Relais Group Plc Half-year Financial Report January-June 2023 (unaudited): Continued strong and profitable growth
Relais Group Plc
Stock Exchange Release 10 August 2023, 9:00 a.m. EEST
This release is a summary of Relais Group's Half-year Financial Report January-June 2023. The full report is attached to this release and is available on our website at https://relais.fi/en/investors/.
Profitability and cash flow from operations were improved by continued positive development in the Commercial Vehicle Repair and Maintenance business, implemented operative efficiency improvement measures as well as acquisitions carried out in Sweden, Denmark, and Finland.
APRIL-JUNE 2023 IN BRIEF
- Net sales totalled EUR 64.1 million (April-June 2022: 58.6), change +9%
- EBITA was EUR 4.8 (3.4) million, 7.5% (5.8%) of net sales, change +42%
- Comparable EBITA was EUR 4.8 (3.8) million, 7.5% (6.5%) of net sales, change +27%
- EBIT was EUR 4.0 (2.6) million, 6.2% (4.4%) of net sales, change +55%
- Comparable EBIT was EUR 4.0 (3.0) million, 6.2% (5.1%) of net sales, change +34%
- Comparable earnings per share excluding amortisation of acquisitions (undiluted) was EUR 0.06
(0.07) *) - Net cash flow from operations improved significantly from previous year and was EUR 6.7 (2.9) million
- 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 0.3 million higher than reported **)
JANUARY-JUNE 2023 IN BRIEF
- Net sales totalled EUR 133.1 million (January-June 2022: 120.7) change +10%
- EBITA was EUR 12.3 (9.1) million, 9.3% (7.5%) of net sales, change +35%
- Comparable EBITA was EUR 12.4 (10.0) million, 9.3% (8.3%) of net sales, change +25%
- EBIT was EUR 10.6 (7.5) million, 8.0% (6.2%) of net sales, change +41%
- Comparable EBIT was EUR 10.7 (8.4) million, 8.0% (6.9%) of net sales, change +27%
- Comparable earnings per share excluding amortisation of acquisitions (undiluted) was EUR 0.27
(0.28) *) - Net cash flow from operations improved significantly from previous year and was EUR 17.7 (5.3) million
- 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 0.7 million higher than reported **)
*) Average undiluted number of shares April-June 2023: 18,132,258 (April-June 2022: 18,132,308). January-June 2023: 18,132,258 (January-June 2022: 17,969,669).
**) The EUR/SEK impact has been calculated by converting the SEK denominated EBITA of the Swedish entities to EUR with the reporting period average EUR/SEK rate as well as the comparison period average EUR/SEK rate and comparing these two (translation difference).
Unless stated otherwise, figures in parentheses refer to the corresponding period of the previous year.
The change percentages in the tables have been calculated on exact figures before the amounts were rounded to millions of euros.
