Rational Ag Lndsberg

Dear ladies and gentlemen, I'm delighted that you have dialed in into this call and a very warm welcome from my side. My name is Stefan Arnold and I'm joined by my colleagues Nicole Engelhardt, Tobias Stadler and of course our CEO Peter Stadelmann and CFO Jörg Walter. Before we start, as always, a few hints at the very beginning. All participants remain muted during the call. After the presentation, we will go directly over to the Q&A session. Our colleague Nicole will read out the questions that you sent us via email, and your questions will then be answered by Peter and Jörg. Thanks to all of those who sent the questions in advance. This makes, of course, our life a little bit easier, and we hope that the answers will be more helpful for you. If we already gave the answer to one of the questions or to more of the questions during the presentation, or if we already had a comparable question, we then might not repeat the question later on. However, we will make sure that all questions will be answered before we close the call. So this call will be recorded and we will send a YouTube link to all participants after the call. We kindly ask you to not share this link outside your organization. And with this, I hand over to Peter.

Thank you, Stefan. Good afternoon, ladies and gentlemen. Let's start with the big elephant in the room, U.S. tariffs. First, a quick reminder on our production sites. We produce 100% of our cooking systems in Europe. The iCombi is produced in Landsberg am Lech, Germany, and the iVario is produced in Wittenheim, France. As we are an assembly-focused company, we heavily rely on our suppliers. More than 95% of purchasing volume comes from European suppliers. Non-European suppliers are located in China, Turkey and Switzerland. You might also know that we currently building a factory in China, which is expected to start production end of this year. As we will focus only on China with this in China for China combi steamer, we do not expect an impact from the tariff discussion. Let me add that there is no substantial production capacity of combi ovens in the United States, so all manufacturers will be evenly hit by tariffs. The small domestic manufacturers are hit by tariffs on the other side on stainless steel and imported components. What is currently affected? Since early April, we face an additional 10% tariff on our export to the United States. This affects roughly 20% of total sales. Before President Trump, in his second time in the office, enacted the latest tariffs, our cooking systems were not affected by tariffs at all in the USA. To mathematically compensate the absolute contribution, an increase of prices of roughly 7% would be needed to compensate a 10% tariff. That's all said that is Paribus. We are of course monitoring the situation very closely, but we will be very careful and observant what the tariff discussion between the USA and the European Union will come up with and how market players will react on that. Giving an outlook on the future development is impossible. It seems like there are new developments daily. These announcements can occur at short notice. As of today, it seems like the reciprocal tariffs are paused for at least 90 days. We expect to see discussions and negotiations between the USA and the European Union in this period. What will happen in early July is not to be predicted. Our customers and ourselves, we do not panic. We are not seeing a slump in incoming orders, nor are we seeing high pre-orders in Q1. Some customers might be a little bit cautious, but we are as well. Our salespeople keep doing what they always do. visiting potential customers, running Rational Life cooking shows and inform potential customers on the many, many benefits of our cooking solutions. Let's look at one of those customers. It is PC Tank at the German border to Luxembourg on the Luxembourg side. They run service stations on a very high level. My colleague explained it to me. If you go to the service area in Germany to eat, you expect not a high quality in food, but you eat there because you have to eat. Here at PC Tank, it's different. People come to those service stations just for eating, not just to get their fuel. They so far run roughly 10 shops and they used the iCombi Pro before. In some units, they also run the iVario. They were among the first customers to switch to the iHexagon. They do all the baking, especially in the morning, and then they use the iHexagon for lunch and dinner times for a la carte production. The customer is totally satisfied and you can read on their heads gourmet rapide. So that means speed matters. And I think that perfectly describes the right point of using the eye hexagon. Let's switch to figures, facts and data. Let's start with the sales performance in 2024. we were at €1,194,000,000 in total. That was an increase by 6% or almost €70 million. If we look into 2025, Q1 is in line with our guidance. We continue to grow. Sales revenues increased by 3% to €295 million. In normal years, the distribution of quarterly follows a certain pattern. Sales in the first quarter account for roughly 23% of annual sales, while sales in the fourth quarter account for around 27%. We have seen a trend towards this seasonality in the last year, but it was still a little bit flatter than it used to be in the past. We are convinced that the trend towards the pre-crisis seasonality is likely to continue. Let's have a look at the business development by region. Europe, excluding Germany and North America, are our two largest sales regions. Together, they account for 65% of sales. And these two regions have had significant impact on the group's sales development. North America has been our number one growth engine in recent years and has achieved high double-digit growth rates due to the large free market potential. Also in Q1 2025, sales increased by 11%. It is important to outline that sales numbers of our most Most of our competitors are not reaching this level, so we are able to expand our already high market share. Sales growth of 7% in Europe was driven by good sales in the United Kingdom and Italy, the two of the largest European markets. However, the Eastern European markets of Poland, the Czech Republic, Hungary and Turkey also achieved double-digit growth. These markets also offer good growth opportunities in the future due to their lower market penetration. With sales of €30 million, Germany remained at a stable level and grew slightly by 2%. In the Asia region, we had a decline in sales. The prior year quarter in Asia was still positively influenced by strong business in the region's two largest markets, China and Japan, and in China by a large one-off additional order from a chain customer. The positive sales trends in India and Korea was unable to offset these effects. We continue to assess the potential of the Asia region as very promising. With that, I'm glad to hand over to Jörg.

