Relais: Slight miss on adjusted EBITA – new financial target for 2025 - Nordea

Relais reported Q4 adjusted EBITA of EUR 7.9m, 8% below consensus and 9% below our estimate. Net sales were EUR 75.2m (up 2% y/y, +4% in constant currencies), 2% above Refinitiv consensus and in line with our estimate. Reported EBIT was EUR 5.3m, 24% below consensus and 32% below our estimate. EBIT was burdened by EUR 1.7m costs related to main list transfer and acquisition. Market situation in repair and maintenance was stable and profitability improved, which we view encouraging taking into consideration challenges during H1. B2B lighting sales stable in Q4, while higher margin B2C sales declined. Sales increased 5% y/y in organic terms in Scandinavia, while those were down 8% y/y in Finland-Baltics, reflecting the general market conditions. The company has managed to increase prices and tackle inflation impact on gross profit. Operating expenses came above our expectations, which we believe related to higher marketing spend in online business. Operating cash flow improved substantially and was EUR 17.2m (EUR 7.9m a year ago), driven by 8% y/y (-12% q/q) decline in inventories. Dividend proposal stands at EUR 0.40 per share, above consensus at EUR 0.34 and is payable in two instalments. Relais does not give short-term outlook, while we note new financial target of EUR 50m adjusted EBITA (pro forma) for 2025. Earlier target was EUR 500m top line (pro forma) for 2026. The company is accelerating its growth plan and sees large amount of potential acquisition targets with increasingly attractive valuation levels. We have modelled EUR 38m adjusted EBITA for 2025E on organic basis, while based on our M&A scenario, we view new financial target achievable through M&A. Our initial take is that, despite slight Q4 miss, consensus EBITA revisions could remain fairly muted after the Q4 report (we have been 8% above on adjusted EBITA for 2023E), while we note new financial target and above expectations dividend proposal.