KEY FIGURES
| EUR thousand unless stated otherwise | Apr-Jun 2023 | Apr-Jun 2022 | Jan-Jun 2023 | Jan-Jun 2022 | Jan-Dec 2022 |
| Net sales | 64,101 | 58,599 | 133,051 | 120,718 | 260,683 |
| Net sales growth, % | 9.4% | - | 10.2% | - | 9.6% |
| Gross profit | 29,274 | 26,633 | 61,360 | 54,767 | 117,214 |
| Gross margin, % | 45.7% | 45.4% | 46.1% | 45.4% | 45.0% |
| EBITDA | 8,586 | 6,569 | 19,682 | 15,434 | 36,581 |
| EBITDA margin, % | 13.4% | 11.2% | 14.8% | 12.8% | 14.0% |
| Comparable EBITDA | 8,586 | 6,979 | 19,770 | 16,294 | 39,414 |
| Comparable EBITDA, % | 13.4% | 11.9% | 14.9% | 13.5% | 15.1% |
| EBITA | 4,811 | 3,379 | 12,328 | 9,113 | 22,980 |
| EBITA margin, % | 7.5% | 5.8% | 9.3% | 7.5% | 8.8% |
| Comparable EBITA | 4,811 | 3,789 | 12,417 | 9,973 | 25,813 |
| Comparable EBITA, % | 7.5% | 6.5% | 9.3% | 8.3% | 9.9% |
| Operating profit | 3,962 | 2,553 | 10,591 | 7,522 | 19,648 |
| Operating profit margin, % | 6.2% | 4.4% | 8.0% | 6.2% | 7.5% |
| Comparable operating profit | 3,962 | 2,963 | 10,679 | 8,381 | 22,481 |
| Comparable operating profit, % | 6.2% | 5.1% | 8.0% | 6.9% | 8.6% |
| Profit (loss) for the period | 170 | -7 | 3,117 | 2,650 | 10,075 |
| Profit (loss) for the period margin, % | 0.3% | 0.0% | 2.3% | 2.2% | 3.9% |
| Comparable profit (loss) | 170 | 402 | 3,206 | 3,509 | 12,907 |
| Comparable profit (loss) margin, % | 0.3% | 0.7% | 2.4% | 2.9% | 5.0% |
| Comparable profit (loss) excluding amortisation of acquisitions |
1,019 | 1,229 | 4,944 | 5,101 | 16,239 |
| Comparable profit (loss) excluding amortisation of acquisitions margin, % | 1.6% | 2.1% | 3.7% | 4.2% | 6.2% |
| Items affecting comparability included in profit (loss) for the period |
0 | 410 | 88 | 859 | 2,832 |
| Net working capital | 56,229 | 67,843 | 56,229 | 67,843 | 62,551 |
| Inventories | 68,610 | 75,489 | 68,610 | 75,489 | 67,804 |
| Free cash flow | 5,910 | 2,342 | 15,527 | 3,245 | 24,070 |
| Cash conversion | 68.8% | 35.7% | 78.9% | 21.0% | 65.8% |
| Net Debt excl. leasing Liabilities | 85,317 | 101,036 | 85,317 | 101,036 | 90,056 |
| Net Debt (excl. Leasing Liabilities) to EBITDA, rolling | 2.09 | 2.73 | 2.09 | 2.73 | 2.46 |
| Net gearing excl. leasing Liabilities | 88.6% | 102.6% | 88.6% | 102.6% | 86.6% |
| Equity ratio | 31.3% | 31.9% | 31.3% | 31.9% | 33.6% |
| Return on investment (ROI) | - | - | 10.7% | 7.8% | 9.4% |
| Return on equity (ROE) | - | - | 6.2% | 5.2% | 9.7% |
| Return on assets (ROA) | - | - | 8.9% | 6.6% | 7.8% |
| Earnings per share, basic (EUR) | 0.01 | 0.00 | 0.17 | 0.15 | 0.56 |
| Earnings per share, diluted (EUR) | 0.01 | 0.00 | 0.17 | 0.15 | 0.54 |
| Comparable earnings per share, basic (EUR) | 0.01 | 0.02 | 0.18 | 0.20 | 0.72 |
| Comparable earnings per share, diluted (EUR) | 0.01 | 0.02 | 0.17 | 0.20 | 0.69 |
| Comparable earnings per share excluding amortisation of acquisitions, basic (EUR) |
0.06 | 0.07 | 0.27 | 0.28 | 0.90 |
| Comparable earnings per share excluding amortisation of acquisitions, diluted (EUR) |
0.05 | 0.07 | 0.26 | 0.27 | 0.87 |
| Average number of employees | 1,031 | 1,005 | 1,020 | 987 | 997 |
| Personnel at the end of the period, FTE | 1,044 | 1,023 | 1,044 | 1,023 | 1,009 |
*) The average undiluted number of shares April-June 2023: 18,132,258 (April-June 2022: 18,132,308). January-June 2023: 18,132,258 (January-June 2022: 17,969,669). The average diluted number of shares April-June 2023: 18,811,560 (April-June 2022: 18,738,260). January-June 2023: 18,799,196 (January-June 2022: 18,725,984).
