Relais Group Plc Financial Statements Review January–December 2022 (unaudited): strong cash flow growth and a solid sales result, dividend proposal EUR 0.40 per share
Relais Group Plc
Stock Exchange Release 2 March 2023, 9:00 a.m. EET
This release is a summary of Relais Group's Financial Statement Bulletin 1 January–31 December 2022. The full release is attached to this release and is available on our website at https://relais.fi/en/investors/.
Unless stated otherwise, figures in parentheses refer to the corresponding period of the previous year. In 2022 the Company adopted IFRS in its financial reporting. All figures presented in this Review are accordance with IFRS unless stated otherwise.
OCTOBER-DECEMBER 2022 IN BRIEF
- Net sales totalled EUR 75.2 million (October–December 2021: 73.5), +2.2% change. Organic growth was -5.4% and currency rate impact -2.3%
- EBITDA was EUR 10.1 (11.0) million, 13.4% (15.0%) of net sales
- Comparable EBITDA was EUR 11.8 (11.7) million, 15.7% (15.9%) of net sales
- EBITA was EUR 6.2 (8.0) million, 8.2% (10.9%) of net sales
- Comparable EBITA was EUR 7.9 (8.7) million, 10.5% (11.8%) of net sales
- EBIT was EUR 5.3 (7.3) million, 7.1% (9.9%) of net sales
- Comparable EBIT was EUR 7.1 (7.6) million, 10.9% (12.9%) of net sales
- Comparable earnings per share excluding amortisation of acquisitions (undiluted) was EUR 0.35
(0.37) *) - Net cash flow from operations improved by MEUR 9.3 from previous year and was MEUR 17.2 (7.9)
- Inventory decreasing measures for improving cash flow were successful and effective
- The market situation in the repair and maintenance business was stable in all operating countries and its profitability developed favourably
- Sales of lighting products to B2B customers was stable. Consumer and online sales, on the contrary, were lower than in previous year
- The development of the EUR/SEK exchange rate during the review period had a negative impact on the Group's EBITA. At comparable exchange rates, EBITA during the review period would have been approximately EUR 0.2 million higher than reported
- The market situation in Sweden and Scandinavia was better than in Finland and the Baltics: In terms of net sales, the Scandinavia segment became the group's largest market area
- The earnings were impacted by significant non-recurring expense items affecting comparability. These expenses related mainly to acquisitions costs and main list transfer and amounted approximately to EUR 1.7 million
- The Board of Directors will propose to the Annual General Meeting on 5 April 2023 that a dividend of EUR 0.40 per share shall be paid. The dividend is proposed to be paid in two equal installments in April and November 2023
*) The average undiluted number of shares Oct-Dec 2022 was 18,132,308 and Oct-Dec 2021 17,941,433
JANUARY-DECEMBER 2022 IN BRIEF
- Net sales totalled EUR 260.7 million (January–December 2021: 237.8), +9.6% change. Organic growth was -4.3% and currency rate impact -2.1
- EBITDA was EUR 36.6 (36.0) million, 14.0% (15.1%) of net sales
- Comparable EBITDA was EUR 39.4 (38.6) million, 15.1% (16.2%) of net sales
- EBITA was EUR 23.0 (25.7) million, 8.8% (10.8%) of net sales
- Comparable EBITA was EUR 25.8 (28.3) million, 9.9% (11.9%) of net sales
- EBIT was EUR 19.6 (23.0) million, 7.5% (9.7%) of net sales
- Comparable EBIT was EUR 22.5 (25.6) million, 7.5% (9.7%) of net sales
- Comparable earnings per share excluding amortisation of acquisitions (undiluted) was EUR 0.90
(1.11) *) - The development of the EUR/SEK exchange rate during the review period had a negative effect on the Group's EBITA. At comparable exchange rates, EBITA during the review period would have been approximately EUR 0.7 million higher than reported
- The AGM of 13 April 2022 decided on a dividend of 0.36 (0.30) EUR per share be paid for FY2021
- On 25 October 2022, the company decided on transition on IFRS and completed the transition on to the Main Market of Nasdaq Helsinki on 1 December 2022
*) The average undiluted number of shares Jan-Dec 2022 was 18,051,682 and Jan-Dec 2021 17,658,106.
