RATIY (RATIY) Q2 2026 Earnings Report, Transcript and Summary

Good afternoon, and welcome to RATIONAL's Earnings Call for the Second Quarter of the Fiscal Year 2026. The results will be presented by the CEO, Dr. Peter Stadelmann; and the CFO, Jorg Walter. [Operator Instructions] Also be aware that this event will be recorded, and you will be able to review it later on Research Hub. We're looking forward to an insightful exchange, and I will now hand it over to Dr. Stadelmann.

Good afternoon, and thank you for joining us. First half of 2026 developed in line with our expectations. Despite continued geopolitical and economic uncertainties, we delivered solid growth, maintained strong profitability and confirm our full year outlook. A proof for our strong market position and innovation leadership is the iHexagon, the world's first and only cooking solution using 3 energy sources simultaneously and smart. Loft 56 is a highly frequented restaurant in Ireland. The chef explains why he is about to buy even a second iHexagon, and please note what the customer is using its former oven for these days. Enjoy the movie. [Presentation] Yes. So you had some real feedback from an existing customer, and I think can understand now also the potential that is in the iHexagon technology. Another important event was the National Restaurant Association Show 2026 in Q2, which takes place in Chicago. We run 52 arena shows where our cooking solutions could be watched in action, and we created more leads in the show than in 2025. The high level of customer engagement and interest in our cooking systems confirms the significant growth potential we continue to see in this strategically very important market. Another event were the Cooking (sic) [ Cook ] for Change challenges or initiative from Sodexo. RATIONAL is Sodexo's global preferred supplier for cooking solutions. Sodexo is the world's biggest catering company, employing more than 426,000 staff and serving 80 million dishes per day. We support them in their Cooking (sic) [ Cook ] for Change initiative to promote sustainable cuisine. 500 of Sodexo's chefs participated globally in this challenge. It created over 20 million views on social media and also gave us a lot of attention. Our partnership with Sodexo highlights how RATIONAL technology supports efficient resource utilization, waste reduction and sustainable food production at global scale. We not only support challenges, we also participate ourselves. We are proud to have received another Best Managed Companies Award. This recognition reflects our long-term management approach to keep strong customer focus and entrepreneurial U.i.U. culture. In addition, we just recently got named 1 of 12 leading quality stocks by the German Handelsblatt. Criteria were revenue and earnings growth, high profitability, strong balance sheet and a resilient business model. We see ourselves in great company here with the shares from Microsoft, SAP, Visa, BNP Paribas and for instance, Samsung. And our people remain a key competitive advantage. The entrepreneurial culture embodied in our Unternehmer im Unternehmen philosophy continues to drive customer focus, innovation and execution across the organization. To foster that culture and to thank our employees and their families, we held our traditional summer party 2 weeks ago in Landsberg. More than 2,600 participants had a lot of fun and food. Let us now turn to the financial performance. Overall, we are pleased with the first half results. We achieved profitable growth, strengthened our market position and continued to invest in future growth opportunities. After 6 months, our revenues grew organically by 8% and 6% after FX adjustments. We achieved EUR 642 million. Growth was higher than in 2025 and 2024. This is in line with the expansion of our sales force by also 8% and the increase of our sales activities at the very same growth rate. Looking at the quarterly results, we see revenue increased by 4% to EUR 324 million in the second quarter. In retrospect, the first quarter benefited from some pull-forward effects in the United States related to pricing actions. We assess the magnitude of those pull-forward effects were EUR 6 million to EUR 8 million. The 8% and 4% growth rates in the corresponding quarters add up to the consistent 6% for the half year 2026. Underlying demand remained solid and in line with our expectations. For more details, I hand over to Jorg.