2023 OUTLOOK AND LONG-TERM FINANCIAL TARGET
The Company does not provide a numeric guidance for the 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.
EVENTS AFTER THE REVIEW PERIOD
On 1 August Relais Group announced that it had signed an agreement regarding the acquisition of the Norwegian workshop equipment business unit of NDS Group AS, comprising the assets and personnel of the AutoMateriell business and the shares in Nordic Lift AS.
In 2022 the total revenue of the acquired business unit was approximately NOK 198 million and the operating profit approximately NOK 13 million. The enterprise value of the acquired business unit was approximately NOK 70 million and the provisional purchase price approximately NOK 58 million.
The acquired business unit will be consolidated into Relais Group from the beginning of August 2023.
CEO ARNI EKHOLM COMMENTS THE SECOND QUARTER AND THE FIRST HALF OF 2023
“The strong growth of Relais Group continued also during the second quarter of the year. Net sales grew by 15% and EBITA by 50% with constant exchange rates compared to the same period last year. During the first half of the year net sales growth was 15% and EBITA growth 43% with constant exchange rates compared to the same period last year.
The main factors behind the strong growth were the continued positive development of the Group’s Commercial Vehicle Repair and Maintenance business, and the acquisitions carried out in Sweden, Denmark, and Finland.
The Commercial Vehicle Repair and Maintenance business continued to perform strongly, driven by the robust customer demand in both Finland and Sweden combined with the effect of the efficiency measures initiated last year. The capacity utilization of the workshops is still at a very healthy level and the gross profit has developed positively despite somewhat increased operating costs. Net sales growth of the business was 15% in the quarter (organic growth 11%) with constant exchange rates.
Net sales of the Technical Wholesale and Products business grew 10% organically in Scandinavia with constant exchange rates during the quarter. The strongly weakened Swedish krona had a negative effect on the reported profitability, which was offset by the positive effect of the acquisition of SET A/S in Denmark. In Finland and Baltics net sales were largely in line with last year, but profitability was weakened by the sluggish consumer demand especially affecting the on-line business in Finland.
The sales of the Lighting product group continued to grow, especially driven by the successful export of Strands Group products in Central Europe. Strands lighting products are now also available in Australia where we are partnering with a major local distributor.
Acquisitions continued to be a major growth driver of Relais Group. The acquisitions carried out in Sweden and Denmark in 2022 (Skeppsbrons, SET) had a very positive effect on the profitability of the Group during the first half of this year. In addition, the acquisition of ADITA early 2023 strengthened the position of Startax in Finland. The latest acquisitions (AutoMateriell and Nordic Lift in Norway), finalized in early August this year are creating an exciting new business area for the Group with several add-on acquisition possibilities within the Nordic countries. Expanding into the workshop equipment business gives Relais Group the possibility to capitalize on the growing trend of conversion towards “EV-ready” workshops and gives us the possibility to serve our customers with an even broader range of products and services. Furthermore, we are continuing our efforts to carry out further acquisitions in line with our growth strategy this year.
Regarding the rest of the year, we are looking forward to the important lighting season starting in August-September. We have several exciting new products to be launched this autumn. The inventory situation is good, allowing us to deliver products in a timely manner. However, there are also some dark clouds in the sky. The inflation is still on a high level, the dramatically risen interest rates are affecting the consumers’ purchase power negatively and there are early signs of increasing unemployment. Nevertheless, we feel that we have a good possibility to continue implementing our strategy also during the second half of 2023.
Finally, I want to express my heartfelt thanks to all Relais Group team members for your strong performance during the second quarter. In addition, I want to take the opportunity to warmly welcome our new colleagues in Norway to join the fast-growing Relais Group family.”
INVITATION TO THE WEBCAST
Relais Group's CEO Arni Ekholm and CFO Thomas Ekström will present the result to the media, investors and analysts at a webcast on 10 August 2023, at 10:00 a.m. EEST. The webcast can be followed at https://relais.videosync.fi/q2-2023-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
Distribution:
Nasdaq Helsinki
Key Media
www.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.