Relais Group Plc Half-year financial report January 1–June 30, 2020 (unaudited) – Profitable growth in exceptional circumstances, dividend proposal of EUR 0.10 per share
Relais Group Plc
Company release August 14, 2020, 9:00 a.m. EEST
This release is a summary of Relais Group’s Half-year financial report for January-June 2020. The full release is attached to this company release and is available on our website at https://relais.fi/en/investors/.
Relais Group Plc acquired the shares of AB Reservdelar (ABR) and Huzells i Karlstad AB on May 31, 2019. The companies have been included in Relais Group’s consolidated balance sheet from May 31, 2019 and in the consolidated income statement from June 1, 2019. This half-year financial report on the reference data concerning the first half of FY2019 includes the figures for the acquired companies from the dates of joining as stated hereinabove.
Relais Group Plc acquired 70% of the shares of SEC Scandinavia A/S (“SEC”) on January 16, 2020. On February 6, 2020 it acquired 95,25% of the shares of TD Tunga Delar Sverige AB (TD”). SEC Has been included in consolidated group figures from January 1, 2020 and TD from February 1, 2020. The companies are not included in the reference data concerning the first half of FY2019.
JANUARY-JUNE 2020 IN BRIEF
- Net sales totaled EUR 58,959 thousand (January – June 2019: 37,720), +56.3% change
- EBITA was EUR 7,490 (3,876) thousand, 12.7% (10.3%) of net sales, +93,2% change
- EBIT was EUR 3,664 (2,185) thousand, 6.2% (5.8%) of net sales, +67,7% change
- Comparable earnings per share excluding amortization of goodwill (undiluted) was EUR 0.29 (0.32) *)
- The company continued the implementation of its growth strategy by acquiring 70% of the Danish SEC Scandinavia A/S on January 16, 2020 and 95.25% of the Swedish TD Tunga Delar Sverige AB on February 6, 2020
- Net sales were positively affected mainly by the impact of acquisitions in 2019 and 2020 as well as the strong sales of spare parts, especially in Sweden
- Net sales were slowed down by the mild winter in Nordic countries as well as the COVID-19 pandemic. The impact of the pandemic was felt in the equipment sales along with the decreased sales of new commercial vehicles
- The sales were partially affected by the COVID-19 pandemic during March-April. However, the sales developed favorably in all markets especially in May-June
- To support the profitability and cash flow during the pandemic, controlled cost saving measures were implemented
- Contrary to the original plans, The AGM on June 8, 2020 was arranged by using the advance voting method without the shareholders attending the meeting in person due to the coronavirus situation
- The AGM approved Board’s proposal regarding dividend distribution and decided that no dividend was paid
- Based on the first half-year performance, the Board of Directors has re-evaluated the conditions for dividend distribution and proposes to the EGM of September 8, 2020 a dividend of EUR 0.10 per share be paid
*) The average undiluted number of shares Jan-Jun 2020 was 16,556,848 and Jan-Jun 2019 8,628,100.
On March 26, 2020, the company withdrew its earlier guidance issued on February 27, 2020 as the market conditions had become very exceptional and visibility into future developments had lowered materially due to the COVID-19 situation and the resulting restrictions and declining of overall development. According to the withdrawn guidance, Relais Group's reported net sales and operating profit excluding the amortization of goodwill (EBITA) had been estimated to grow clearly from the previous year. The withdrawal of the guidance did not affect the company's growth strategy involving corporate acquisitions that the company will actively pursue.
However, the company estimates that the visibility of the future developments remains low, especially due to the pandemic situation, a threat of a second wave of COVID-19, and the uncertain future prospects of global economic development. The company, therefore, refrains from issuing new guidance.
|EUR thousand||Jan-Jun 2020||Jan-Jun 2019||Jan-Dec 2019|
|EBITDA margin, %||13.1%||10.7%||13.5%|
|EBITA margin, %||12.7%||10.3%||13.1%|
|Operating profit margin, %||6.2%||5.8%||7.9%|
|Profit (loss) margin, %||1.6%||-0.7%||0.4%|
|Comparable profit (loss) excluding amortization of goodwill||4,756||2,731||8,740|
|Comparable profit (loss) excluding amortization of goodwill margin, %||8.1%||7.2%||8.8%|
|Return on equity (ROE), %||2.9%*)||-1.1%*)||1.4%*)|
|Earnings per share, basic, EUR**)||0.06||-0.03||0.03)|
|Earnings per share, diluted, EUR**)||0.05||-0.03||0.03|
|Comparable earnings per share, basic, EUR**)||0.06||0.12||0.31|
|Comparable earnings per share, diluted, EUR**)||0.05||0.11||0.29|
|Comparable earnings per share excluding amortization of goodwill, basic, EUR**)||0.29||0.32||0.76|
|Comparable earnings per share excluding amortization of goodwill, diluted, EUR**)||0.28||0.30||0.71|
|Personnel at the end of the period, FTE||292||268||258|
*) Items affecting the comparability and amortization of goodwill not eliminated
**) The average undiluted number of shares Jan-Jun 2020 was 16,556,848 and Jan-Jun 2019 8,628,100. The average diluted number of shares Jan-Jun 2020 was 17,238,216 and Jan-Jun 2019 9,178,098.
