments in property, plant and equipment and in intangible assets. In the first quarter, this amounted to 3.2 million euros, 0.8 million euros down on the previous year (2016: 4 million euros).

The cash outflows from financing activities mainly reflect the repayments of principal and interest payments on outstanding loans up to the end of March and were 1.6 million euros in the period under review (2016: 1.4 million euros).

Good development for both segments

The Rational segment, which represents the production and sale of the SelfCookingCenter (R) and the CombiMaster (R) Plus, grew its sales revenues by 22 percent in the first three months of 2017, to 154.4 million euros (2016: 126.6 million euros). The segment EBIT was 43.3 million euros (2016: 31.6 million euros).

The FRIMA segment produces and markets the VarioCooking Center (R) . FRIMA continued its successful growth of the previous year in the first quarter of 2017, posting an above-average increase in sales revenues of 25 percent compared with the Group. FRIMA generated total sales revenues of 11.8 million euros (2016: 9.5 million euros). Segment earnings stood at

0.8 million euros in the first quarter (2016: 0.5 million euros).

75 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. 75 new employees had been added as at the end of March 2017, around half of them in Germany. Most of the new jobs are in sales, sales-related functions and technical service.

Outlook confirmed

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 the company is well placed to keep on growing successfully.

Sales revenues and EBIT in the first quarter of 2017 were far better than expected. This good performance was due to the positive effects described earlier. These effects are not anticipated in this form in the remainder of the year or, in some cases, will probably have the effect of slowing down our performance in the subsequent quarters.

In view of this, the Executive Board of Rational AG confirms the forecast for fiscal year 2017 given in the Annual Report, i.e. continuation of the moderate growth trend for sales volume and revenues, an above-average increase in costs, a slightly higher EBIT than the year before and an EBIT margin between 26 percent and 27 percent.

Contact:

Rational Aktiengesellschaft

Stefan Arnold/Head of Investor Relations

Tel. +49 (0)8191 327-2209

Fax +49 (0)8191 327-722209

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 around 1,800 people, more than 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 MDAX.

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	Q1 2017	Q1 2016	Change in percent
Sales revenues	165.7	135.7	+22
Gross profit	101.1	83.9	+21
Gross margin in percent	61.0	61.8	–
EBIT	44.1	32.2	+37
EBIT margin in percent	26.6	23.7	–
Profit or loss after taxes	33.7	24.5	+38
Earnings per share (in EUR)	2.96	2.15	+38

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.

03.05.2017 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.

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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:	MDAX
Listed:	Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Munich, Stuttgart, Tradegate Exchange