KEY FIGURES
| EUR thousand unless stated otherwise | Oct-Dec 2022 |
Oct-Dec 2021 |
Jan-Dec 2022 |
Jan-Dec 2021 |
| Net Sales | 75,185 | 73,547 | 260,683 | 237,830 |
| Net sales growth, % | 2.2% | 97.4% | 9.6% | 84.4% |
| Gross profit | 33,670 | 31,803 | 117,214 | 99,588 |
| Gross margin, % | 44.8% | 43.2% | 45.0% | 41.9% |
| EBITDA | 10,076 | 11,042 | 36,581 | 36,005 |
| EBITDA margin, % | 13.4% | 15.0% | 14.0% | 15.1% |
| Comparable EBITDA | 11,796 | 11,717 | 39,414 | 38,607 |
| Comparable EBITDA, % | 15.7% | 15.9% | 15.1% | 16.2% |
| EBITA | 6,183 | 8,017 | 22,980 | 25,727 |
| EBITA margin, % | 8.2% | 10.9% | 8.8% | 10.8% |
| Comparable EBITA | 7,903 | 8,692 | 25,813 | 28,330 |
| Comparable EBITA, % | 10.5% | 11.8% | 9.9% | 11.9% |
| Operating profit | 5,308 | 7,270 | 19,648 | 23,042 |
| Operating profit margin, % | 7.1% | 9.9% | 7.5% | 9.7% |
| Comparable operating profit | 7,028 | 7,945 | 22,481 | 25,645 |
| Comparable operating profit, % | 9.3% | 10.8% | 8.6% | 10.8% |
| Profit (loss) for the period | 3,734 | 5,157 | 10,075 | 14,377 |
| Profit (loss) for the period margin, % | 5.0% | 7.0% | 3.9% | 6.0% |
| Comparable profit (loss) | 5,454 | 5,832 | 12,907 | 16,980 |
| Comparable profit (loss) margin, % | 7.3% | 7.9% | 5.0% | 7.1% |
| Comparable profit (loss) excluding amortisation of acquisitions |
6,329 | 6,580 | 16,239 | 19,665 |
| Comparable profit (loss) excluding amortisation of acquisitions margin, % | 8.4% | 8.9% | 6.2% | 8.3% |
| Items affecting comparability included in profit (loss) for the period |
1,720 | 675 | 2,832 | 2,603 |
| Net working capital | 62,738 | 60,975 | 62,738 | 60,975 |
| Inventories | 67,804 | 73,352 | 67,804 | 73,352 |
| Free cash flow | 16,417 | 6,458 | 24,070 | 9,056 |
| Cash conversion | 162.9% | 58.5% | 65.8% | 25.2% |
| Net Debt excl. leasing Liabilities | 90,056 | 84,775 | 90,056 | 84,775 |
| Net Debt (excl. Leasing Liabilities) to EBITDA, rolling | 2.46 | 2.35 | 2.46 | 2.35 |
| Net gearing excl. leasing Liabilities | 86.6% | 81.2% | 86.6% | 81.2% |
| Equity ratio | 33.6% | 33.6% | 33.6% | 33.6% |
| Return on investment (ROI) | - | - | 9.4% | 11.6% |
| Return on equity (ROE) | - | - | 9.7% | 15.5% |
| Return on assets (ROA) | - | - | 7.8% | 9.8% |
| Earnings per share, basic (EUR) | 0.20 | 0.29 | 0.56 | 0.81 |
| Earnings per share, diluted (EUR) | 0.20 | 0.27 | 0.54 | 0.78 |
| Comparable earnings per share, basic (EUR) | 0.30 | 0.32 | 0.72 | 0.96 |
| Comparable earnings per share, diluted (EUR) | 0.29 | 0.37 | 0.69 | 0.92 |
| Comparable earnings per share excluding amortisation of acquisitions, basic (EUR) |
0.35 | 0.31 | 0.90 | 1.11 |
| Comparable earnings per share excluding amortisation of acquisitions, diluted (EUR) |
0.34 | 0.35 | 0.87 | 1.06 |
| Average number of employees | 1,003 | 918 | 997 | 812 |
| Personnel at the end of the period, FTE | 1,009 | 950 | 1,009 | 950 |
The average undiluted number of shares Jan-Dec 2022 was 18,051,682 and Jan-Dec 2021 17,658,106. The average diluted number of shares Jan-Dec 2022 was 18,759,556 and Jan-Dec 2021 18,483,226.
2023 OUTLOOK AND LONG-TERM FINANCIAL TARGET
The Company does not provide a numeric guidance for financial year 2023. On 2 March 2023, the company issued a revised long-term financial target, according to which the company aims to reach a proforma EBITA of EUR 50 million by the end of the year 2025. Relais considers a profit target to be more relevant in describing the shareholder value creation potential of the Company, as opposed to a net sales target. The previous financial target of the Company was to reach pro forma net sales of EUR 500 million by the end of year 2026.
CEO ARNI EKHOLM COMMENTS FINANCIAL YEAR 2022
“Our decentralized and acquisition driven business model proved its resilience and strength. We reached an all-time high quarterly net sales of EUR 75 million and our cash flow from operations increased significantly by over EUR 9 million during the fourth quarter.
Buy and build strategy
A core component of Relais Group’s strategy is the consolidation of the vehicle aftermarket in the Nordic region. During 2022 Relais made three acquisitions and strengthened our position in both Denmark and Sweden. We are now clearly the leading operator of independent repair and maintenance workshops for commercial vehicles in Sweden and Finland. An important part of our acquisition driven strategy is also building and developing the operations of the acquired companies. I am pleased that we managed to clearly improve the sales and profitability of our workshop business and were among other things successful in recruiting more mechanics in both Finland and Sweden during the past year.