Thank you, Peter, and also hello to everybody in this call from my side. Let me now turn to our sales development. Sales revenue by region for first half 2026. Overall, revenue growth continues to be driven primarily by Europe while developments in the other regions were more mixed. Let us start with Germany. Revenue increased by 9%, reflecting a demand in our home market. We are particularly pleased to see that the growth remains strong in the second quarter as we had a positive onetime effect from a major stockholding dealer in the first quarter. Looking at Europe, excluding Germany, revenue also increased by 9% to EUR 285 million. Growth was broadly based across the region with particularly strong developments in Austria, in Spain, in Scandinavia, Switzerland and in Eastern Europe. We also saw a return to growth in Benelux while only a few markets, such as Turkey, remained below the prior year level. Overall, Europe continues to demonstrate resilience and remains a highly reliable growth contributor for our group. Turning to North America, revenue increased by only 4% to EUR 154 million in the first half. However, before exchange rate effects, we were able to grow in the first half by 10%. Growth of the region was entirely driven by the third quarter. We already mentioned that, where we saw organic growth of over 23% and 1 factor was this prebuying from the February price increase and that pushed sales level of second quarter down. Now turning to Asia, revenues declined by 2%. The main reason was the continued weakness in China where revenues were down year-over-year by 25%. Here, we are heavily affected by Yum China's decision to source combis -- combi ovens locally. This was partly offset by solid growth in Japan, India and in several partner markets. While the short-term environment in China remains challenging, we continue to see attractive long-term opportunities across the region and especially in China with our new product, iCombi Pro. The smaller regions, Lat Am and Rest of the World, I don't want to comment in detail as we usually see higher variances on a quarterly basis here. Maybe only a word to the near Middle East. Dubai, the conflict with Iran is affecting our sales in this region, which is part of Rest of the World, and this is 1 main reason why we are showing a decline in sales in this area. To summarize the regional picture, Germany and Europe remain the key growth drivers. Together with North America, we also had a double-digit growth rate by 10% in the quarter. Let's take a look at the development of our product groups. Starting with iCombi, revenue increased by 5% to EUR 562 million. As our largest product group, the iCombi continued to benefit from solid demand across most regions that are the effects we just talked about, and the iCombi remains the backbone of our business. Looking at the iVario, revenue increased by 14% to EUR 79 million. And as we have stated before, we generally expect the iVario to grow faster than the iCombi due to its lower market penetration and growth potential in many markets. The half year numbers once again underline this expectation and especially positive to note here was the higher sales level in North America with a growth rate of 24%. Let me now turn to the development of our EBIT. In the first half 2026, EBIT increased by 11% year-on-year to EUR 170 million, with an EBIT margin that reached the highest number since many years with 26.5%. This was possible due to the positive impact from tariff refunds related to our U.S. business, which were recognized in the second quarter. Excluding tariff refunds, that was an amount of EUR 14 million, the profitability would have been 24.3%. This number is fully in line with our guidance for this year. Let me walk you through our profitability development a little bit in more detail. We already discussed the revenue performance, so we focus now on profitability. Looking at the gross profit level, cost of goods sold increased by 4% below the growth rate of the revenue. Gross margin remained affected by higher material costs, increased logistic expenses and the tariff-related effects. These headwinds were more than offset by the tariff refund that we received during the second quarter. As a consequence, gross profit increased by 7% with an improved margin of 59.8%. Operating expense increased by 5% year-on-year to EUR 215 million. And as announced, we continue to invest selectively in our strategic priorities. First of all, that is R&D. Expenses here grew by 7%, reflecting our ongoing commitment to innovation and future product development. Sales and service costs increased by 5%, mainly driven by customer-facing activities and targeted initiatives to further improve our market position. At the same time, administrative expenses were slightly below the prior year level, demonstrating our continued cost discipline and cost initiatives. And as we heard before, as a result, EBIT increased by 11% to a very good number for a first half year of EUR 170 million, outpacing our revenue. I don't want to comment too much on the balance sheet as it is clear that it remains very strong. Total asset increased by around 7% year-on-year, reflecting the continued growth of our business. And despite the high dividend payout in May of 90% of our earnings of 2025, we increased the equity by nearly EUR 40 million against the June last year number. Most of that equity increase is now in our liquid funds. In addition, we have higher inventories in our overseas markets to secure our delivery abilities, and also since we opened a new warehouse in Dubai. Let me conclude with our revenue and earnings outlook for this year. The economic outlook for the commercial kitchen industry remains positive despite the ongoing geopolitical uncertainties. The out-of-home food service market continues to grow, and driven by the persistent shortage of skilled labor, automated and efficient solutions such as combi-steamers and iVarios remain in a high demand. Therefore, we expect 2026 to continue to grow in the mid- to high single-digit percentage range. After having stabilized in recent years, raw material and logistic costs have started to trend upwards again. In addition, we face a full year impact from the foreign exchange rate and the tariff situation for our exports to the United States. The reimbursement of the tariffs paid mainly in 2025 helped to buffer these effects. Overall, we still expect the gross margin to come in slightly below the prior year level. And also in this year, we will increase certain operating expenses, especially in the direct sales area. Costs not related to sales will be kept as stable as possible. Overall, that means that we keep our EBIT guidance. However, due to the reimbursement of tariff, we expect the EBIT margin rather around the upper end corridor of between 25% to 26%. Now this concludes our presentation, and we are now happy to take your questions.

