Relais Q2'24 preview: Organic growth expected to calm down from the peak rate of Q1

Translation: Original comment published in Finnish on 08/12/2024 at 7:13 am EEST

Relais publishes its Q2 result on Thursday at about 9:00 am EEST. We expect the company’s revenue to have grown at a double-digit rate, supported by acquisitions. With revenue growth, we expect Relais to also achieve clear earnings growth from the comparison period. As usual, Relais has not provided numerical guidance for this year.

Acquisitions the main driver of revenue growth

We forecast Relais' revenue to have grown by 13% in Q2 from the comparison period to 72.3 MEUR. Our organic revenue growth forecast is 3%, which is still slightly supported by the demand peak for vehicle spare parts supported by the cold weather conditions in Q1’24. Thus, our forecast is roughly at the level of the usual long-term growth rate in Relais' main markets. In addition to organic growth, revenue is supported by the acquisitions of AutoMateriell, Jyväskylä Truck Center and Asennustyö M. Ahlqvist completed after the comparison period. We do not expect exchange rates that brought clear headwinds during the comparison period to cause any major problems now in Q2’24.

We expect steady earnings growth to continue

Our Q2 operating profit estimate excluding PPA amortization (EBITA) is 5.4 MEUR. This corresponds to an EBITA-% of 7.4% which is roughly in line with the comparison period. With acquisitions and organic growth, we expect the revenue shares of the Wholesale and Products segment and the Repair and Maintenance segment to remain roughly at the comparison period levels in Q2'24. Therefore, we expect the cost structure to evolve in line with revenue. In the comparison period, adjusted EPS was burdened by higher than usual recorded taxes and increased financial expenses due to changes in exchange rates. Thus, we expect adj. EPS to increase clearly more than operational performance to EUR 0.15.

Demand has been decent despite macroeconomic challenges

As usual, Relais has not provided numerical guidance for the current year, and we do not expect it to do so now either. In connection with the result, our attention is focused on comments concerning the development of the demand situation in H2 after the very strong Q1. Relais announced an acquisition in July when it acquired two commercial vehicle repair shops in the Gothenburg region of Sweden. We will include the small acquisition relative to the company’s size class in our estimates in connection with the Q2 report.