Relais Q1 on Thursday: We expect demand to have reflected its defensive nature

Translation: Original comment published in Finnish on 5/2/2023 at 5:00 am.

Relais publishes its Q1 result on Thursday at about 9:00 am. We expect the company's net sales to increase slightly year-on-year, while our EBIT estimates are slightly below the comparison period. Relais has not provided numerical guidance for the current year, and we do not expect it to do so with the report either.

Slight organic slowdown in estimates, inorganic growth supports overall growth

We forecast that Relais' net sales in Q1 have grown by a good 3% year-on-year to EUR 64.2 MEUR (was 75.4 MEUR). In our estimates, growth is slightly strengthened by the acquisitions of Trucknik and SET A/S, while organically we expect net sales to be 1% below the comparison period. Overall, we estimate that the demand picture for spare parts and equipment as well as for the repair and maintenance business was reasonably good early in the year, reflecting their usual defensive nature. We estimate that the company has encountered headwinds mainly in consumer-driven discretionary demand, which accounts for a small proportion of total demand. In addition, the weakening of the Swedish krona compared to a year ago has put the brakes on the company's development.

Earnings expectations are slightly below the comparison period

Our estimate for Relais' Q1 EBITA is EUR 5.4 million, slightly down year-on-year. In our estimates, the result relative to the comparison period is held back by increased depreciation and cost inflation. In addition, the weakening of the Swedish krona is also weighing on earnings. In line with the decline in operating profit, we expect Q1 adjusted EPS to fall to EUR 0.18.

Instead of guidance, attention is focused on market comments

Relais has not provided numerical guidance for the current year, and we do not expect it to do so now either. In the context of the results, our attention is focused not only on the regular financial review, but also on the company's comments on the short-term market outlook and the results of the efficiency improvement program launched last year. Relais made a small acquisition at the end of Q1, when it also acquired Adita, a distributor and retailer of its own products. We will take the acquisition into account in our estimates in the company report to be published after the Q1 report. Our comments on the acquisition can be found here.