Rational AG generates record new orders in the first nine months - supply bottleneck has adverse effect on deliveries

- New orders at record high

- Third-quarter sales revenues up 23 percent on the previous year - +26 percent after nine months

- EBIT margin of 24 percent in the third quarter - 23 percent after nine months

Landsberg am Lech, 3. November 2021

New orders at record high - 17 percent up on 2019
The order situation has continued to improve since March 2021. In the third quarter of 2021, Rational achieved an increase in orders of 70 percent compared with 2020 and of 40 percent compared with the pre-crisis year of 2019. In the nine-month period, the rise in new orders was just above 50 percent as against 2020; compared with 2019, new orders were up by around 17 percent.

"All regions contributed to this excellent performance. Especially Asia and the German-speaking region were very successful, with growth rates of more than 20 percent on 2019," explains CEO Dr. Peter Stadelmann.

Sales revenues of 207 million euros in the third quarter of 2021 - year-on-year growth of 23 percent
Due to the current supply difficulties, Rational was unable to fulfil its high level of orders on hand. Despite these restrictions, the company generated sales revenues of 206.9 million euros in the third quarter of 2021, therefore almost matching sales revenue levels seen in the third quarter of 2019 (2019: 213.2 million euros). When compared to the prior-year quarter, which had still been affected by coronavirus- related reductions, Rational recorded growth in sales revenue of 23 percent (2020: 168.2 million euros).

After nine months, this resulted in sales revenues expanding by 26 percent to 586.3 million euros. Regional growth rates compared with the crisis year of 2020 ranged from about 20 percent in Europe to about 30 percent in Asia. In the nine-month period of the current fiscal year, changes in exchange rates slowed sales revenue growth by about one percentage point.

iCombi and iVario - the new standards in cooking technology
In May and June 2020, Rational launched two new appliance generations, the iCombi and the iVario, which have since set new standards in the market. Their competitive advantages are a major reason for the pleasing order intake. In the iCombi product group, sales revenues were up 25 percent year-on-year in the first nine months of 2021, at 526.3 million euros (2020: 421.3 million euros). In the iVario product group, sales revenues rose by as much as 34 percent to 60.0 million euros (2020: 44.9 million euros).

56 percent gross margin in the first nine months of 2021 - 55 percent in the third quarter
Cost of sales increased slightly more slowly than sales revenues in the first nine months, by around 23 percent, to 258.1 million euros (2020: 209.2 million euros). As a result, the gross margin improved to 56.0 percent in this period of 2021 (2020: 55.1 percent). In the current year, the production process benefited from a major improvement in productivity about one year after the production launch of the new appliance generation.

The - in some cases - significant rise in commodity and component costs began to have a tangible impact on production costs in the third quarter, causing these costs to increase slightly faster than sales revenues. For this reason, the gross margin for this period was half a percentage point down on the prior-year quarter, or one percentage point when adjusted for changes in exchange rates. Compared with the second quarter of 2021, the resulting decline was slightly higher than one percentage point.

23 percent EBIT margin after nine months
EBIT (earnings before financial result and taxes) in the first nine months of the current fiscal year was 134.1 million euros, up threefold on the first nine months of 2020 (2020: 64.4 million euros). The EBIT margin was 22.9 percent (2020: 13.8 percent).

This year's EBIT margin in the first nine months benefited from the healthy sales revenue performance in combination with continuing lower cost levels. While sales revenues rose by 26 percent year-on-year, operating costs were only 7 percent above the prior-year level. Total operating costs amounted to 197.6 million euros in the first nine months of 2021 (2020: 184.9 million euros). One reason for this is that sales events such as trade shows but also business trips were still limited due to contact and travel restrictions.

Adjusted for all currency effects, the EBIT margin after nine months in 2021 was 22.7 percent.

145 million euros in operating cash flow
In the first nine months of the current fiscal year, the cash flow from operating activities was 145.1 million euros (2020: 45.7 million euros). This significant rise was largely attributable to the higher profit before taxes. Another significant effect arose from changes in provisions. Last year, a significant decline in the business volume prompted reductions in provisions, especially for taxes as well as for variable remuneration and dealer bonuses. In 2021, provisions for many of these items were increased again, in some cases significantly so, due to the good sales revenue and earnings performance.

Cash flow from investing activities includes investments in property, plant and equipment and intangible assets. In the first nine months of 2021, these investments amounted to 16.4 million euros (2020: 21.9 million euros). This is mainly due to investments in the construction of the new logistics centre, which was completed in spring of this year, in expanding the Wittenheim location, where work started in spring, and in modernising the machinery installed at the Landsberg am Lech location.

The cash flow from financing activities of -62.4 million euros mainly reflects the dividend payment (-54.6 million euros), the repayment of bank loans (-1.2 million euros) and the repayment of and payments for lease liabilities in accordance with IFRS 16 (-6.4 million euros).

Employees
As a socially responsible company, Rational had made only minimal adjustments to the size of its workforce during the crisis. In line with the improving market prospects, the number of employees has increased since the second quarter for the first time since the start of the coronavirus crisis. At the end of September 2021, the Rational Group employed 2,216 people worldwide. Of these, 1,257 were employed in Germany.

Outlook 2021
In view of the encouraging recovery of industrial kitchen markets, the lifting of coronavirus restrictions in a growing number of countries and, above all, the high level of customer satisfaction, the Executive Board of Rational AG assumes that the current positive trend will continue in the medium term.

The coming fourth quarter will be characterised by uncertainty about the global supply shortages and logistics constraints. "We described these factors as a possible risk scenario in our July forecast. These factors have intensified in recent weeks, in some cases significantly", says CFO Jörg Walter, describing the current situation. As the trends change daily, the short-term consequences are hard to predict.

Due to the countermeasures initiated, Rational currently sees itself well positioned to master these challenges. In the more optimistic forecast scenario, we consider sales revenue growth of 15 to 20 percent and an EBIT margin of around 20 percent to be realistic.

Peter Stadelmann explains, "Should the already tense situation be exacerbated by additional bottlenecks in materials procurement, longer delays or supply chain disruptions, the Executive Board expects a corresponding negative effect on sales revenues and earnings. In this case, sales revenues would grow in the high single digits in percentage terms and the EBIT margin could be slightly below the forecast 20 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. Founded in 1973, the company employs around 2,200 people, over 1,200 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 always offer maximum customer benefit. 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.

Editorial closing date: 29. October 2021