RATIONAL Aktiengesellschaft (RAA) Earnings Call Transcript
October 1, 2026
Earnings Call Speaker Segments
So good afternoon, morning or evening, everyone, from wherever you are following us today. So first of all, question, can you hear me? Okay. Perfect. Thank you very much. So thank you for participating in today's IR Talk. So we start with the basic information. So that's the last call for Q3 now, Q3 2026 for sure. With this call, we are following the ESMA recommendations, and this means that we, of course, only discuss publicly available information. And the call was made accessible to everyone who is interested via our website. Any documents that would be shared, if at all, would be made available to all nonparticipants afterwards. And an additional information, we will transcribe this call for internal purposes. So I think you need to confirm now when I start the transcription. And please unmute yourselves. So this should now work. is it working for everybody? Can one raise your hand? Does it work? Yes. Perfect. Thank you very much. So then let's start. Let me first summarize the most important points of H1 2026. So sales revenues amounted to around EUR 642 million, which corresponds to a growth rate of 6%. And adjusted for the negative effects, our organic growth amounted to around 8% -- adjusted for the negative FX effects, as amounted to 8%. So the negative FX effects were in Q1 and in Q2, they were already more or less neutral. And in Q3 and Q4 now, we are also expecting a neutral to slightly positive FX effect, mostly resulting from the dollar development. It is also important to know that looking at the development of the past month, we see that there was a stronger prebuying effect earlier this year than we initially expected, and that's why growth in Q2 was then way lower than in Q1. For assessing the underlying development, we consider H1 as a whole more meaningful than individual comparisons of the quarters. From a regional perspective, the overseas regions of North America South America and Europe were still the growth drivers, the major growth drivers we were having with growth rates of around 9%. And Asia was the only region with a year-on-year decline in half year 1 compared to H1 2025 with lower sales revenues of around 4%. And here, it is still China that is driving the lower performance, while the other markets did overall quite well. A look at the product group shows that iVario was growing at a high rate of 14% in half year 1 compared to plus 5% for the iCombi product segment. In the long term, I think you know this, we are expecting to grow around 10% to 15% with the iVario while seeing some mid-single-digit rates for the iCombi product group due to the different rates of penetration levels. On the gross profit side, we benefited from the tariff refunds amounting to around EUR 40 million. In addition, some lower warranty levels and productivity gains in production were contributing positively. And this amounted all over to a positive effect of around 280 basis points, the major part, of course, coming from the tariff refunds. On the other hand, higher tariff costs had negative margin impact of around 200 basis points. And so together with the smaller effects from component and steel costs and logistics in H1, this contributed to a gross margin reduction of around 200 basis points. So plus 280 points on the one hand and minus 200 on the other hand. So the gross margin stood at the end of H1 at 59.8% and adjusted for this one-off tariff refund position at 57.6%. And with that, it was 1.4 percentage points below previous year as expected approximately. Operating costs, on the other hand, increased slightly disproportionately to the sales revenues, also as expected. And including then the tariff refunds and less negative currency results, the EBIT margin at the end stood at 26.5% adjusted for the refund at 24.3%. And with that, it was around 100 basis points lower than in half year 1 2025. And this, again, as expected. So for more detailed information on H1, please visit our website. So closing H1, let me now go over to some -- so sorry, there is somebody not muted. Okay. Perfect. As a reaction on seemingly sustainable higher cost levels, mostly for steel, electronics, chemicals, energy and logistics, management decided to implement a price increase for our cooking systems of 2.9% on average. So this is not for the nonunit business, so not for cleaners, accessories or spare parts, but just for cooking systems. And it will not be in the U.S. as we already increased prices in February in the U.S.A. So that means slightly more than half of our sales revenues will be affected by this price increase. We announced this towards our dealers in early September, and it will be effective from October on in the most countries, with the exception of the United States as said. For fiscal year 2026, we expect a sales revenue growth rate in the mid to high single-digit percentage area. And again, as said, we saw significant negative currency effects in Q1. And now this is gone, and it should not contribute negatively, but maybe from Q3 and Q4 on rather positively. Always, of course, assuming constant FX levels from now on. On the other hand, we see continued trends on the sales development so that we confirm our sales guidance. From a regional point of view, same story. So we see that the trends approximately are intact as we saw it in H1, with a few exceptions that I will describe now. So one topic that is important to mention is that due to reduced government funding compared to high levels of last year's government funding, the school business in the U.S. also was coming