RATIONAL AG — Interim / Quarterly Report 2017

May 16, 2017

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 % – growth driven by Americas

61 % gross margin

27 % EBIT margin – adjusted for special effects, at previous year's level

78 % equity ratio

12 million euros in operating cash flow

Good development for both segments

75 new employees hired

Outlook confirmed

Key Figures	Successful Start to 2017	Statement of Comprehensive Income	Balance Sheet	Cash Flow Statement	Statement of Changes in Equity	Sales Revenues by Region	Operating Segments	3
03	04	07	08	09	10	11	12

Key Figures

in m EUR	1st quarter 2017	1st quarter 2016	Absolute change	Change in %
Sales revenues and earnings
Sales revenues	165.7	135.7	+ 30.0	+ 22
Sales revenues generated abroad in %	88	85	+ 3	–
Cost of sales	64.6	51.8	+ 12.8	+ 25
Gross profit	101.1	83.9	+ 17.2	+ 21
Gross margin in %	61.0	61.8	– 0.8	–
Sales and service expenses	43.8	36.9	+ 6.9	+ 19
Research and development expenses	7.5	5.7	+ 1.8	+ 32
General administration expenses	7.0	6.5	+ 0.5	+ 8
Depreciation/amortisation	2.8	2.4	+ 0.4	+ 18
Earnings before interest and taxes (EBIT)	44.1	32.2	+ 11.9	+ 37
EBIT margin in %	26.6	23.7	+ 2.9	–
Profit or loss after tax	33.7	24.5	+ 9.2	+ 38
Balance sheet
Total assets	550.7	487.3	+ 63.4	+ 13
Working capital1	110.2	93.4	+ 16.8	+ 18
Equity	430.9	380.3	+ 50.6	+ 13
Equity ratio in %	78.2	78.0	+ 0.2	–
Cash flow
Cash flow from operating activities	11.5	8.2	+ 3.3	+ 40
Capital expenditures	3.2	4.0	– 0.8	– 20
Free cash flow 2	8.3	4.2	+ 4.1	+ 99
Key figures for RATIONAL shares
Earnings per share (in EUR)	2.96	2.15	+ 0.81	+ 38
Quarter-end closing price3 (in EUR)	436.55	469.70	– 33.15	– 7
Market capitalisation	4,963.6	5,340.5	– 376.9	– 7
Employees
Number of employees as at 31 March	1,788	1,596	+ 192	+ 12
Number of employees (average)	1,764	1,574	+ 190	+ 12
Sales revenues per employee (in kEUR)	93.9	86.2	+ 7.7	+ 9

1 Excluding liquid funds

2 Cash flow from operating activities less captital expenditures

3 XETRA

RATIONAL AG – Successful Start to Fiscal Year 2017

Group-wide sales revenues increase by 22% – 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 % to 165.7 million euros (2016: 135.7 million euros).

Sales revenues increased 58% 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%), 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® 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%. 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% 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® also increased again there.

Sales revenues in our home market of Germany were 5% down year on year. Whereas FRIMA was able to continue its success of the previous year by growing sales revenues by 22 %, the figure for RATIONAL was 10 % 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%. 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® 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 % 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% compared with the previous year. At 61%, the gross margin remained at the high level of the previous year (2016: 62 %). 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® XS – could not be fully offset by the good business performance in markets with a higher price level.

27% EBIT margin – adjusted for special effects, at previous year's level

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

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% 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% 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% 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 forthis effect, 16% 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% 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 %, around the level of the previous year's margin after exchange rate adjustments.

78 % equity ratio

At 78% (2016: 78%) 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% of total assets (2016: 54%).

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® and the CombiMaster® Plus, grew its sales revenues by 22 % 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®. 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% 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 RATIONALAG 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 RATIONALAG 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% and 27%.

7 Key Figures Successful Start to 2017 Balance Sheet Cash Flow Statement Statement of Changes in Equity Sales Revenues by Region Operating Segments 03 04 07 08 09 10 11 12 Statement of Comprehensive Income

Statement of Comprehensive Income RATIONAL Group

in kEUR	1st quarter 2017	1st quarter 2016
Sales revenues	165,717	135,655
Cost of sales	– 64,572	– 51,758
Gross profit	101,145	83,897
Sales and service expenses	– 43,813	– 36,880
Research and development expenses	– 7,515	– 5,712
General administration expenses	– 7,004	– 6,479
Other operating income	2,149	2,356
Other operating expenses	– 828	– 5,013
Earnings before interest and taxes (EBIT)	44,134	32,169
Interest and similar income	84	126
Interest and similar expenses	– 205	– 218
Earnings before taxes (EBT)	44,013	32,077
Income taxes	– 10,343	– 7,598
Profit or loss after taxes	33,670	24,479
Items that may be reclassified to profit and loss in the future: Differences from currency translation	226	– 305
Other comprehensive income	226	– 305
Total comprehensive income	33,896	24,174
Average number of shares (undiluted/diluted)	11,370,000	11,370,000
Earnings per share (undiluted/diluted) in euros, based on profit or loss after taxes and the number of shares	2.96	2.15