Strong growth in Scandinavia, challenging market conditions in Finland
After the generally weak market demand caused by the exceptional global circumstances during the first half of the year, the improved market situation combined with our increased commercial efforts started to show positive results. The sales growth was strong especially in Scandinavia, whilst Finland faced some challenges deriving from the weak consumer confidence and relatively mild winter conditions during the quarter.
The Group´s net sales increased by 2% to EUR 75.2 million during the quarter (+5% with comparable exchange rates). The organic growth in Scandinavia was +5% and -8% in Finland/Baltic compared to the record high sales of 2021, which reflects the general market conditions according to our estimates. The net sales for the full year 2022 reached an all-time high level of EUR 260.7 million, corresponding to a growth of 10% (+12% with comparable exchange rates). The organic growth in Scandinavia was 2% and -7% in Finland/Baltic.
Relais Group is one of the biggest actors within the European vehicle aftermarket lighting business. Despite the overall challenging market conditions, we managed to grow the Group’s lighting sales with 3 per cent with comparable exchange rates. The sluggish consumer demand in Finland was offset by the strong growth of our Strands-lighting business in Scandinavia and rest of Europe.
Operational excellence
During the second half of the year, we took several measures in order to improve the profitability and cash flow of the Group. We succeeded in increasing prices in all our operating units to fence off the negative effects of the inflation-driven cost increases. We resolutely decreased the inventory levels by over 14 million euros from peak level in early Q3, without compromising the gross margin levels, which lead to a significant cash flow growth.
Stabilizing profitability
After the challenging first half of the year, the profitability of the Group started to recover during the third quarter. In the fourth quarter the EBITA amounted to EUR 6.2 million compared with EUR 8.0 million in the same quarter of the record strong year of 2021. This resulted in an EBITA margin of 8.2 (10.9) per cent. The EBITA level was impacted by items affecting comparability of EUR 1.7 million, mainly deriving from the costs relating to the Group’s transfer to Nasdaq Helsinki main list and some acquisition transaction costs. The comparable EBITA amounted to EUR 7.9 (8.7) million resulting in a comparable EBITA-margin of 10.5 (11.8) per cent. The decline of the comparable EBITA relates mainly to the weak consumer demand in Finland for discretionary products during Q4, the increased marketing and other operating costs in the Group’s on-line business in Finland and currency effects. The weakened SEK/EUR ratio had a negative impact of ca EUR 0.2 million during the quarter.
Outlook for 2023
We feel we are well prepared to continue the implementation of our strategy during 2023. The solid financial position of the Group is also reflected in the Board of Director’s dividend proposal. We will continue focusing on driving further acquisitions, accelerating organic sales growth and improving the profitability with operational efficiency measures during the year.
I want to express my warmest thanks to all our employees, shareholders, and business partners for the past year.”
MAJOR EVENTS AFTER THE REVIEW PERIOD
On 15 February 2023, Relais appointed Thomas Ekström, M.Sc. (Econ.) as Group CFO starting from August 2023 at the latest.
On 24 February 2023, Relais announced to have agreed on an one-year extension on the maturity of its Senior Facilities Agreement with its main bank. The restated maturity date of the SFA is 31 May 2025.
On 2 March 2023, the company issued a revised long-term financial target, according to which the company aims to reach proforma EBITA of EUR 50 million by the end of the year 2025. The previous financial target of the Company was to reach pro forma net sales of EUR 500 million by the end of year 2026.
FINANCIAL RELEASES IN 2023
- Q1/2023 Interim Management Statement on Thursday 4 May 2023
- H1/2023 Half-Year report on Thursday 10 August 2023
- Q3/2023 Interim Management Statement on Thursday 2 November 2023
INVITATION TO THE WEBCAST
Relais Group's CEO Arni Ekholm and CFO Pekka Raatikainen will present the result to the media, investors and analysts at a webcast on 2 March 2023 from 2:00 pm EET. The webcast can be followed at: https://relais.videosync.fi/2022-q4-results.
Presentation material and video will be available on the company's website at https://relais.fi/en/investors/ after the event.
Relais Group Plc
Board of Directors
Further information:
Arni Ekholm, CEO
Phone: +358 40 760 3323
E-mail: arni.ekholm@relais.fi
Relais Group
Relais Group is a leading consolidator and acquisition platform on the vehicle aftermarket in the Nordic and Baltic countries. We have a sector focus in vehicle life cycle enhancement and related services. We also serve as a growth platform for the companies we own.
We are a profitable company seeking strong growth. We carry out targeted acquisitions in line with our growth strategy and want to be an active player in the consolidation of the aftermarket in our area of operation. Our acquisitions are targeted at companies having a good strategic fit with our group companies.
Our net sales in 2022 was EUR 260.7 (2021: 237.8) million. During 2022, we completed a total of three acquisitions. We employ approximately 1,000 professionals in six different countries. The Relais Group share is listed on the Main Market of Nasdaq Helsinki with the stock symbol RELAIS.