Rational : on a successful path again in the third quarter of 2018

DGAP-News: RATIONAL AG / Key word(s): Quarterly / Interim Statement 30.10.2018 / 07:00 The issuer is solely responsible for the content of this announcement. Rational AG - Statement on the first 9 months of 2018 Landsberg am Lech, 30 October 2018 Rational AG on a successful path again in the third quarter of 2018 - 10 percent growth in sales revenues in the first 9 months of 2018 - Worldwide growth - 25 percent EBIT margin - currency-adjusted 26 percent - 106 million euros in operating cash flow - Positive performance for both segments - Some 200 new employees - Growth and earnings outlook confirmed 10 percent growth in sales revenues in the first 9 months of 2018 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 amounted to 562.2 million euros in the first nine months of 2018 (2017: 509.2 million euros), which is an increase of 10 percent compared to the previous year. Sales revenue development was negatively impacted by the weakness of foreign currencies relevant for Rational, including particularly the US dollar, Brazilian real, Canadian dollar, Swedish krona and Japanese yen. On a currency-neutral basis, sales revenue growth after nine months stood at 13 percent. Worldwide growth After encouraging growth in the first six months (+12 percent), third-quarter sales revenues in Germany came in only slightly above the level of the prior-year quarter (+2 percent). In the rest of Europe (excluding Germany), sales revenues in the third quarter also moved forward only slightly (+2 percent) after having exceeded the prior-year performance by 11 percent in the first six months. Growth in both the home market of Germany and the rest of Europe was 8 percent in the first nine months. After adjusting for negative currency effects, growth in Europe was up by 9 percent year on year. A major order by a chain customer in the United States, most of which had been delivered in the first six months, was completed in the third quarter. Business with small and medium-sized customers in North America was extremely successful, with sales revenues there increasing by 32 percent in the third quarter. With growth of 22 percent, the region was thus the main growth market in the first nine months of this year. Sales revenues here advanced by an even more substantial 29 percent on a currency-neutral basis. After declining slightly in the first six months, sales revenues in Latin America grew by 12 percent again in the third quarter. Nevertheless, sales revenues grew only moderately year on year in the first nine months, advancing by 3 percent. The main factors here were the very strong growth (9M 2017: +37 percent) in the prior-year reference period and the depreciation of the Brazilian real (-21 percent) and the Mexican peso (-7 percent). After adjustment for these currency effects, sales revenues in the first nine months of the year were 11 percent higher than in the previous year. Asia increased sales revenues by 18 percent in the third quarter and thus by 14 percent in the first nine months. China was once again the largest growth driver. On a currency-neutral basis, sales revenue growth after nine months stood at 17 percent. Sales revenues in Asia were diminished particularly by the depreciation of the Japanese yen (-4 percent). Sales revenues in the "Rest of the World" region declined slightly (-1 percent) year on year in the third quarter of 2018 and came in up 4 percent against the prior-year figure in the first nine months. 25 percent EBIT margin - currency-adjusted 26 percent In the first nine months of 2018, Rational achieved gross profit of 334.5 million euros (2017: 310.5 million euros), an increase of 8 percent compared to the previous year. The gross margin was 59.5 percent, a substantial decrease over the previous year (2017: 61.0 percent). About half of the decline in the gross margin was attributable to the negative currency effects on sales revenues. On a currency-neutral basis, the gross margin after nine months stood at 60.3 percent. In addition, moderately rising procurement and raw material prices and persistently above-average growth for smaller appliance sizes (product mix) reduced the gross margin. Operating costs grew slightly faster (+11 percent) than sales revenues in the first nine months of 2018, to 193.5 million euros (2017: 174.6 million euros). Costs for sales and service increased by 10 percent to 141.6 million euros (2017: 128.5 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 14 percent in the nine-month period, to 27.5 million euros (2017: 24.1 million euros). Administration expenses rose by 11 percent and were 24.4 million euros after nine months (previous year: 22.0 million euros). The aforementioned effects also negatively impacted EBIT (earnings before interest and taxes) and the EBIT margin (ratio of EBIT to sales revenues). Rational achieved an EBIT of 142.0 million euros in the first nine months. This equates to growth of 7 percent compared to the prior-year period (2017: 132.3 million euros). The nine-month EBIT margin was thus 25.3 percent (previous year: 26.0 percent). After adjusting for currency effects, the EBIT margin after nine months was around 26 percent. 106 million euros in operating cash flow In the first nine months of the current fiscal year, cash flow from operating activities was 106.2 million euros, well up on the previous year (2017: 93.1 million euros). This increase was mainly the result of increased earnings and higher depreciation and amortisation than in 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 37.7 million euros (2017: 16.9 million euros). This is mainly attributable to new construction work and renovations to increase production capacity at the Landsberg location. The cash flow from financing activities (-127.6 million euros) essentially reflects the dividend of 125.1 million euros distributed in May (2017: 113.7 million euros). Positive performance 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 in the first nine months by 10 percent to 516.3 million euros (2017: 470.7 million euros). Segment earnings amounted to 133.7 million euros, 6 percent up on the previous year (2017: 126.3 million euros). Frima produces the VarioCookingCenter(R). Segment sales in the first nine months were 45.9 million euros, 15 percent up on the previous year (39.8 million euros). Segment earnings amounted to 8.3 million euros, 40 percent above the previous year's figure (2017: 5.9 million euros). Some 200 new employees Some 200 new employees were added in the first nine months of 2018, almost half of them in Germany. Most of the new positions are in sales and sales-related functions. Growth and earnings forecast confirmed 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 2018. Given the high market potential and the expansion activities undertaken in sales and service, the Executive Board of Rational AG believes the company is well placed to keep on growing successfully. Despite substantial negative currency effects, the company increased sales revenues by just over 10 percent in the first nine months of 2018. Apart from the generally positive business trend, that is also due to a number of large orders, especially from North America. The Executive Board of Rational AG also assesses the prospects for the final quarter of the year as positive. The growth forecast for sales revenue in 2018 is therefore confirmed at between 10 and 12 percent. Management believes the EBIT margin will lie within the forecast range of 26 to 27 percent. Further exchange rate trends in particular will be a crucial factor here. Rational still assumes that sales revenues will grow in the high single-digit range in the coming years. Contact: RATIONAL Aktiengesellschaft Stefan Arnold / Head of Investor Relations Tel. [phone] Fax [phone] 2209 E-mail: [e-mail] www.rational-online.com Figures in millions of euros 9M 2018 9M 2017 Percentage change Sales revenues 562.2 509.2 +10 Gross profit 334.5 310.5 +8 Gross margin in percent 59.5 61.0 - Earnings before interest and taxes (EBIT) 142.0 132.3 +7 EBIT margin in percent 25.3 26.0 - Profit or loss after taxes 108.5 101.0 +7 Earnings per share (in EUR) 9.54 8.88 +7 Figures in millions of euros Q3 2018 Q3 2017 Percentage change Sales revenues 194.9 178.1 +9 Gross profit 116.0 108.0 +7 Gross margin in percent 59.5 60.6 - Earnings before interest and taxes (EBIT) 51.1 48.5 +5 EBIT margin in percent 26.2 27.2 - Profit or loss after taxes 39.1 37.0 +6 Earnings per share (in EUR) 3.44 3.26 +6 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 2,000 people, over 1,000 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. 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. 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. 30.10.2018 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. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de

Language:	English
Company:	RATIONAL AG
Siegfried-Meister-Straße 1
86899 Landsberg a. Lech
Germany
Phone:	0049 8191 327 2209
Fax:	0049 8191 327 722209
E-mail:	[e-mail]
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

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