Rational AG continues its successful path - growth and earnings outlook for 2019 confirmed

9 percent growth in sales revenues in the first 9 months of 2019

The successful business performance of Rational AG in the first six months carried over to the third quarter, with the company posting 9 percent growth in sales revenues. In total, sales revenues of 612.6 million euros were generated in the first nine months of 2019 (2018: 562.2 million euros). This represents a year-on-year increase of 9 percent, which is at the top end of the Company's expectations.

Several foreign currencies of relevance to Rational rose on average against the euro compared with the previous year. The appreciation, above all, of the US dollar (+6 percent), the Japanese yen (+7 percent), the Canadian dollar (+3 percent) and the Swiss franc (+4 percent) had a positive effect on sales revenues. On a currency neutral basis, sales revenue growth after nine months stood at 7 percent.

Above-average growth for the VarioCookingCenter^(R) product group

In the combi-steamer product group, which represents the production and sale of the SelfCookingCenter^(R) and the CombiMaster^(R) Plus, sales revenues after nine months were 8 percent higher at 558.7 million euros (2018: 516.3 euros).

Sales revenue growth for the VarioCookingCenter^(R) product group continued on a positive note, with an 18 percent increase in the first nine months of 2019 to 53.9 million euros (2018: 45.9 million euros).

Worldwide growth

Following the rapid rise in sales revenues in the first half of the year (+9 percent), sales revenues in the home market of Germany in the third quarter were 2 percent higher than in the prior-year period. For the nine-month period, growth of 7 percent was recorded in Germany. The VarioCookingCenter^(R) made a significant contribution to business performance in Germany, with sales revenue growth of 21 percent in the first nine months.

In Europe (excluding Germany), sales revenues were up by 8 percent in the third quarter, following a year-on-year increase of 5 percent in the first six months. After nine months, growth in Europe stood at 6 percent. On a currency-neutral basis, the Europe region was also up 6 percent on the previous year.

Despite the base effect of very strong growth of 32 percent in the previous year as a result of a major order from a US chain customer, sales revenues in North America increased by 10 percent in the third quarter. After nine months, sales revenues were 12 percent above the previous year, although they benefited from the strong performance of the US and Canadian dollars. On a currency-neutral basis, sales revenues in North America increased by 6 percent.

Following strong growth in the first half of the year (+15 percent), sales revenues in Latin America in the third quarter were only 2 percent higher than in the previous year. For the nine-month period, the region's sales revenues were up by 10 percent. On a currency-neutral basis, sales revenues also increased by 10 percent.

Asia increased sales revenues by 16 percent in the third quarter and thus by 14 percent in the first nine months. China was again the biggest growth driver, but business in India and Korea also performed very well. On a currency-neutral basis, sales revenue growth after nine months stood at 11 percent.

Sales revenues in the Rest of the world region were 23 percent higher in the third quarter. After nine months, sales revenues were 17 percent above the previous year. Business performed particularly well in the Middle East and Africa.

Gross margin exceeds previous year's level

In the first nine months of 2019, Rational achieved gross profit of 361.5 million euros (2018: 328.9 million euros), an increase of 10 percent compared to the previous year. The gross margin was 59.0 percent, slightly higher than in the previous year (2018: 58.5 percent). The increase is mainly attributable to the positive currency effects on sales revenues. On a currency neutral basis, the gross margin is at the previous year's level.

26 percent EBIT margin

Rational generated EBIT (earnings before financial result and taxes) of 159.5 million euros in the first nine months. This equates to growth of 12 percent compared to the prior-year period (2018: 142.0 million euros). The EBIT margin after nine months was 26.0 percent (2018: 25.3 percent). Adjusted for currency effects, the EBIT margin after nine months was around 25 percent.

Compared with the first nine months of 2018, operating costs grew by 9 percent, and therefore in line with sales revenues, to 205.1 million euros (2018: 187.9 million euros). Costs for sales and service increased by 8 percent to 146.7 million euros (2018: 136.0 million euros). Further investments were made in expanding the global sales and service organisation, especially in the overseas growth markets. Research and development costs rose by 11 percent in the nine-month period, to 30.4 million euros (2018: 27.5 million euros). Administration expenses rose faster than sales revenues in the nine-month period, climbing by 15 percent to 28.1 million euros (2018: 24.4 million euros). The main cost drivers are the forward-looking expansion of support functions in IT and the commercial division at the Landsberg am Lech location and of administrative positions in overseas markets.

141 million euros in operating cash flow

In the first nine months of the current fiscal year, cash flow from operating activities was 141.1 million euros, well up on the previous year (2018: 106.2 million euros). The rise was mainly attributable to higher profit, a smaller increase in receivables and an increase in additions to provisions compared with the previous year.

The cash flow from investing activities includes investments in property, plant and equipment and in intangible assets. In the first nine months, these investments amounted to 26.9 million euros (2018: 37.7 million euros). This is mainly due to investments in expanding and modernising the machinery installed at the Landsberg am Lech location. The figure also includes investments in refurbishment and preparatory work at the in Landsberg am Lech location and the purchase of a plot of land in Wittenheim, as well as returns from financial investments totalling 13.9 million euros. In total, there was cash outflow from investing activities of -12.9 million euros.

The cash flow from financing activities (amounting to -117.3 million euros) essentially reflects the dividend of 108.0 million euros distributed in May (2018: 125.1 million euros).

116 new employees

116 new jobs were created in the first nine months of 2019, around half of them in Germany. The main focus here was again on the expansion of the global sales and service organisation. In addition, new employees were taken on in production and central support functions. As at 30 September 2019, the Rational Group employed 2,229 people worldwide.

Growth and earnings outlook for 2019 confirmed

Despite the deterioration in general economic conditions, sales revenues increased by 9 percent in the first nine months of the current fiscal year, and the EBIT margin achieved was higher than in the previous year. Boosted by positive currency effects, business performance in the first nine months of 2019 was at the top end of the Company's expectations; on a currency neutral basis, performance was within expectations.

The large majority of our customers are so satisfied with the products and services that they would be happy to purchase them again at any time and also recommend them to friends and colleagues. This assessment was confirmed again in the latest customer satisfaction survey in spring of this year. Given the high market potential and close association with the basic human need for food, the Executive Board of Rational AG believes the company is well placed to keep on growing successfully in the fourth quarter of 2019. For this reason, the Rational AG Executive Board confirms the forecast of sales revenue growth in the high single-digit range for fiscal year 2019 and an EBIT margin of around 26 percent.

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 around 2,200 people, over 1,100 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. Rational is committed to the principle of sustainability, which is expressed in its corporate 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 for year.