RATIONAL (RAA) Q4 2007 earnings summary

Executive summary

• 2007 sales rose 19% to €336.6m; EBIT increased 15% to €92.6m and net earnings rose 18% to €61.2m.

• Growth was broad across markets, with global share up to 54%; higher steel costs and currency effects constrained reported margins.

• 2008 guidance: sales of €387m, EBIT of €106m and EPS of €6.60, supported by capacity expansion and a lower expected tax rate.

Financial highlights

• Sales €336.6m, up 19% YoY; foreign sales were 84% of total.

• Gross profit €199.9m; gross margin 59.4% versus 61.3% in 2006, reflecting higher steel and alloy-surcharge costs.

• EBIT €92.6m, up 15%; reported EBIT margin 27.5% versus 28.4%.

• Adjusted for the exceptional alloy-surcharge increase, EBIT grew ~26% and margin was 30%.

• Net income €61.2m, up 18%; EPS €5.38 versus €4.55, and operating cash flow €61.1m versus €49.1m.

Outlook and guidance

• 2008 sales forecast at €387m, up 15%, with EBIT projected at €106m, also up 15%.

• EPS expected to rise 23% to €6.60 from €5.38, with the tax ratio forecast to fall from 34.6% to under 30% following German tax reform.

• Guidance assumes positive global conditions, continued sales-network expansion and additional production capacity; further currency depreciation remains a risk.