Rational Ag Lndsberg

Good afternoon and welcome to Rational's earnings call for the fiscal year 2025. Following the balance sheet press conference, which was held earlier today, management would like now to give you a run-through through last year's results. That will be done by the CEO, Dr. Peter Stadelman, and the CFO, Jörg Walter. Thanks to everyone who submitted their question in advance. They will be answered after the presentation. To avoid duplication and for your convenience, I will post a list of the questions that have already been submitted. You will find them in the chat box on the lower right-hand corner in a few moments. Should you have additional questions, please feel free to enter them in the chat. We're looking forward to an insightful exchange, and I now hand it over to Dr. Stadelmann. The floor is yours.

Thank you very much, and good afternoon, ladies and gentlemen. We can celebrate again, it's 50 years of combi ovens that we celebrate in 2026. We started in 1976 with the first convection oven where at that time also steam was included, which made it a very multifunctional device with a great future to come. You know our history a little bit, some of you, 1979, we started to clearly focus on combi steamers only, so we stopped producing and selling convection ovens, which at that time made up to 40% of our total sales. The company doubled several times in the following years. In 1986, we were celebrating the 100,000th iCombi oven and shortly after, in 1987, we introduced Clima Plus Control. That was the globally first combi steamer with a very precise control of the humidity in the cabinet. Oops, that was a little bit too much. 2000, as we know, and as we celebrated a year ago, was our IPO. 2004, we celebrated the launch of the Self-Cooking Center and the iValue Cooking Center, our two first intelligent devices which are able to cook on their own, so we don't need any chef's experience or knowledge. in order to bring out high quality food in high volumes. In the following year, we constantly improved our existing product range. 2017, we added connected cooking as the platform for our units to be connected. And 2018, also a milestone, we integrated the sales and brand of Frima, which was taking care of the, at that time, Barrio Cooking Center, into the Rational brand and into the Rational sales force. Later on, we built our one millionth combi oven, which then helped the Hofbrauhaus in München to feed its many guests. 2020, we launched a completely, completely new series of iCombis and iVarios. Every unit, every product at that time was completely redevelopment and reassessed. And then, as you also might know, 2023, we had a big anniversary. We celebrated the 50 years of Rational. A year later, we launched the next revolution after the first combi steamer and the first iVario. We launched DI-Hexagon. the world's only and first cooking solution which combines three sources of energy to heat up food, convection, steam, and microwave on six levels in high quality and high volume. Also in that year, we started the production site in Suzhou, China, and if I'm going on The last year's 2025 brought a new plant in Wittenheim. Everybody attending our capital market day last year, not yesterday, last year was there. We produced the 1.5 million Combi oven in February. And as we will tell you later, we came back from our product launch in China, where we introduced the iCombi One last week. Let me add one more slide here. Our 1.5 million combi steamer was donated to a health institution taking care of severely ill children here in the neighborhood and was very well received. And let me add some pictures to the iCombi 1. It is a perfect fit for Chinese kitchen, and we demonstrated in a spectacular show last week to more than 160 dealers, kitchen planners, and key accounts the new unit. And I'm happy to show you some more insights in a short movie. Please let it roll. Yes, you saw that this is a perfect fit, as I said, for Chinese customers. The iKombi One will be sold through our existing sales channels with our existing dealers. We do the same kind of selling approach as we do for the iKombi Pro, which is still also, of course, on sales in China. It will be sold only on China mainland. We do not have any plans to export that unit to other countries. Its languages on the display are Chinese and English only, so already this is a clear focus on China. How do we do all that? As you know, we pay a lot of attention to our employees. So also last year we could order 133 UIUs as we call them for 10 or up to 40 years of service with the company. We usually do a wonderful dinner with them where some of our best chefs are proud to serve whatever they are wishing to have on the menu. And another interesting thing I would like to show is a competition we won. We are in machinery, number one company of employees that share information and news about their own company on LinkedIn. So that also shows the pride and the ambition of our staff they have with the company. Let me finish with some interesting information on sustainability. We are happy that we did our first CSRD sustainability report for the fiscal year 2025. But much more, we had last year a great study done in one of our customer's kitchen that was the AXA insurance company in Germany. We installed a lot of meters for energy consumption and water consumption, and we were measuring the consumptions before the complete redoing of the kitchen and also afterwards. You see what was installed in the kitchen on the slide here. And when we measured after the completion of the rebuilding, we could see that Water consumption was down almost 50%. Energy consumption was down 24%. The load, the connected load that