CEO ARNI EKHOLM COMMENTS:
“We had an excellent start in 2020 by being able to make two important acquisitions within a short period of time in January-February. With the acquisition of SEC, we expanded to Denmark and enhanced our competencies in light commercial vehicle lighting solutions. With the acquisition of TD Tunga Delar Sverige AB, we expanded our offering of spare parts and equipment for heavy commercial vehicles in the increasingly important Swedish market. The first months for both companies as a part of Relais Group have been extremely promising and the companies are clearly contributing to our growth and profitability.
As the first COVID-19 news came in from Asia, we initially assessed their operational impact, mainly in terms of our extensive sourcing channels. As the situation changed in March and the pandemic spread into Europe, we took swift action to ensure the safety of our staff and customers, but also to reduce the financial impact of the pandemic on our company’s business and economy. In particular, we wanted to secure our cash reserves that are intended for the company’s strategic investments. We initiated targeted cost-saving measures to be able to react immediately should the sales in any part of the Group decrease. We have limited our spending to external services and also implemented personnel cost savings through temporary layoffs where this has been necessary due to sales development or reduced customer work due to restrictive measures.
The impact of the COVID-19 pandemic on net sales for the review period varies between operating countries and product areas. The most vulnerable to the impact are product areas related to new vehicle sales, such as the equipment of new commercial vehicles. On the other hand, there are clear signs of defensive characteristics in our business owing to the inherent stability of especially the service- and repair part of the automotive aftermarket. The development of our net sales and cash flow remained strong, despite the negative effects of the COVID-19 pandemic in the general economic situation.
The past review period has demonstrated to us that our strategy works in varying market situations. Our dividend proposal also reflects our strong belief in the future. In all future scenarios, it is important to be determined in growing our business to be an even stronger player in the market. It is also important that our offering covers several countries and product areas so that we can serve our customers even better in the future. Encouraged by our experience to date, we are actively pursuing our growth strategy together with our competent and motivated personnel.”
LONG-TERM FINANCIAL TARGETS
The targets for Relais’ strategy period extending to 2024 have been defined in summer 2019 as follows:
The company aims to double its net sales by 2024. The company aims to grow through a combination of organic growth and acquisitions.
- Organic growth: Relais aims to continue growing at an average pace exceeding the market growth, which is supported by targeted synergies, e.g. cross-sales between the existing and acquired entities.
- Based on Relais management’s view, the overall market has been growing during recent years at a moderate but stable rate of approximately 1–3 percent annually, depending on product category and geography.
- M&A based growth: The company aims to make 1–2 acquisitions per year, where targeted synergies are expected to support earnings growth.
Relais Group’s CEO Arni Ekholm and CFO Pekka Raatikainen will present the results at briefing (in English) for media, investors and analysts on August 14, 2020, at 10:00 a.m. EEST at Hotel Kämp’s Symposion cabinet, Pohjoisesplanadi 29, 00100 Helsinki.
You can watch the webcast online at: https://relais.videosync.fi/2020-q2-tulokset.
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
Relais Group Plc
CEO Arni Ekholm
Tel. +358 40 543 1446
Evli Bank Plc
Tel. +358 40 579 6210
Relais Group Plc
Relais Group is an importer and technical wholesaler that actively develops its vehicle spare parts and electrical equipment business in the Nordic and Baltic countries. Relais Group creates added value for its customers by offering vehicle spare parts, electrical equipment, and specialist services throughout the lifecycle of vehicles in a reliable, efficient, and timely manner. As a strongly growth-oriented company, Relais Group aims to be an industry forerunner in the vehicle lifecycle enhancement business. The net sales of Relais Group were EUR 98.9 million in 2019. The company employed 258 people across five countries as of December 31, 2019.