Relais Group Plc Interim Management Statement January-September 2023 (unaudited): Stable and profitable growth continues
Relais Group Plc
Stock Exchange Release 2 November 2023, 9:00 a.m. EET
This release is a summary of Relais Group's Interim Management Statement January-September 2023. The full report is attached to this release and is available on our website at https://relais.fi/en/investors/.
Double-digit EBITA growth percentage for the third quarter in a row this year in comparable exchange rates.
JULY-SEPTEMBER 2023 IN BRIEF
- Net sales totalled EUR 70.3 million (July-September 2022: 64.8), change +9%
- EBITA was EUR 8.4 (7.7) million, 11.9% (11.9%) of net sales, change +9%
- Comparable EBITA was EUR 8.6 (7.9) million, 12.2% (12.3%) of net sales, change +8%
- EBIT was EUR 7.5 (6.8) million, 10.7% (10.5%) of net sales, change +11%
- Comparable EBIT was EUR 7.7 (7.1) million, 11.0% (10.9%) of net sales, change +10%
- Comparable earnings per share excluding amortisation of acquisitions (undiluted) was EUR 0.30
(0.27) *) - Net cash flow from operations was EUR 4.6 (6.2) million
- The development of the EUR/SEK exchange rate had a negative impact on the Group's EBITA during the review period. At comparable exchange rates, EBITA would have been approximately EUR 0.5 (0.2) million higher than reported **)
JANUARY-SEPTEMBER 2023 IN BRIEF
- Net sales totalled EUR 203.3 million (January-September 2022: 185.5), change +10%
- EBITA was EUR 20.7 (16.8) million, 10.2% (9.1%) of net sales, change +23%
- Comparable EBITA was EUR 21.0 (17.9) million, 10.3% (9.7%) of net sales, change +17%
- EBIT was EUR 18.1 (14.3) million, 8.9% (7.7%) of net sales, change +27%
- Comparable EBIT was EUR 18.4 (15.5) million, 9.1% (8.3%) of net sales, change +19%
- Comparable earnings per share excluding amortisation of acquisitions (undiluted) was EUR 0.57
(0.55) *) - Net cash flow from operations improved significantly from previous year and was EUR 22.2 (11.6) million
- The development of the EUR/SEK exchange rate had a negative impact on the Group's EBITA during the review period. At comparable exchange rates, EBITA would have been approximately EUR 1.3 (0.5) million higher than reported **)
*) Average undiluted number of shares July-September 2023: 18,132,258 (July-September 2022: 18,132,308). January-September 2023: 18,132,258 (January-September 2022: 18,024,511).
**) 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 | Jul-Sep 2023 | Jul-Sep 2022 | Jan-Sep 2023 | Jan-Sep 2022 |
Jan-Dec 2022 |
|||
| Net Sales | 70,259 | 64,780 | 203,310 | 185,498 | 260,683 | |||
| Net sales growth, % | 8.5% | 10.3% | 9.6% | 12.9% | 9.6% | |||
| Gross profit | 32,275 | 28,777 | 93,635 | 83,544 | 117,214 | |||
| Gross margin, % | 45.9% | 44.4% | 46.1% | 45.0% | 45.0% | |||
| EBITDA | 12,122 | 11,071 | 31,804 | 26,505 | 36,581 | |||
| EBITDA margin, % | 17.3% | 17.1% | 15.6% | 14.3% | 14.0% | |||
| Comparable EBITDA | 12,325 | 11,324 | 32,095 | 27,618 | 39,414 | |||
| Comparable EBITDA, % | 17.5% | 17.5% | 15.8% | 14.9% | 15.1% | |||
| EBITA | 8,392 | 7,684 | 20,720 | 16,797 | 22,980 | |||
| EBITA margin, % | 11.9% | 11.9% | 10.2% | 9.1% | 8.8% | |||
| Comparable EBITA | 8,595 | 7,937 | 21,011 | 17,910 | 25,813 | |||
| Comparable EBITA, % | 12.2% | 12.3% | 10.3% | 9.7% | 9.9% | |||
| Operating profit | 7,546 | 6,818 | 18,137 | 14,340 | 19,648 | |||
| Operating profit margin, % | 10.7% | 10.5% | 8.9% | 7.7% | 7.5% | |||
| Comparable operating profit | 7,749 | 7,071 | 18,428 | 15,453 | 22,481 | |||
| Comparable operating profit, % | 11.0% | 10.9% | 9.1% | 8.3% | 8.6% | |||
| Profit (loss) for the period | 4,345 | 3,691 | 7,462 | 6,341 | 10,075 | |||
| Profit (loss) for the period margin, % | 6.2% | 5.7% | 3.7% | 3.4% | 3.9% | |||
| Comparable profit (loss) | 4,548 | 3,944 | 7,753 | 7,453 | 12,907 | |||
| Comparable profit (loss) margin, % | 6.5% | 6.1% | 3.8% | 4.0% | 5.0% | |||
| Comparable profit (loss) excluding amortisation of acquisitions |
5,393 | 4,810 | 10,337 | 9,911 | 16,239 | |||
| Comparable profit (loss) excluding amortisation of acquisitions margin, % | 7.7% | 7.4% | 5.1% | 5.3% | 6.2% | |||
| Items affecting comparability included in profit (loss) for the period |
203 | 253 | 291 | 1,113 | 2,832 | |||
| Net working capital | 58,367 | 69,685 | 58,367 | 69,685 | 62,551 | |||
| Inventories | 73,942 | 77,038 | 73,942 | 77,038 | 67,804 | |||
| Free cash flow | 417 | 4,408 | 15,944 | 7,653 | 24,070 | |||
| Cash conversion | 3.4% | 39.8% | 50.1% | 28.9% | 65.8% | |||
| Net Debt | 144,412 | 153,260 | 144,412 | 153,260 | 143,544 | |||
| Net Debt excl. leasing Liabilities | 87,081 | 98,449 | 87,081 | 98,449 | 90,056 | |||
| Net Debt to EBITDA, LTM | 3.45 | 4.08 | 3.45 | 4.08 | 3.92 | |||
| Net Debt (excl. Leasing Liabilities) to EBITDA, LTM | 2.08 | 2.62 | 2.08 | 2.62 | 2.46 | |||
| Net gearing | 141.5% | 151.3% | 141.5% | 151.3% | 138.0% | |||
| Net gearing excl. leasing Liabilities | 85.3% | 97.2% | 85.3% | 97.2% | 86.6% | |||
| Equity ratio | 31.6% | 31.8% | 31.6% | 31.8% | 33.6% | |||
| Return on capital employed (ROCE) | - | - | 10.4% | 9.1% | 9.4% | |||
| Return on equity (ROE) | - | - | 9.7% | 8.2% | 9.7% | |||
| Return on assets (ROA) | - | - | 8.6% | 7.6% | 7.8% | |||
| Earnings per share, basic (EUR) *) | 0.24 | 0.21 | 0.41 | 0.35 | 0.56 | |||
