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Rational UK reveals 30% revenue hit

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Rational is forecasting stronger sales for the second half of 2021.

Rational UK has revealed its first financial results covering the pandemic period, for the 12 months to 31 December 2020.

The annual report, publicly available on Companies House, shows that revenue was cut by 30%, from £63.5m in 2019 to last year’s £44.2m.

Operating profit was hit even harder, by 78%, from £4.2m to 2020’s £0.9m.

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In the report, the company cited the impact of Covid-19 hitting its typical customer base (restaurants, pubs, hotels) with many being closed or in some stage of lockdown for large parts of the year. It detailed that while all sectors showed a decline compared to 2019, the biggest impact was felt in the restaurant segment, down 42% on the previous year.

The catering segment fared better with public sector business, healthcare, education and prisons outperforming expectations. However, the supplier performed well in the retail sector, taking into account the growth in the food to go sector, which was up 26% on 2019.

Rational UK finance director Michael Keeley wrote: “At the beginning of 2020 our focus was on the preparations we needed for Brexit and import processes needed. Whilst this was still a major focus of our business towards the end of 2020 the impact of the pandemic was what occupied our attention for most of the year.

“Gross profit declined in absolute terms as a result of the fall in volumes but in percentage terms we also felt the impact of low spare parts and cleaner sales, as a result of our customer base being closed for much of the year and there being low usage of the equipment.

“In response to the pandemic we took the necessary steps to restructure the UK business to cope with the challenges ahead. Selling and distribution expenses were reduced by 35.7% as a result of cancelled public-facing demonstrations (exhibitions and events) as well as less travel costs due to an increase in home-working and virtual customer contact. Administrative expenses were reduced by 7.2% through internal cost-saving measures and rationalisation programmes.

“Despite the cost reductions operating profit was reduced to just 22% of prior year but as an organisation we were well aware that 2020 was an exceptional year and we needed to restructure our business to face the challenges the future will present.”

Looking ahead, he detailed: “The forecast for 2021 will be a tough first half of the year followed by a stronger recovery as lockdown measures are eased mid-year. On a positive note we can point to many positives such as the adaptability of our business structure, how quickly the sales process has been adapted to the virtual platform and, most importantly, how our people have responded to this pandemic.”

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Clare Nicholls

The author Clare Nicholls

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