Yes, thank you very much, Peter. I start with the development of our product groups. First, on the right side, the product group of Ivario. Ivario continues the growth path with a sales increase of 10%. Especially the business in Americas was growing around 35% and the rest of the world was able to double in Q1 2025. So the development of these regions was particularly well and helped to support the 10% growth of the Ivario. And on the left side, you see the development of the iCombi. And it's clear that due to the size of the iCombi business, it mainly represents the group. And the iCombi was growing by 2% and the regional development was a bit the same like Peter just commented for the group as a whole. Let's look at the result. Earnings before interest in Texas, the EBIT increased by 1% to €72 million. The EBIT margin stood at 24.4%. And we have here the similar effect that Peter was just mentioning by the quarterly sales development. Similar to the seasonality, the sales seasonality, also our EBIT margin has a special seasonality with the highest margin the last quarter. That's why overall we are satisfied with EBIT and the EBIT margin of 24.4% for the first quarter and it's in line with our guidance for the full year. Looking at the P&L in more detail shows that in addition to the sales growth of 3%, the main driver of the good earnings development was the improved cross-profit margin of 59.2% compared to previous years that was a plus of 0.7 percentage points. The cross-margin was positively impacted by a favorable product mix and a strong demand from regions with a higher priced level. Looking at the operating costs, they rose faster than the sales by 10% to 105 million euros. We recorded the highest increase in R&D costs, where the increase was overproportionately by 30%, and therefore we continue to invest in the future of Rational, especially hirings in the software sector, so for software specialists, is a main driver for this strong cost increase. And also it's important to consider that in Q1 2024, we are capitalizing 1 million euros of R&D costs. So if we take that effect out, the increased R&D expense was at a level of around 20%. Also very important for us is the cost investment into sales and service. Here we increased our headcount compared to the year ago by 6%, and this is the main driver for the cost increase by 8%. As a result, we see a good performance also in our sales activities. which again, as always, was and is an important pre-leading indicator for the business development of the coming months. And then lastly, looking at the currency result, we have also, especially when we compare to the previous year, a positive effect of 3 million euros. And this was also an important factor to offsetting the higher OPEX and increase the absolute EBIT over the last year. Well, looking at the balance sheet, we are very solid. You all know the numbers, so there is no change in Q1. We have an equity ratio now of 82% and a liquidity ratio of 45%. We are very, very robust here. And these two KPIs speak for themselves. There is nothing really to add in Q1. And then we come already finally to our sales and earnings forecast for the current year. Overall, we expect 2025 to be another year of growth for us. We expect our long-term growth trend to continue in the mid to high single-digit percentage range. And due to the last The latest economic development in the U.S., in Europe, and also in China, we are currently consider sales and revenue growth in the mid single-digit percentage range for 2025 to be realistic. The raw material and logistic prices stabilized last year, resulting in a higher cross-margin. Current signs indicate that prices will remain at the current level. At the same time, we have lowered our selling prices for most of our care products as of January 1st, 2025. And this is one of the reasons why we are expecting a slightly lower cross margin for the full year 2025 than in 2024. And also in 2025, we will continue to considerably increase some of our operating costs and critical questions, the development of other costs. We saw that in Q1 already, so we are planning overproportional increase in our sales to continue to win more customers and increase in our customer proximity. And we will also continue to build up our production in China. And then on the other hand, we will keep our cost that are not related to sales or R&D at a stable level. Overall, we expect the group's operating cost increase somewhat more than the consolidated sales revenue. And as a result of all these factors mentioned before, we expect an EBIT margin of around 26% for the current year. So we are at the end of the presentation and I'm handing over to Nicole for the questions.