Relais: Strong Q2 across the board - Nordea

Relais reported Q2 adjusted EBITA of EUR 7.3m, 13% above LSEG Data & Analytics consensus. Organic sales growth was 8% y/y in Q2, clearly above our expectation of 4%. Net sales were EUR 74.3m (up 16% y/y), 3% above consensus expectations. FX did not have an impact on EBITA level. Q2 benefited from the good market demand, acquisition and successful commercial activities. Equipment sales missed our estimate while all other product groups beat. Sales increased 23% y/y (+12% organic growth) in Scandinavia and 8% y/y (+3% organic growth) in Finland-Baltics. Gross margin came 180bp above consensus expectations and was up 200bp y/y to 47.7%, supported by price increases, efficiency of workshops and effective purchasing. We note the company has continued to see strong demand from bigger fleet customers which we believe translates into sticky customer relationships. EPS of EUR 0.18 came clearly above consensus expectation of EUR 0.13. Operating cash flow was EUR 9.5m (EUR 6.7m a year ago) while leverage decreased to 3.0x from 3.2x at the end of Q1. Inventories were clearly up sequentially and y/y, related to acquisition and growth investments in lighting products. Relais does not give short-term outlook for 2024 but sees stable market situation for H2. On initial take, we believe consensus to take up its estimates to the tune of mid-single digits.