| Earnings per share, diluted (EUR) | 0.23 | 0.20 | 0.40 | 0.34 | 0.54 | |||
| Comparable earnings per share, basic (EUR) | 0.25 | 0.22 | 0.43 | 0.41 | 0.72 | |||
| Comparable earnings per share, diluted (EUR) | 0.24 | 0.21 | 0.41 | 0.40 | 0.69 | |||
| Comparable earnings per share excluding amortisation of acquisitions, basic (EUR) |
0.30 | 0.27 | 0.57 | 0.55 | 0.90 | |||
| Comparable earnings per share excluding amortisation of acquisitions, diluted (EUR) |
0.29 | 0.26 | 0.55 | 0.53 | 0.87 | |||
| Average number of employees | 1,072 | 1,011 | 1,038 | 995 | 997 | |||
| Personnel at the end of the period, FTE | 1,078 | 998 | 1,078 | 998 | 1,009 | |||
*) The average undiluted number of shares July-September 2023: 18,132,258 (July-September 2022: 18,132,308). January-September 2023: 18,132,258 (January-September 2022: 18,024,511). The average diluted number of shares July-September 2023: 18,804,869 (July-September 2022: 18,787,677). January-September 2023: 18,800,123 (January-September 2022: 18,752,469).
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.
CEO ARNI EKHOLM COMMENTS THE THIRD QUARTER OF 2023
“The strength of our business model was demonstrated again during the third quarter. Despite the challenging market conditions and a strong comparison period last year, we were able to achieve solid and profitable growth. In comparable exchange rates, the third quarter of 2023 was the third consecutive quarter with a double-digit EBITA growth percentage for the Group.
Relais Group aims to reach constant earnings growth with a strategy combining three reinforcing themes: stronger than market average organic growth, growth by acquisitions and implementation of operational efficiency measures. Our strategy is based on a “buy and build” model, where we actively support the acquired companies to grow their business. We help them to grow faster than the market by utilizing our in-depth knowledge of the vehicle aftermarket and the synergy benefits between the Group companies. The results during this year clearly show that we have been able to successfully pursue our value creation model.
The performance of the Group’s Technical Wholesale and Products business was strong especially in the Scandinavian markets, based on the robust customer demand, acquisitions in Denmark, Finland and Norway and the effect of price increases carried out through the year. The market situation in Finland and Baltics continued to be challenging, mainly due to the heavy competition in the spare parts market. The third quarter organic net sales growth of the Technical Wholesale and Products business was 5% at comparable exchange rates.
The positive development of our Commercial Vehicle Repair and Maintenance business continued also during the third quarter. The main growth drivers were the solid customer demand in both Finland and Sweden combined with the effect of the efficiency measures carried out last year. The capacity utilization of the workshops was at a good level and the gross profit-% continued to develop positively. The third quarter organic net sales growth of the Commercial Vehicle Repair and Maintenance business was 5% at comparable exchange rates.
The Lighting product group net sales was slightly lower than in the third quarter last year (-3% in comparable exchange rates) mainly owing to the retail customers’ more cautious pre-orders and the slow start of the e-commerce season sales in Finland. On a year-to-date level net sales has grown with 5% in comparable exchange rates, largely owing to the successful export of Strands Group products.
Acquisitions continued to be an important 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 nine months of this year. In addition, the acquisition of Adita in early 2023 strengthened the position of Startax in Finland. The latest acquisitions (AutoMateriell and Nordic Lift in Norway) was finalized in and consolidated starting from the beginning of August. We are continuing our efforts to carry out further targeted acquisitions this year in line with our growth strategy.
The outlook for the rest of the year is largely dependent on external, macroeconomic and market demand factors. Inflation is still on a high level, the dramatically risen interest rates are negatively affecting the purchase power of customers and consumers. There are also signs of increasing unemployment and layoffs in Finland and Sweden. In addition, the weakening of the Swedish krona against the euro sets pressure on our reported results, as a major part of our business is conducted in the Swedish marketplace. On the other hand, the vehicle aftermarket is defensive by nature and compared to many other businesses it is a sector with less cyclicality. The inventory and resource situation is good, allowing us to meet the customer demand for our products and services. Despite the challenging external conditions, we feel that we are well positioned to continue the successful implementation of our strategy also during the rest of the year 2023.
Finally, I want to express my warm thanks to all Relais Group team members for your strong performance during the third quarter.”
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 2 November 2023, at 10:00 a.m. EET. The webcast can be followed at https://relais.videosync.fi/q3-2023-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.