Balance Sheet RATIONAL Group

Assets

in kEUR	31 March 2017	31 March 2016	31 December 2016
Non-current assets	106,646	94,458	112,276
Intangible assets	8,410	6,611	8,803
Property, plant and equipment	85,856	74,235	85,067
Financial assets	1,500	5,000	8,000
Deferred tax assets	8,554	6,561	8,273
Other non-current assets	2,326	2,051	2,133
Current assets	444,071	392,801	427,525
Inventories	39,324	32,471	39,214
Trade receivables	101,078	81,074	100,180
Other current assets	12,025	14,460	9,979
Deposits with maturities of more than 3 months	180,700	132,551	175,700
Cash and cash equivalents	110,944	132,245	102,452
Total assets	550,717	487,259	539,801

Equity and liabilities

in kEUR	31 March 2017	31 March 2016	31 December 2016
Equity	430,854	380,281	396,958
Subscribed capital	11,370	11,370	11,370
Capital reserves	28,058	28,058	28,058
Retained earnings	393,812	342,789	360,142
Other components of equity	– 2,386	– 1,936	– 2,612
Non-current liabilities	33,988	31,718	34,888
Provisions for pensions	3,265	2,579	3,223
Other non-current provisions	9,506	6,804	9,203
Non-current liabilities to banks	19,583	20,643	20,747
Deferred tax liabilities	425	850	578
Other non-current liabilities	1,209	842	1,137
Current liabilities	85,875	75,260	107,955
Current income tax liabilities	6,826	6,672	8,340
Current provisions	30,615	27,852	38,518
Current liabilities to banks	6,809	6,655	7,046
Trade accounts payable	19,623	14,188	25,000
Other current liabilities	22,002	19,893	29,051
Liabilities	119,863	106,978	142,843
Total equity and liabilities	550,717	487,259	539,801

Cash Flow Statement RATIONAL Group

	1st quarter	1st quarter
in kEUR	2017	2016
Earnings before taxes (EBT)	44,013	32,077
Cash flow from operating activities	11,537	8,245
Change in fixed deposits with maturities of more than 3 months	1,500	– 26,651
Cash flow from other investing activities	– 3,091	– 3,863
Cash flow from investing activities	– 1,591	– 30,514
Cash flow from financing activities	– 1,597	– 1,354
Effects of exchange rate fluctuations in cash and cash equivalents	143	– 254
Change in cash and cash equivalents	8,492	– 23,877
Cash and cash equivalents as at 1 January	102,452	156,122
Cash and cash equivalents as at 31 March	110,944	132,245

Statement of Changes in Equity RATIONAL Group

in kEUR	Subscribed capital	Capital reserves	Retained earnings	Other components of equity		Total
				Differences from currency translation	Actuarial gains and losses
Balance as at 1 January 2017	11,370	28,058	360,142	– 1,584	– 1,028	396,958
Dividend	–	–	–	–	–	–
Total comprehensive income	–	–	33,670	226	0	33,896
Balance as at 31 March 2017	11,370	28,058	393,812	– 1,358	– 1,028	430,854
Balance as at 1 January 2016	11,370	28,058	318,310	– 1,211	– 420	356,107
Dividend	–	–	–	–	–	–
Total comprehensive income	–	–	24,479	– 305	0	24,174
Balance as at 31 March 2016	11,370	28,058	342,789	– 1,516	– 420	380,281

Sales Revenues by Region RATIONAL Group

	1st quarter		1st quarter
in kEUR	2017	% of total	2016	% of total
Germany	19,365	12	20,488	15
Europe (excluding Germany)	79,692	48	67,481	50
North America	28,968	17	18,341	13
Latin America	9,752	6	6,384	5
Asia	20,294	12	16,469	12
Rest of the world	7,646	5	6,492	5
Total	165,717	100	135,655	100

Operating segments RATIONAL Group

1st quarter 2017

			Total of
in kEUR	RATIONAL	FRIMA	segments	Reconciliation	Group
External sales revenues	153,894	11,823	165,717	0	165,717
Intercompany sales revenues	495	0	495	– 495	–
Segment sales revenues	154,389	11,823	166,212	– 495	165,717
Segment profit or loss	43,311	847	44,158	– 24	44,134
Financial result	–	–	–	–	– 121
Earnings before taxes	–	–	–	–	44,013

1st quarter 2016

	Total of
in kEUR	RATIONAL	FRIMA	segments	Reconciliation	Group
External sales revenues	126,192	9,463	135,655	0	135,655
Intercompany sales revenues	412	0	412	– 412	–
Segment sales revenues	126,604	9,463	136,067	– 412	135,655
Segment profit or loss	31,640	523	32,163	6	32,169
Financial result	–	–	–	–	– 92
Earnings before taxes	–	–	–	–	32,077

Publisher and contact RATIONAL Aktiengesellschaft Iglinger Strasse 62 86899 Landsberg am Lech

Dr Axel Kaufmann

Chief Financial Officer Tel. +49 8191 237-209 Fax +49 8181 327-272 E-mail ir@rational-online.com

Stefan Arnold

Head of Investor Relations Tel. +49 8191 237-2209 Fax +49 8181 327-722209 E-mail ir@rational-online.com

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.