Rational Ag Lndsberg

My dear ladies and gentlemen, welcome to our earnings call on the Rational HE half year one figures that we published this morning. My name is Stefan Arnold. With me are my colleagues Nicole Engelhardt and Tobias Stadler and of course our CEO, Dr. Peter Stadelmann and our CFO, Jörg Walter. Peter will start the presentation in a few seconds. As always, a few hints at the very beginning. You also can see them now on this slide. After the presentation, we then will directly go over to the Q&A. Our colleague Nicole Engelhardt will read the questions that you already sent us via email, which then will be answered by Peter and Jörg. We already have quite a big number of questions and we say thank you to all of those who sent them in advance to make us here the life a little bit easier. If we already gave the answer to a question during the presentation or if we already had a comparable question, we then might not repeat the question later on or we combine the questions. And of course, at the end, we will make sure that all the questions will be answered before we close the call. One hint regarding the recording of the call. We will send the YouTube link to all the participants after the call. as we do it always, and we kindly ask you to not share this outside the organization as we have here written on the slide. Thank you for that. And before Peter starts the presentation, our last hint from my side, you can see here our disclaimer on the information statements, estimates, and forward-looking statements given in the call. I am not going now to read this out word for word, but I would like to ask you to take note and to consider this, please. You can also find the disclaimer on our homepage at the end of the earnings call presentation. And with this, I want to hand over to Peter now. The stage is yours.

Thank you, Stefan. Good afternoon. Before we look at the key financial figures, I would like to talk about great sport events of this summer. The European Football Championship in Germany and the Olympic Games in Paris. Those events become events also with food and drinks. Imagine being in a stadium and not getting any drinks or food. In Paris, only Sodexo hired 6,000 staff to cater 15,000 athletes and more than 10 million visitors. We are happy and proud to be preferred supplier for Sodexo worldwide. There's another happy customer in Germany in the Weltdienst Arena. Built in 2001, the Weltdienst Arena is now an established multi-purpose stadium and home ground of Bundesliga club FC Schalke 04. It had also hosted four European Championship matches. In addition to soccer, stars such as Metallica, and in mid-July, superstar Taylor Swift honored the stadium with their visits. More than 18 million people have now visited the arena since 2001. All these spectators want to be catered for. 62,271 people are on site each match day, and 3,500 guests have to be catered for in the hospitality area. In addition, there are up to 700 business events with catering. Unlike in many stadiums, FC Schalke 04 Arena Management is responsible for all catering on its own. On match days or during concerts, 3.5 to 4 tons of goods are processed in the large areas and lounges of the Weltdienst area to cater for the guests. Managing Director Carbacher and HF Dvoracek currently see two opposing trends as challenges. The pressure from the shortage of skilled workers continues to increase and guests are becoming more quality conscious. Dvoracek is particularly pleased that we did not leave him to his own devices when it came to training. If needed, we show our customers several times how to work with the programs and cooking methods. This makes our cooking systems application really foolproof and eliminates sources of error. Not only practical for Dvoracek, but also a key point in fulfilling the guest's desire. for sustainable use of resources. When we reduce user errors, we guarantee no food is being wasted. Thanks to our cooking intelligence, also less educated staff can fulfill the demand of the more quality conscious football fans. And then the Wembley National Stadium, holy ground to the English and home to the Football Association, The Three Lions. The UCFB shows stars like Elton John, Adele, Coldplay and Ed Sheeran and up to 90,000 fans. They all have one thing in common. At some point, they get hungry. Just like the security personnel, the police, the fire brigades, the press and so on. And they all rely on the delicious food services from the Three Lions restaurants team at Wembley National Stadium. Fish and chips, pizza, nachos are the fastest selling products. Everything is produced in rational cooking systems. The kitchen can send up to 600 chickens in 12 minutes and 150 liters of creamy lobster soup at the same time. Why rational? They like to rely on the efficient use of the workforce on digital solutions like connected cooking, cooking research and technical refinements like my display. This means that the most important dishes can be viewed on the unit display as a picture or icon. The corresponding cooking program is stored. Now just one press of a button and the cooking process runs automatically and according to plan. Steam and heat, not too much, not too little. After all, the 600 chickens ultimately have to look all the same. And finally, talking about sports and stadium hospitality, let's talk about the iHexagon. The iHexagon is the perfect fit for every kitchen where speed and perfect food quality for larger volume is requested. In a town nearby our headquarters, we tested iHexagon in a snacking environment. Results were great. We were able to get an even deeper insight view on use cases. We are looking forward to continuing working together with the ice hockey club there. The football stadium, on the other hand, decided to invest in an iHexagon. We will keep you posted with new developments. And before we get to the key financial figures, let me talk about the most important figure at all for us at Rational. It is customer satisfaction. We want to offer people in commercial kitchens the greatest possible benefit. To check whether we are on the right track, we evaluate customer satisfaction. We do this using the internationally recognized Net Promoter Score every second year. The NPS indicates whether customers would recommend our cooking systems and services to friends or business partners. We run the NPS survey for the third time in 2024. As you can see, our customers are very satisfied with us. We remain in the best in class segment and well beyond the average NPS of peers. What is even more important for us is the feedback we get. This will be immediately addressed in workshops in our sales teams and service teams in order to keep high satisfaction or to increase it in the future. Let's take now a closer look at the figures all together. We start with sales. Let me repeat 2023. There we set a new sales record of 1.126 billion euro and we were able to exceed the previous year sales by 10 percent or by more than 100 million euro. After two years of exceptionally high growth rates after the pandemic, we are returning to our normal growth rate of the many, many years before 2020. Having a look at the annual sales figures, we now turn our attention to the quarters. In the second quarter of 24, sales revenues grew by 6% to around 295 million euros. This is a new all-time high. In half year 2024, we grew by 4% to more than 581 million euro. Let's have a look at the regional business development. Europe, including Germany, remains our largest region, accounting for more than 50% of sales. Due to higher market penetration of combi steamers, the growth rates here are lower than in the overseas markets. Europe, excluding Germany, recorded sales revenues near previous year with 240 million euro. While developed markets like Italy, Benelux, Spain and Sweden did not reach prior year levels, South and Southeast countries grew successfully. The biggest two markets, France and UK, were also above prior year. In Germany, sales fell by minus 4% in half year one. Q1 sales were down 17%. Q2, on the other hand, grew by 11%. This is explained by the reduction of order backlog impacted prior year. After growing by 50% in half year one 2023, mainly price driven, sales in North America continue growing organically by 6% in half year one 2024. Double digit growth rates came from Asia. we achieved our highest growth rate in Asia with plus 13%. We saw a great development in China and in Japan, where big key account and OEM customers placed and realized orders. The smaller regions also contribute to growth, albeit a little bit lower absolute at a lower absolute level. With that, I'm glad to hand over to Jörg for more details.