down this summer, compared to the elevated levels of last year. Another important tweak is some volatility we always see in our OEM partner business here now in Japan, which shows lower levels in Q3 after contributing very well to growth in Q1 and Q2. So this volatility is absolutely usual for those kinds of customers, and the rest of the business is not affected. Due to the announced price increases, we saw elevated order numbers again now in September. So the effects on Q3 sales revenues were indeed of minor importance, presumably, as the orders were not shipped yet in the majority of the cases, which means that we will again have an elevated order book level at the end of September now. But at this stage, we cannot determine whether the preordering effect represents only a pure order shift from Q4 to Q3 or whether it will also have a positive impact now on Q4 sales levels in total. So another information on the tariff situation, as already said, the EUR 14 million refund in Q2 was a one-off. This impacted gross margin and EBIT margin, of course, positively in Q2 and in H1. And on the other hand, the tariff rates for cooking systems were lowered from 25% to 15% from June on. And this will lead to lower tariff costs in total for 2026 compared to what we initially expected. So we are estimating the total tariff expenses in total to be, as already said maybe in the last calls, in the higher 20 million areas, so around EUR 14 million to EUR 15 million higher than in 2025 where they stood at around EUR 12 million to EUR 13 million. So this reduction of the tariff rates will get effective mainly in Q4 2026 now, after, let's say, rolling the bigger part of our warehouse that was still booked with higher tariff rates. So sequentially, quarter-on-quarter, this will lead to lower tariff expenses in Q4. But the exact amount is, yes, open and difficult to predict right now. So this depends in the end on the order situation and when the -- which part of the order book will be taken out. And on the other hand, as already mentioned, we see increasing costs for different kinds of inputs like stainless steel, electronics, chemicals, logistics, et cetera. So this will be significantly higher. And if we sum this up, for fiscal year 2026, all over, this will lead to effects in both directions, some lowering costs, some increasing costs. They should eliminate each other more or less, maybe with a tendency toward more reduction than increase. So therefore, our guidance is all over still valid. This means mid to high single-digit growth rates for sales revenues, gross margins slightly below previous year, maybe 50 to 100 basis points. And together with the cost development in the operating sector that we come out with an EBIT margin level that is maybe rather [ 2 boards ] or around the upper end of our guided range of 25% to 26%. So here, we are maybe a little bit more optimistic, but I think we already mentioned this also in the earnings call of the half year. And after this short recap, I'm ready to answer your questions. So I think Ope already raised his hand. And feel free to raise your hand and then I call you afterwards. So let's start with Ope.
Just 2 questions for me. Just first one on China. I suppose, starting to see the effect of the KFC reductions there. So did you have a sense of sort of what impact that might have on sales in Q3, Q4? And then the second one is I suppose you went into H2 with a bigger backlog than normal just given the pre-buy effect in Q1, but then you have this pricing effect that [indiscernible] in Q3 and Q4. So just any comments on the progress on the initial order book before the new price heading into H2, what that means, also the institutional weakness maybe in the U.S.
Yes. So first on China, all over the situation has not changed that much. So we will see presumably similar developments when you look at the figures. So from that point of view, no major change. So KFC is on a low level, staying on a low level, and they started early this year in January, February. So I think a normalization so that the [ base ] effect here will be gone is just will be expected, maybe beginning in Q1 next year. So until then, we will see reduced sales levels there, approximately in the magnitude we saw in Q1 and Q2. And on the pricing and pre-buying effect, yes, as always, we see, if there is an announced price increase, we see some preordering, let's call it here, preordering effect, so that people place their orders in order to safeguard lower price levels. And this year, I think we have maybe even higher, maybe around EUR 20 million to EUR 30 million higher order book level, presumably now. But as we are just at the quarter end, this just could mean that everybody who wanted to buy in October, as there is also an agreement with the dealers, that they need to ship preordered units quite early on. This means this is maybe just a transfer of the orders from the 1 quarter to the other, and they will be shipped then in the next quarter. So presumably, we don't see a lot of these effects now in Q3, maybe just minor parts, but not a lot. And in Q4, we will have shipments that maybe normally we would have seen the orders maybe in October for that and now they came in, in September to safeguard the lower price level. And the pricing effect of higher price levels now for units in Q3, there will be maybe a smaller part of positive effect, whether this is then EUR 2 million, EUR 5 million or whatever number, it's difficult to predict. As said, it depends a little bit on also the order behavior then. Okay, is there more hands up there? So first, Craig, then Lars, and after that, Fraser.
