Relais Q4 on Thursday: We expect trucks to have found repair shops

Translation: Original comment published in Finnish on 3/5/2024 at 7:15 am EET.

Relais will publish its Q4 report next Thursday at around 9.00 am EET. We expect the company's revenues to have continued their upward trend in Q4, driven by acquisitions, which we forecast will also lead to earnings growth. Our interest in the financial statements bulletin is usually focused on comments on the outlook for the current year and we expect Relais, as usual, not to give numerical guidance for the current year.

Acquisitions support revenue development

We expect Relais' Q4'23 revenue to grow 9% year-on-year to 82.3 MEUR. The main driver of revenue growth is the SET, Adita and AutoMateriell acquisitions. We expect organic revenue growth to have been moderate at 1%. In Q4, we expect both the Commercial Vehicle Repair and Maintenance business (just over 30% of revenue) and the Technical Wholesale and Products business (just under 70% of revenue) to remain in a healthy market environment, with revenue developing more or less steadily from the comparison period. To our understanding, volumes in the Technical Wholesale and Product business have declined slightly year-on-year, but we expect the company's price increases to compensate for the slight decline in volumes. Lighting sales, which are concentrated in the winter season, were weak in the comparison period, especially in the consumer channels, and we do not expect consumer sales to pick up. We expect further headwinds from the Swedish krona (SEK was on average 5% weaker against the euro in Q4 23 vs. Q4 22), although the negative impact will not be as strong as in early 2023.

We expect profitability to have improved both in relative and absolute terms

We expect Relais' Q4 EBITA to increase to 8.8 MEUR compared to the same period last year, which corresponds to a significantly higher EBITA margin of 10.7% compared to the same period last year. The main driver of EBITA growth is revenue growth, and we expect the growth in the operating cost structure to roughly follow the pace of revenue growth. The improvement in relative profitability (EBITA%) was mainly due to items affecting comparability, of which approximately 0.8 MEUR related to the transfer of the company to the main list of Nasdaq Helsinki and almost 1 MEUR to acquisition costs and contingent considerations. Our dividend forecast is EUR 0.42, a slight increase compared to the last financial year.

We expect earnings growth in 2024, but no numerical guidance will be given

Relais has not been in the habit of providing numerical guidance in recent years, and we believe it is likely that the company will refrain from providing guidance for the 2024 financial year. We forecast the company to achieve 8% revenue growth in 2024, more than half of which is explained by acquisitions, while we expect organic revenue growth to be around 3%. Organic revenue growth is forecast to be driven by moderate price increases in addition to modest volume growth. In terms of cost structure, we do not expect much change in 2024 compared to the previous year, which is why we expect EBITDA to increase by 5% to just under 47 MEUR in the current financial year.