Thank you so much for the insights that you've already shared. We did get a lot of questions before the event started. So I will dive right in. First question regarding salespeople. You further developed your sales footprint. Can you talk about the further need for a ramp-up in salespeople?

Yes. This is an ongoing process that needs to be performed consistently in order to fuel sales growth. As we showed in the Q1 call on a slide, there is a clear causality between increasing sales force and our sales activities and development. So further market penetration means compacting the sales territories by adding salespeople.

Let's continue with the next question. It's regarding China. China remains very weak. How has the acceptance of the iCombi One product been so far, and do you expect sales in China to return to growth in the coming quarters?

Yes. As you know, we do not publish any details on the iCombi One. But so far we are happy with the development. I have to check for the right question. Sorry, give me a minute. I don't see it.

Sorry. Let's continue with the next question. The update on iHexagon. Can you give us an update on iHexagon? Yes. That would be appreciated.

Yes. No problem. Also here as you know we do not publish any detailed numbers. We are happy with the development so far, and as shown in the movie at the introduction, we find more and more customers which really see great benefit from using the iHexagon.

Great. Which region does propel the iVario sales in the first half of 2026? And can you give us an outlook for the second half 2026?

Yes. Biggest growth came from U.S., France, and Iberica, so Spain and Portugal. We are confident to keep the growth rates double as high as the iCombi growth rates for the future.

Great. Could you provide an update on the market development in China, the acceptance of the iCombi One product there and customer feedback, and also whether the product has already secured any major chain or key account contracts in that region?

Yes. Consumer sentiment in China remains subdued and continues to weigh on our business performance. The main headwind is the decline in sales to Yum China, as KFC China is increasingly shifting towards local sourcing strategy. At the same time, our street business is developing positively. The iCombi One sales team has been set up. We are gaining new dealers for all products every month. Customer interest in the iCombi One is high, and as previously announced, we have already secured a contract with a new key account for the iCombi One.

Thank you. Does management see any competitors boosting productions in the U.S. as a result of tariffs? Would RATIONAL consider investing in the U.S. directly?

No, we do not see this, and we regularly assess the overall situation for USA production.

Great. Thank you. Could you provide more detail on the increase in the order backlog at the end of the second quarter, and comment on the drivers behind the stronger demand trend towards the end of the quarter, and were there any changes in customer behavior? Can you discuss July trading as well?

First of all, monthly fluctuations are quite usual, but development during Q1 and Q2 was mainly driven by the prebuying effects in the United States. The stronger demand development was driven primarily by the U.S., Germany and Canada, while most other markets also contributed positively. The strong order intake in June led to a higher order backlog at quarter end, as not all orders could be shipped before the end of the quarter. As a result, the order book was approximately EUR 10 million to EUR 15 million higher than at previous quarter ends. Overall, we expect the higher order backlog at the end of H1 to support positive business development in H2. [indiscernible]

Continuing with Asia, why did Asia South slightly miss the results a year ago?

Major impact was from Australia. The development is mainly driven by timing effects related to a large partner who restocks the warehouse as needed. Over a longer period however business development remains stable with no structural changes.

Great. Thank you. Can you give us some reasons for the strong growth that we've seen in the DACH countries?

Yes. Growth in Germany was driven by one-off stock orders from several dealers in Q1, while Q2 showed broad-based growth across the business without any significant onetime effects. In Austria, growth was supported by rewinning a major Aldi [ offer ] tender at the start of the related rollout. In Switzerland, there were no specific one-off factors, with performance reflecting generally solid business development and strong market execution.

Great. Thank you. Let's continue with regions. Dr. Stadelmann, the impact from the Middle East conflict, what are you seeing?

Yes. The Middle East conflict has a limited impact on our business. Revenues in the region accounted for approximately 2% to 3% of group sales in the prior year. In H1, we recorded a sales decline of around EUR 2 million. The conflict has generally led to higher costs. However, we do not expect any material shortages or supply chain disruptions for us.

Great. Thank you. Let's look at the U.S., Dr. Stadelmann. Which factors in North America enabled the currency-adjusted sales growth of a little bit over 10% in the first half 2026?

Yes. North America, especially the U.S., is our #1 growth market due to the big open potential. So 10% plus organic growth is a growth rate we would expect.

Great. And would you mind splitting your Q2 2026 sales growth, which was roughly 4%, into volume growth on the one hand, and business mix, price growth on the other hand?