you need to the size of the cable, as I explained it usually, was down 20%. And also more than 20% of peak times were reduced compared to the old kitchen. So all in all, we could prove together with the university, which did the research and the analysis that our equipment is helping our customers to get more sustainable every day. Also on everybody's Use is the topic of artificial intelligence. Just an example how we use it at Rational. We have several ten thousands of units connected and from that we get a lot of data and using AI tools in that data lake, we can now monitor and identify preventative maintenance needs so we can or our service partners are able to tell their customers there is a pump not working properly or your ceiling is not working properly, let's repair it while your kitchen is down and not being affected by an unplanned down in busy hours. That's something we offer to our service partners. They then sell it to their end customers and would provide those customers with a digital service report, which also gives them advice how to improve their sustainability or how to improve the usage of their equipment in total. Let me finish with some new geopolitical risks. Both of them are coming out of the White House, the Oval Office. One is the U.S. tariffs. As you all know, some of those tariffs are unlawful. So we are in the process of asking those unlawful tariffs back through our customs broker. That's still in process. We can't say actually what the outcome will be as so far no other company also was successfully claiming some money back. So the impact on our cost and income situation is still quite difficult to predict. The second issue is the war in Iran. Currently, we don't see any interruption of supplier logistics. Of course, delivery routes to Dubai are uncertain. We have higher container rates with surcharges, and there are risks of higher energy costs and higher material prices. And also there, so far, it is quite difficult to predict the impact on our cost situation. With that, I would like to hand over to Jörg Walter for the second part.

Yes, thank you very much, Peter. Also, a warm welcome to this call from my side. We published our preliminary figures for this year, for last year on February 5. And with this publication, we already commented on the most important KPIs regarding sales and earnings. And with this call, we would like now to take a little bit of a deeper look into the financials for the last year. Before we start, let's have a look at our sales reach. As a product-wise focused company, we are active worldwide. This is because we have customers. We want to reach customers all over the world and bring them our benefit. And this is important for our growth on one side, but it's also a very important element for our risk management. We can actively achieve this only if we are close to our customers, when we know the needs and we can actively help to overcome the challenges. And the free market potential, you know that, remains high. 4.8 million worldwide kitchens, addressable kitchens in the world. 75% of them still use traditional devices. 25% only have a combi steamer or an iBario. So there is lots of opportunity for us. And that is important, why it's very important for us to have a high sales reach. You see that we are active in 100 countries of the world. We have 22 sales companies worldwide, and we are actively working on extending our presence. And this is also what we did last year. So last year, we hired 102 new employees. of these over 80 percent were located in our sales organizations and 60 percent are in the direct sales team so our sales force now has a worldwide strength of 630 employees and this is an important factor why we can again present good figures with new records And this is once again, we can prove that our business model is quite resilient against economic fluctuations or geopolitical tensions in the different regions of the world. Now, let's start with the sales. You can hear the sales development 2019 to 2025. And despite the challenging situations in individual regions of the world, we continued our growth path. We achieved a new sales record of 1.26 billion euros, and we were able to exceed the previous year's figure by 6%. Now, our growth rate was lowered by the unfavorable development of the currencies. Our foreign currency share is currently at 53%. The U.S. dollar alone accounts for 20% of our sales. And in particular, the development of the North and South American currencies above all the U.S. dollar slowed our sales growth, adjusted for currency effects. We were able to increase our sales by 8%. A look at the business performance during the year. We are very proud of the last quarter because we closed the fourth quarter with a new quarterly record of 341 million euros in the quarterly growth of 7%. And I just talked about the currency effect that was most noticeable in the fourth quarter. And before these currency effect, the last quarter growth was even higher at 11%. And that's on top of a privacy value that was already very high. And when you look at the different quarters, you see that we come back to our normal seasonality. So we start with a lower first quarter, then we have two comparable quarters. with a second and the third quarter. And then typically we have a new sales record in the fourth year. And you see that this trend after we were out of this trend in during Corona COVID and during the supply chain crisis in 2024 and in 2025, the normal seasonality applies. Let's have a look at the business development by region. Europe, excluding Germany and North America, they are our largest sales regions. Together, they account for 67% of our sales. And these two regions have