Yes, thank you very much, Peter. And also from my side, hello to everybody in this call. So after looking at the sales by region, how is the situation regarding our product groups? And as Peter stated earlier, we have an increased growth rate in the second quarter, went up from 1% in the first quarter to 6% in the second quarter. And this is basically also the situation that we see for both product groups, that means both product groups contributed to this positive trend. In the case of the iVario, after returning to the growth mode in Q1, we could even accelerate our rate in Q2, so sales in Q2 grew by 15% and which resulted in higher sales by 11% for the first half year. iCombi grew 3% in the first half 2024 and with a growth rate of 5% in Q2 alone. And having in mind that the growth rate in the first half 2023 was 27% due to working down the high order backlog, the iCombi in this year successfully defended its high prior year figure. Let's move on to the development of earnings. EBIT grows over proportionally in relation to sales by plus 10% to 149 million euros in the first half year. This is the best half year result that we have ever achieved. So a new record for us. Looking at Q2 alone, the EBIT was 78 million euro, which translated to an EBIT margin of 26.4%. When we look at the long-term development since 2019, you see here on the slide, we achieved in this year with an EBIT margin of 25.6%, already a margin level that is even higher than the pre-pandemic level. Now, on the next slide, we see more details about the margin development. First of all, as always, besides Yeah, the basis for a good EBIT is a good sales development. So you see here sales grew by 4%. But besides that, with the main driver of the good earnings was the favorable cross margin situation. We were able to increase the cross margin, cross profit margin by 2.8 percentage points to 58.9%. And this reflects basically two effects on one hand. we were able to implement our price increases for our own products in the market following the reduction of the high order backlog last year. And then secondly, at the same time, we currently benefit from example from the easing of the commodity markets. Basically, chemicals are on a lower level. Also, the alloy surcharge is on a lower level. The operating costs, on the other hand, rose at a slightly higher rate than sales by plus 77% to 190 million euros. We recorded the highest increase in R&D expenses where we grew by 24% and thus continue to invest in the future of Rational. However, you have to keep in mind that around 3.9 million euro of the R&D costs were capitalized in the last year, in the first half last year, The percentage change of the R&D costs without this effect is on a lower level. It's on around 11%. So overall, you see that we have a quite positive earnings development, and with this development, we are quite happy. Again, a short look on our quite solid balance sheet structure. There was no change in Q2. So after paying our dividend in May with around €154 million, our balance sheet remains very solid. Our equity ratio is at 75%. Our liquidity ratio, that is bank deposits and short-term investments combined, is at 38%. And in absolute figures, that means that cash and cash equivalents, we have on the balance sheet of around €350 million. in these two line items, other assets and liquid funds. Compared to the end of the second quarter last year, the total assets grew by plus 10% or 87 million to 940 million. And this was mainly due to an increase of long-term assets by 22 million euros. And the rest is the higher liquidity we already talked about. and that we didn't distribute to our shareholders. So, and that brings us already to our sales and earnings guidance for 2024. We stated earlier after Q1 and also after the full year figure publishing of the full year figure, after a quite volatile last three financial years, we expect 2024 to be just a normal year for us. And that means with regards to sales, we expect sales growth in the mid to high single digit percentage range without any planned price increases for our products. For our cross-profit margin, we expect the trend of 2023 to continue and we expect our input prices to further easy. That's why we now state that we benefit significantly from a better cost situation in the cross-profit. On the other hand, looking at our operating cost, we are planning a slightly over-proportional increase in our operating costs That is, as we said, expansion of our sales activities, the strengthening of our R&D capacities. And then on the other hand, we will continue our strategic projects. We already talked about road to China earlier. So this is one of the investments project. So overall, we expect EBIT to grow slightly faster than sales. and thus we expect an EBIT margin slightly above the previous year. Yeah, and with this outlook, we are at the end of our presentation, and we are now starting the Q&A session. I hand over to Nicole.