Yes, Stefan. First question, I appreciate, of course, you don't -- won't be guiding on '27, obviously, until early next year. But I just wondered in terms of the structural factors, particularly the things you can control, the rollout of your sales and marketing force, capacities both in the [ economy ] vertical and on the [indiscernible] side. And also keep in mind, some of the base effects you'll be running into some positive, some negative in Q1. I just wondered if you have any -- provide any color type of growth rate -- top line growth rate, excuse me, momentum, you're kind of looking at as you're heading into '27. I kind of think you have a view of the idea here has been to ramp up your capacity so that you can start to trend back toward the long-term trend line growth of the company more in the 8%, 9%, 10% range. I just wondered if you -- if there's any early stage color you could provide here.
Do you mean sales capacities?
Well, I just mean like factors that -- including that, that could be driving your top line growth in -- heading into '27.
Yes. So basically, you know that our expected midterm growth pattern is what we say in the mid to high single digit, this is maybe somewhere between the 6 and 9-point something percent. So in the past, when we look in longer-term time frames, we had approximately 8% on leverage. I think this is something we could expect for the average for future, that we'd see it as sensible. But what it will be in '27, it's difficult to say. I would say, as an indicator, as you already mentioned, so we are building up sales capacities. We saw this in the level of the, I think, 7%, 8% or so after half year 1. And I think this is going on approximately in this magnitude, and we will see this as a, let's say, top focus of the management for the coming -- yes, for the near future. And so we will really highlight this. Otherwise, difficult to say. There is always local influencers, which help or do not help. So for example, as we already mentioned, I think in the German-speaking area in Switzerland and Austria, we had a bigger deal with a supermarket chain, which was absolutely supporting here. On the other hand, the negative impact from the Chinese business or also now in the short term with the volatility of the Japanese OEM partner, this is always, of course, then negative impact. Yes, and they are normally compensating for each other more or less. So Lars?
Stefan, yes, I'm trying to figure out the cyclicality of your business this year again. You said at the end of Q2, you had a stronger order book, higher order book, you were entering Q3 with strength. Now you say Q3 ends with a higher order book, we should be aware of the U.S. school business, Japan. So quarter-on-quarter, comparing Q2 to Q3, is it possible that we see a mid-single-digit quarter-on-quarter revenue improvement? Or would that already be too optimistic given what you are seeing so far?
You mean quarter-on-quarter...
Yes, from '26, from EUR 324 million in Q2. Should we expect Q3 to be comparable given all of the influencing factors? Or could we see growth there?
Yes. I would say normally, Q3 is comparable to Q2, maybe a little bit higher. A little bit higher. That's a normal pattern. So lower volume in Q1, then a little bit higher in Q2 and Q3, and then the highest level in Q4. I think what we need to consider this year is that we last year had a very strong Q4. So this is maybe just for the remainder of the year very important. And now for Q3, as said, normally, we would expect a slightly higher levels than in Q2 when you look into a normal seasonality. And I think there is maybe some positive, some negative indicators contributing. So from that point of view, I would not see a 5% difference. This would be very high between these 2 quarters, yes. So Fraser?
Just could you just come back on the U.S. schools point, which you've been calling out, just to maybe help us understand how meaningful that is also just thinking specifically about the U.S. business given that seems to be an area where you had a strong backlog. There have been these strong orders in June. So just to understand the message, if it's cautious or not on the market as a whole.
