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Rational received the first deliveries from an alternative supplier

Posted in General News & Helpful Tips

Rational received the first deliveries from an alternative supplier of processors this month, after supply bottlenecks for electronic components pushed out lead times for its cooking equipment from last year.

The German-headquartered manufacturer acknowledged that it hadn’t been able to meet high customer demand in full, resulting in outstanding orders of more than €300m (£253m) at the end of 2021, a figure that rose further due to a high level of new orders at the beginning of 2022.

As a result of sourcing a new processor supplier, Rational’s executive board expects the still-challenging supply situation to ease slightly. However, it believes the Ukraine crisis and the covid pandemic in China could exacerbate the situation again.

All in all, Rational expects the material sourcing situation to be extremely volatile in 2022. The company reports it continues to tackle these challenges with prompt countermeasures, where possible.

These include completing some production output without the missing components, and dispatching the unfinished appliances to overseas warehouses.

CEO Dr Peter Stadelmann reported: “By dispatching partially assembled appliances, we are bridging the long shipping times on the freight routes. The electronic components will follow by air as soon as they are available. The appliances will then be finished by local engineers on site.”

In Rational’s annual report for the 2021 fiscal year, the firm posted a turnover of €780m (£658m), 20% up on 2020’s €650m (£549m) total.

Sales revenues were positively impacted by factors such as encouraging demand for the new iCombi combi ovens and iVario multifunctional cookers, catch-up investments, government support programmes and orders brought forward in anticipation of shortages of materials.

A significant rise in material costs was reflected in Rational’s 2021 margins. Stadelmann explained: “We normally don’t increase prices across the board, but rather locally in special situations. However, due to the considerable cost increases for commodities, primary products and logistics, we felt compelled to raise our price levels in 2021.” The new prices have applied in overseas markets since November 2021, while in some European markets they will only come into effect in 2022.

Due to the higher costs for commodities and components, which Rational will counter in 2022 with further price increases, gross margin is expected to be at the level of the previous year. Since the increase in operating costs was disproportionately small relative to revenue, the company anticipates that EBIT will grow at a slightly higher rate than sales revenues and that the EBIT margin will be slightly higher year on year.

In the annual report, Rational also pointed to the geopolitical risks as a result of the conflict in Ukraine. The affected regions account for around 2-3% of its sales revenues. It feels that any impact on business will be limited to that unless the conflict spreads. Stadelmann assessed: “First and foremost, we’re happy in the knowledge that our employees there are in safety. Nevertheless, we see risks to currency stability, logistics and the propensity of customers to invest in these regions.”

With record orders on hand Rational said it has started 2022 with confidence. The company expects sales revenues to be between 10% and 15% up on 2021 – above the pre-crisis levels of 2019.

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