Yes. The majority of the 6% year-on-year sales growth in H1 was driven by underlying volume growth. A smaller portion came from the regional mix, while price increases had only a minor impact on the overall growth. Specifically in Q2, volume growth remained the main driver, while price increases started to make a modest impact to the growth.

Great. Thank you. What cost does the group expect coming from tariffs in the second half of 2026?

For the full year effect, we expect tariffs to be around EUR 28 million to EUR 29 million. And with the reduced tariffs rates now, we expect that the second half will be a little bit less than the first half.

Thank you. Also continuing with tariffs, the expected development of input costs. Costs of goods sold increased by around 9% in the first half 2026, excluding the refunding of the U.S. tariffs. Will this rate continue in the second half of 2026 as well?

Yes. It will, as we are facing an increased level of input costs. That is for steel, that is for chemicals, but also especially in the electronical sector, which will presumably not reduce in short term. We are expecting higher growth rate for the COGS also in the second half.

Great. Assuming the actual level of energy costs, which additional amount will you need to pay compared to 2025? What are you expecting?

Direct energy costs, they are very low. Only EUR 3 million for gas and electrical energy. Plus, we have around EUR 2.5 million for the fuel for our company cars. So the total effect year-on-year is maybe, I don't know, EUR 0.5 million. So it's not significant. The higher impact comes from our customers and our suppliers that are facing higher impact here.

Great. Looking at another cost item, wage costs, how do you expect those to develop going forward?

We have our regular salary round every year beginning in July. And we increase our salaries for around 3.8% on average in Germany from July on. In general, we are getting orientation from inflation rates and in Germany from the metal union negotiations. That is the current state.

Thank you. You've talked about other costs rising as well, and one of the questions is if we start looking into 2027 already, the U.S. tariff refund will probably not be repeated, and bearing in mind that currently higher costs for a lot of inputs, might that trigger potential slight price increases to offset those higher costs in the coming year?

Yes, there are different scenarios in discussion. As you know, typically, we would like to avoid price increases and rather buffer this by efficiency increases. But if the amount gets higher than you can do by efficiency, we typically also think about modest price increase. And we are looking at these scenarios right now.

Great. Looking at tariffs, I think you shared a calculation previously that with a 10% tariff base assumption, a list price increase of between 6% to 7% would be needed mathematically in order to maintain the absolute earnings contribution. Is that calculation still valid?

Yes. The calculation, the mathematical exercise is still correct. The absolute number, the 10%, is certainly not correct anymore. Next year, we are rather looking at around something like 14% on average on tariffs. But the mathematic, the ratio between the 10% and the 6% to 7%, that is still the same.

Thank you. What margin improvements would you expect from your service parts investment in Landsberg? How is your revenue mix split between cooking systems on the one hand, service parts, care products, and accessories on the other? And what CapEx projects should investors be expecting for 2027?

Well, first of all, the primary reason for the decision to expand the service parts building in Landsberg was not to lower the costs. It's about growth. It's a decision that we need to invest in order to ensure the service parts availability, and that is the main driver. So there is not really a scalability. Rather, we are having set up and step up costs. So once the building is fully in operation, we are expecting higher depreciations in the area around EUR 1.5 million to EUR 2 million. So it will be, first of all, rather putting some more pressure on our balance sheet, on our P&L, but we expect then with the further growth to buffer that up. So that is the majority. In terms of CapEx, new service parts building center in Landsberg, that is expected to be completed in the beginning of next year. So we will start that in Q1 2027. In addition, we will start with the construction of the new customer experience center in Landsberg, located next to the existing training centers, and that is scheduled to also begin in the next year, the middle of 2027.

Great. Looking at guidance for this year, could you provide an update on the outlook for the second half and the remainder of the year, including input cost developments, demand trends, and expectations for key markets such as, for example, Germany and North America?

Yes. The input cost, they remained mixed. While the stainless steel base prices, they are still low, the alloy surcharges have increased more than expected and are likely to have an impact in the second half. The freight costs also remain elevated, but have recently stabilized. Overall, the demand continues to be supported by the healthy order backlog. In Germany, we expect the positive momentum to continue, although it remains uncertain whether the exceptionally strong growth rates can be sustained also in the second half. In North America, we continue to expect growth in the range of 10% to 15%, in line with our long-term outlook. In the U.S., some of the last year's headwinds, such as FX effects, are expected to ease in the second half. Overall, we remain positive on the outlook for both markets.

