Relais: 11% adjusted EBITA miss driven likely by soft lighting sales – dividend proposal above expectations - Nordea

Relais reported Q4 adjusted EBITA of EUR 7.8m, 11% below LSEG Data & Analytics consensus and 12% below our estimate. Organic sales growth was 1% y/y in Q4, slightly below our expectation of 4%. Net sales were EUR 80.9m (up 8% y/y), 2% below consensus expectations. FX had a negative impact of EUR 0.2m on EBITA level due to weak SEK. Q4 sales declined 1% organically in repair and maintenance while technical wholesale and products business declined 2% on organic basis. Relais has continued to strengthen its market position in repair and maintenance business both in Finland and Sweden. Lighting sales declined 8% y/y on comparable exchange rates. Sales increased 18% y/y in Scandinavia, while sales were down 3% y/y in Finland-Baltics, reflecting acquisitions and a weaker market in Finland. Lighting sales were burdened by weak consumer demand for discretionary products, especially visible in the on-line channels. Gross margin came 250bp below consensus expectations and was down 120bp y/y to 43.6%. We believe this mainly relates to weaker-than-anticipated lighting sales. EPS of EUR 0.35 came above consensus expectation of EUR 0.27, supported by positive exchange rate differences related to SEK denominated interest-bearing loans and internal loan receivables, and taxes. Dividend proposal of EUR 0.44 is above consensus at EUR 0.41 set to be paid in two instalments. Operating cash flow declined y/y as expected and was EUR 8.4m (EUR 17.2m a year ago, supported by net working capital). Inventories were up 9% y/y, driven by acquisitions, and the company notes good level of inventories. Relais does not give short-term outlook for 2024. On initial take, we believe consensus to trim 2024E-25E EBITA by some 3-5%.