I mean in the U.S., maybe there is one important fact that's very important. It's just that the FX effect, the negative FX effect we saw, especially in Q1, that is gone and rather is going to neutral or maybe even slightly positive. So depending on the development for sure. And school business for us is very strong. It was even elevated in the past, maybe, I don't know, 1 or 2 years because of higher funding levels we were seeing. And this, of course, was helping us then in Q2 -- sorry, in Q3, to, yes, also grow there quite nicely. And this year, the levels are lower. So as -- when I talk to my U.S. finance colleagues says rather this year is maybe the normal level and last year was elevated. And the school business in good years was up to 20% or so of sales in total. And this year, it will be a little bit less and we would see it rather in Q3. So this is maybe sort of giving you, let's say, a trigger for your models on U.S. sales in Q3, but it's -- of course, it's not completely depressed, but it will be a lower level. And whether this will be then stable next year because the funding will stay on this level or it will -- there will be extra funding again or -- that's difficult to predict. But for this year, it's just a negative one. So I think Ope was again raising his hand.
Just one on the U.S. So comps are quite higher than in Q4, I think on organic basis above 20%. Do you know how much of that was prebuy versus underlying demand and sort of how to think of [indiscernible] have in Q4 last year in the U.S.?
No, sorry, this I cannot say. Sorry. I would not assume that there was a lot prebuying in Q4 last year. Sometimes you know our business model, that's very year-end driven as our salespeople try to, let's say, optimize their bonus, our dealers try to optimize their kickback payments and, of course, big customers with open budgets want to use it at the year-end in order to maybe not lose it for the next year. And so sometimes this could be a little bit more, sometimes less. But how much pre-buying was in there is -- we cannot say now. Perfect. So as -- now Christian is -- yes, you're raising your hand. Yes.
Yes. I just wanted to ask again, you mentioned the tariffs. I got lost a bit because it was often moving into various directions, so many, yes, changes in the directions in the past. If I understood you correctly, you said that you expect a lower tariff impact in Q4. But you stick to the EUR 14 million to EUR 15 million increase year-over-year. Can you maybe repeat the context again? Because I've got a bit lost within all these information.
Yes. So with the tariff situation we were facing at the end of last year or early this year, we were assuming tariff costs of I think around EUR 33 million or so, so way more than, of course, last year, but also now, of course, a higher level than we are seeing right now after this tariff reduction was announced. And we think that there will be, let's say, sort of a lower level in the magnitude of EUR 4 million to EUR 5 million compared to the initial, let it be from EUR 3 million to EUR 5 million lower levels, compared to what we initially thought, due to this lower amounts or lower tariff rates now, which we would mainly see in Q4 now. We maybe saw it to some extent in Q3 already kicking in with the first warehouse positions going out that was already booked to the lower rates. But now I think in Q4, we will see the major part. So that those units sold mostly would maybe be booked -- already be booked with 15% tariffs, which is now contributing to lower COGS. And so from that point of view, I would say, in a rate between EUR 3 million, EUR 5 million incremental lower costs, so quarter-on-quarter, expected to be in Q4 maybe. But on the other hand, when we look at the guidance, higher cost levels might compensate for this. Always difficult to predict the exact amounts, but this should help maybe to partly compensate for the higher costs so that the gross margin maybe would, yes, benefit a little bit and be less negatively affected than we initially thought. Okay. [ Ilar].
Yes, Stefan. I missed the first part of the call, so maybe you have already answered my question. But for -- in Europe, the strong momentum seen in Germany and Europe continue through Q3, that you have seen in Q2? And are you seeing any signs of softer customer investment decisions in Europe heading into Q4?
So in Europe, so we didn't have it in that detail, to be honest, but we said, okay, there will be more or less unchanged trends for the European markets as we saw it in H1. So still a very robust development with the additional positive impact from the supermarket business in Austria and Switzerland. Germany still on a high level. And also in the European markets, we see some stronger markets, we see some less strong market. But all over the robust development is going on. So we do not see any signs of really weakening business development in Europe. Okay. So as there appear to be no further questions now, I want to conclude today's call. I thank everybody of you for your participation. If you want to look up our IR dates, please go on the IR calendar on our website and also the IR Talks, I think they are already in there. So if you want to block these appointments in your schedule, this could be helpful. And of course, if you want, share your feedback with us to help us improve. And with that, then we are looking forward to seeing you in our H1 call on the 5th of November. So see you soon. Take care and bye-bye.
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