Thank you. Looking at your balance sheet, we've seen quite a strong increase in inventories, which were up by nearly 10%. Can you give us some insight as to what the key driver behind this was?

Yes, I said that in the presentation. First of all, we opened a new warehouse in Dubai, so that put on some extra stock level to the balance sheet. And then we have seasonally increased our stock level in overseas markets just to ensure the normal delivery availability.

Thank you. Looking at accounts payable, do you expect accounts payable to be on an overall higher level in the future? And if yes, why?

Well, the accounts payable is not a big number in our balance sheet. It's more or less on a constant level. But you'll see in the balance sheet, timing shifts between the quarters. So from our side, we don't have any specific topics initiated there, so it's just a random effect.

Great. Thank you. Let's look at a big number in the balance sheet. You've done a special dividend this year, but your equity ratio at roughly 80% is still pretty high and solid, and some of your peers do regular share buybacks. Are you open to examining share buybacks as part of your capital returns framework, also given the share price level?

Well, we never really looked into this topic. The share buybacks, it's not really important to us because we have a low free float of the shares, and we don't want to limit that further. So our unwritten dividend policy is to 70% payout ratio, plus a special dividend if that is possible. I think we will keep on with this policy, and have a good chance, if liquidity is on a high level, to think about a special dividend in the future also.

Great. Should we expect a tariff impact next year of around EUR 28 million to EUR 29 million on EBIT as well? Or do you already have an idea of where that could probably come out at?

That is actually around what we also plan for the next year. Certainly, we have a growth in the U.S. market. So probably it's EUR 2 million to EUR 3 million higher than for this year as our business volume is growing in the U.S. But in general, this calculation is correct.

Great. I do not see any other questions as of right now. [Operator Instructions] I see that somebody is still typing, so we'll give that person a chance to post a question in the chat, and chat in the meantime. Give us 1 minute. We'll see what the question will be. Great. It's regarding China, our Chinese competition. Chinese competition and market shares. Could you please comment on the competitive intensity in China? Are local competitors mostly competing on price? And would iCombi One help you gain back market share?

Yes. So as usual, in I think a lot of industries, we see more local manufacturing. For us, that's mainly 2 companies. one is called Justa and the other is called [ NoPain ]. They produce, I would say, medium quality combi ovens at, of course, lower production costs and therefore also lower sales prices. Also lower services after sales. So usually they do not offer any training or not the same state-of-the-art quality in service repairs, maintenance as we do. The iCombi One aims at being competitive again with those products like the [ NoPain ] or Justa oven. Price-wise, we are slightly above them in list prices. But we also know that our cooking quality is above what they deliver. So it must help us, again, to also have an entry model combi-steamer and win some market shares there. The iCombi Pro, as you might know, is still, of course, in sales. But in most cases, we will not offer the iCombi Classic in China because especially its display function is not at that level where Chinese customers expect it to be these days.

Great. Last question is regarding North America and the performance. You mentioned the Chicago NRA Fair. And given the development of your order book, what level of growth do you expect for this year to see in North America?

As we said, in the first half, we had before FX effects this 10%. This is around the level that we would also expect in the second half, maybe a little bit higher.

Great. I think that concludes it. Thank you very much for the insights that you've shared and the good answers to the questions. Of course, thanks to everybody who submitted questions and also asked them during the chat. I will say 2 more things. This event has been recorded and will be made available later in the course of the day. And we will also send out a questionnaire shortly. If you have a second, we'd appreciate your feedback. And with that in mind, I will hand it over to Dr. Stadelmann for the last final remarks.

Yes, thank you very much. My dear ladies and gentlemen, to close the call, please let me thank you for you actively participating. We are looking forward to staying in contact with you. So in case of any questions, please do not hesitate to contact our IR team. Laura and Stefan will always be there for you to support you and answer your questions. Our next IR event will be our IR follow-up talk next week, Tuesday, 11th of August at 2:00 p.m. CET. You can find the subscription link on this very slide or on our homepage. The next announcement and earnings call will be on November 5th in the same setup. Please let me also announce some information on our 2026 Capital Markets Day. We are planning the CMD for November 19th. After having made it in Landsberg, in Wittenheim, and at Munich Airport with a lot of snow, for those remembering, in the last years, we will make it online in a webinar focusing on the virtual world of ConnectedCooking in 2026. More details will be sent out with a save the date in the coming weeks. And with that, I wish you a nice summer, a good time, and on behalf of Laura, Stefan, Jorg, and myself, we are looking forward to meeting you soon. Thank you and goodbye.

Thank you and goodbye.