had a significant impact on the group sales development with sales growth of 9% in Europe and 8% in North America. Now the growth in Europe was first of all possible because we had a good normal sales development in the major, the biggest markets we have, that is Great Britain and in France. And in addition, we achieved double-digit growth rates in Sweden, in Italy, in Benelux, in Austria, and in the Eastern European markets of Poland and Hungary. We are very, very pleased that we have been able to consistently exploit the opportunities that are available in Europe, close to our home markets, and far away from the geopolitical conflicts. Now, in North America, our growth was 8%, and that was significant, once again reduced by these exchange rate effects. adjusted for the currency, we grew by 14% in this region. And this is even more positive because our competitors, they have reported low single digit growth rates at best And we see this as a confirmation of our strategy, not to compensate the unexpected tariffs through quick price increases on the market, but that we rather waited a little bit and we go for efficiency gains among other things in all areas of our company. Looking at Germany, we see that with 129 million euros We were able to achieve a new sales record and we doubled our growth rate from 2% last year to 4% this year. So it's typically because it's a penetrated market, a little bit on a lower level and with the 4%, we are quite content. Now we come to the one critical factor I would say at this slide, it's the sales development in the Asian region. We recorded here a sales decline of 11%. But also here, it's important to have a closer look. There are especially two reasons for this sales decline. This is first of all, we had a significant decline in sales with our largest Chinese chain account after the record sales that we had with them in 2023 and 2024. And the second effect was a decline in sales with our Japanese OEM partner that placed in 2024 special stock orders, and that wasn't repeated in 2025. So excluding those two customers, we were also able to achieve a sales growth in Asia of around 6%. So in the general growth development of the group. On the positive side here, I would like to mention that we were able to stabilize our street business in China. We had a double digit growth rate there. And also in Korea and in India, we were able to achieve double-digit growth rate. Now the two smallest regions you see here, Latin America and the rest of the world, they showed also the same growth rate as the group as a whole. So both were growing by 6%. Here I would like to highlight the Brazilian market. That is the largest market in Latin America. And we increased sales by 18%. and we were able to continue now a very positive development that we have here since five years in a row. So to summarize this chart, you see that we continued to have good growth opportunities in our so-called established markets. That are the markets where we are active for many, many years with our own sales force, with a higher sales team. And we are also able to find new customers in North America with our customer proximity and our offering, despite the difficult condition caused by the unexpected tariffs. So overall, we are with the sales result quite happy. Coming to the sales by product groups. Typically we say that the iVario, because it has not the same time in the market as the iCombi, can grow with double the growth rate. And that was true also for last year. So you see that Ivario in Euro was able to grow sales by 10%, iCombi by 5%. If you look at the units alone, the growth rate of the Ivario was 12% and the iCombi was 6%. So also here is this double growth rate is true. And also here, I would like to mention again, North American market and the South American, Latin American market. It was particularly pleasing for the iVario because you were able to achieve growth rates of 30 and 40% here in these two areas. Now coming to earnings before interest in Texas that would reach a new all time high of 333 million euros in line with our new sales record. and we were able to increase the EBIT in line with sales development by 6%. And as a result, we stabilized the EBIT market. It's slightly above the good previous year figures and in line with our earnings forecast in the beginning of 2025. Now looking at the P&L in more details, We look especially at the gross margin. Despite additional burden of the US service, we were able to stabilize the gross margin at 59%. And this is only 0.2 percentage points below the previous year's figure. It was possible because we saw an improved efficiency in production. And also we, again, saw positive effects from lower raw material and purchase prices. So these two factors, whether the additional tariffs that we had to take on our account. Looking at the operating costs, they rose slightly faster than the sales with a rate of 7%. Again, here you see that we have increased or we have the highest increase in the R&D costs where we increased by 15% and thus continued to invest into the future of Rational. We also invested slightly over proportional in the sales area. From here you see on the slide the sales and service at 6%. If you only look at the sales numbers, it is an increase by 8% and this is in respect of the additional workforce that we expanded in our sales team. On the other hand, we have savings. First of all, you see the administration costs. They are lower than in previous year, in the 2024 years. And also, we have positive effects from lower logistic costs. So overall, in light of the unexpected challenges due to the terrorist situation and also due to the unfavorable exchange rate development, we are, the