Relais: A solid Q3 performance and well positioned for Q - Nordea

Relais reported Q2 adjusted EBITA of EUR 7.9m, 4% below our estimate. Net sales were EUR 64.8m (up 10% y/y, +12% in constant currencies), 4% above Refinitiv consensus and 1% below Nordea. Reported EBIT was EUR 6.8m, 41% above consensus and 3% below our estimate. The company notes strong performance in the Scandinavian units, where market conditions have been clearly more positive than in Finnish-Baltic market. Finnish-Baltic business sales and profitability were down y/y. Wholesale sales increased 8% y/y in Scandinavia, while those were down 8% y/y in Finland-Baltics. The company has managed to increase prices and tackle inflation impact on gross profit. Repair and maintenance operations grew strongly driven by acquisitions, while operational efficiency measures in Raskone in Finland started to support profitability. Lighting season sales have started somewhat later than earlier years and uncertainty is prevalent especially in Finnish B2C sales. Efficiency improved program should lower working capital already in Q4, while the company expects profitability improvement in 2023 through price optimisation. The company continues to actively process possible M&A targets and expects valuation multiples of targets to decline to a more moderate level than before. Our initial take is that consensus EBIT estimates could come up some 5% after the Q3 report, while Q3 results can be viewed as a relief after the weak H1.