Relais: Slight EBITA margin miss likely driven by slightly lower lighting sales and weak SEK - Nordea

Relais reported Q3 adjusted EBITA of EUR 8.6m, 6% below Refinitiv consensus and our estimate. Net sales were EUR 70.3m (up 8% y/y) and in line with Refinitiv consensus and our estimates. EBITA was burdened by EUR 0.5m by weak SEK. Q3 sales growth was driven by both repair and maintenance business (+5% y/y organic growth) and technical wholesale and products business (+5% y/y organic growth). Lighting sales declined 3% y/y on organic basis, which combined with weak SEK explain deviation to our estimate. Sales increased 15% y/y in Scandinavia, while sales were up 1% y/y in Finland-Baltics, reflecting acquisitions and tighter market in Finland-Baltics. Lighting sales were burdened by the retail customers’ more cautious pre-orders and the slow start of the ecommerce season sales in Finland. Gross margin came 10bp below our expectation and was up 150bp y/y to 45.9%. Operating cash flow declined slightly and was EUR 4.6m (EUR 6.2m a year ago), driven by inventory changes related to acquired inventories in connection with the acquisition of AutoMateriell and Nordic Lift as well as growth related increased inventories in the Lighting product group. However, inventories were down 4% y/y and the company notes good level of inventories. Relais does not give short-term outlook. On initial take, we believe consensus to make only limited estimate revisions on the back of the Q3 for 2023E-25E.