management, Peter, myself, but also our other colleagues, we are quite satisfied with the EBIT development. Now let's have a look at the balance sheet. We improved our balance sheet again last year. Total assets grew by 77 million to 1.185 billion euros. This is due to an increase in the equity of an amount of 84 million euros. And this is due to the good earning situation in recent years and in respect to their comparatively lower dividend payout. This has as a result, we see that the equity ratio has increased from 77% at the end of 2024 to now 80% at the end of 2025. On the asset side, you see additional higher working capital for inventories and receivables. That's mainly due to this positive fourth quarter that we just talked about earlier. And then the main effect on the active side is certainly the high level of cash and cash equivalent. So that is bank deposits and the short term investment combined of now just under 540 million euros. And with this liquidity ratio of 46%, we are now in a very, very robust position. And this gives us in particular flexibility when we come to the dividend proposals later in this call. Looking at CapEx, you see that our business model has a very low investment CapEx intensity. In comparison of the growth of our business volume in the recent years, we have a very constant capex in the range between 30 to 35 million. And also in the last year, we are in this range of 34 million. And it was primarily for our construction project. We already talked about earlier and earlier calls about those. I would like to quickly give you the last status. We start with our largest investment in the history of Rational and our youngest investment project. We started the planning for a new service part distribution center. In the beginning of 2023, last year in January, we had the ground breaking ceremony. You see that in the picture on the lower left. And now you see on the picture that all the buildings are already standing and the interior work and installation of the warehouse technology that has begun. And we are quite confident that we will be able to celebrate the opening in spring, 2027. And now we can also report the, let's say the finish of two important investment projects. On the one hand, we have the new plant building in Wittenheim, Peter already talked about in the timeline about it. You all know that we have problems with our concrete floor for the production hall. And this quality problem was totally solved in the last year. And we had the move in the relocation of the production in October last year. So we can now say that this project is fully completed. And the second completed project also we talked earlier in this call about is the build up of our production for the new iCOMBI steamer for the Chinese market. and we had the opening of the new plant in march 2024 last year mainly we worked on the build up of the production facility of the welding machines and all the assembly lines and now we have the start of production in january so also here this capex project is fully completed Now we come to the dividend proposal. Typically we distribute out 70% of our earnings per shares. And we looked earlier at the balance sheet and we saw the very positive cash development and the very positive business development of the years 2023 and 2025 that led to these high liquid funds. And this is the reason that for the financial year 2025, we are proposing a regular dividend of 16 euros plus a special dividend of four euros per share to the annual shareholder meeting in April. This represents now a payout ratio of 90% and is in dividend decrease against previous year of 33%. And of course, after the payout of the dividend, we still have enough liquidity in these challenging times to keep our flexibility and invest in the future of the company. Now we come to the end. Finally, to the outlook for this year, the economic outlook for the commercial kitchen industry remains positive despite all geopolitical uncertainties. The out-of-home catering is growing, and due to the shortage of skilled laborers, automated and efficient solutions such as our combi steamers or our iVario are in a very high demand. We therefore expect sales wise to be 2026 to be another year of growth and to continue our long-term growth trend with a sales growth in the mid to high single digit percentage range. Now the raw material prices and the logistic prices, they have stabilized in recent years on a low level. Currently, Peter already mentioned it. Currently, we have a trend reversal of steel prices and also electronic prices. They have risen since the beginning of the year. In addition, there is the burden of the full year effect of the exchange rates. and still the unclear custom situation for our exports in the USA. And overall, therefore, we expect that the gross margin will be slightly slower below the previous year's figures. This year, again, we will intentionally increase some of our operating expenses. These are especially all expenses that are connected with our sales process that brings us more closeness to our customers. And on the other hand, we will keep all non-related sales expenses stable and we will continue our efficiency program that we started in the mid-2024. We still have the same policies in place, especially the very conservative hiring policy here in Nansberg at the headquarters. However, overall also we expect the OPEX to increase a bit more than revenue. And with all these three factors, sales, gross margin and OPEX, we are expecting compared to sales, a lower increase of the EBIT and with a margin EBIT margin between 25 and 26%. So with this, we are at the end of our presentation. and we are opening now the Q&A session. Thank you very much.