Rational AG (RATIY) (Q2 2026) Earnings Call Highlights: Record EBIT Margin and Strategic ...

Q & A Highlights

Q: Could you provide an update on the market development in China, the acceptance of the iCombi One product there, customer feedback, and whether the product has already secured any major chain or key account contracts in that region? A: Peter Stadelmann (CEO): 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 a local sourcing strategy. At the same time, our street business is positive. The iCombi One sales team has been set up, and 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.

Q: 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 Germany and North America? A: Jorg Walter (CFO): Input costs remained mixed. While stainless-steel base prices are still low, alloy surcharges have increased more than expected and are likely to have an impact in the second half. Freight costs remain elevated but have recently stabilized. Overall, demand continues to be supported by a healthy order backlog. In Germany, we expect positive momentum to continue, although it remains uncertain whether the exceptionally strong growth rates can be sustained. In North America, we continue to expect growth in the range of 10% to 15%, in line with our long-term outlook. In the US, some of last year's headwinds, such as FX effects, are expected to ease in the second half.

Q: What cost does the group expect coming from tariffs in the second half of 2026? A: Jorg Walter (CFO): For the full year effect, we expect tariffs to be around EUR28 million to EUR29 million. With the reduced tariff rates now, we expect that the second half will be a little bit less than the first half.

Q: You've done a special dividend this year, but your equity ratio at roughly 80% is still pretty high and solid. Are you open to examining share buybacks as part of your capital returns framework, also given the share price level? A: Jorg Walter (CFO): We never really looked into this topic. Share buybacks are not really important to us because we have a low free float of the shares and we don't want to limit that further. Our unwritten dividend policy is a 70% payout ratio plus a special dividend if that is possible. 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.

Q: 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? Were there any changes in customer behavior? Can you discuss July trading as well? A: Peter Stadelmann (CEO): Monthly fluctuations are quite usual, but development during Q1 and Q2 was mainly driven by the pre-buying effect in the United States. The stronger demand development was driven primarily by the US, 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 EUR10 million to EUR15 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.

Q: You've talked about other costs rising as well. If we start looking into 2027 already, the US tariff refund will probably not be repeated. 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? A: Jorg Walter (CFO): There are different scenarios in discussion. Typically, we would like to avoid price increases and rather buffer this by efficiency increases. But if the amount gets higher than what you can do by efficiency, we typically also think about modest price increases, and we are looking at these scenarios right now.

Q: 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? A: Peter Stadelmann (CEO): The biggest growth came from the US, France, and Iberica (Spain and Portugal). We are confident to keep the growth rate double as high as the iCombi growth rates for the future.

Q: 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? A: Peter Stadelmann (CEO): We see more local manufacturing, mainly two companies called Austar and Nopain. They produce medium-quality iCombi ovens with lower production costs and therefore lower sales prices, but also lower service after sales. They usually do not offer training or the same state-of-the-art quality in service repairs and maintenance as we do. The iCombi One aims to be competitive again with those products. Pricewise, we are slightly above them in list prices, but we know our cooking quality is above what they deliver. So it must help us to have an entry model combi steamer and win some market shares there.

Q: What kind of margin improvements would you expect from your service parts investment in Landsberg? What CapEx projects should investors be expecting for 2027? A: Jorg Walter (CFO): The primary reason for the decision to expand the service parts building in Landsberg was not to lower costs, it's about growth. We need to invest to ensure service parts availability. Once the building is put in operation, we expect higher depreciations in the area of around EUR1.5 million to EUR2 million. So it will first put some more pressure on our P&L, but we expect with further growth to buffer that. The new service parts building is expected to be completed in the beginning of next year. In addition, we will start with the construction of the new customer experience center in Landsberg, scheduled to begin in the middle of 2027.

Q: Does management see any competitors boosting productions in the US as a result of tariffs, and would Rational consider investing in the US directly? <

For the complete transcript of the earnings call, please refer to the full earnings call transcript .