The clear strategy accelerates growth
The strategy of Relais Group is based on combining growth through acquisitions with faster than market average organic growth. This growth is supported by synergies between the existing and acquired companies. During the first three quarters of the year 2021, we have continued the uncompromised execution of our chosen strategy and managed to achieve significant and profitable growth in our different operating units.
The Nordic vehicle aftermarket developed positively during the third quarter of the year. The partial easing of the COVID-19 related societal restrictions in the latter part of the review period, and the continued growth of the general economy had a favorable effect on the market. According to our own estimates we were able to grow even faster than the market in average.
The organic growth was especially strong for the Group’s own vehicle lighting brands. Several successful product launches, the increased market share in Sweden supported by cross-sales through local Group Companies, and the strong growth in export markets were the main contributors in this development. Especially the export of Strands-branded products to e.g., Germany and Canada has grown strongly during the first nine months of this year.
As we communicated in June, we increased our resources in the M&A function which is of vital importance to us. Due to this we can now analyze the target markets even better and make contacts with a larger number of potential acquisition targets with a good strategic fit in the Nordic countries. During July-September our pipeline has already been complemented with several potential target companies.
In addition to the acquisitions already carried out earlier this year (Strands Group AB, Raskone Oy, Lumise Oy) we announced the acquisition of STS Sydhamnens Trailer Service AB after the review period. The transaction is expected to be completed during November 2021. After its completion the acquisition will substantially strengthen our already significant heavy commercial vehicle business in Sweden together with our Group companies Huzells i Karlstad and TD Tunga Delar AB.
Apart from the disruptions in the global logistics and supply chains, the COVID-19 pandemic has not had a significant effect as such in our operating markets during the third quarter. Especially the commercial vehicles sector has picked up as the overall economic activity has increased. However, the delays in the deliveries of new vehicles have to some extent had an effect on the demand of vehicle equipment products, and the still continuing lower than normal level of bus traffic has decreased the demand of related spare parts. On the other hand, the growth of e-commerce has increased the need for different type of last-mile home deliveries. This has led to growth in the usage of light commercial vehicles and increased the demand for related services and spare parts.
As the pandemic still continues, the health and safety of our employees and business partners is of paramount importance to us. Even though some restrictions have already been lifted locally, we continue to carefully follow the different recommendations of the authorities in our operating countries. Fortunately, we have so far had no serious COVID-19 incidents reported among our personnel, and we will continue striving to guarantee everyone’s safety in the best possible manner also in the future.
Sustainability and electrification of the vehicles
For us, sustainability means above all practical and meaningful actions. We take good care of our employees, customers, and business partners and the environment. We have set clear ESG-related criteria to our global suppliers and several spare parts that we sell are covered by a refund system extending their life cycle after remanufacturing at the production site. We also take seriously the responsibility of our own line of business in reducing the global CO2-emissions. As the vehicle electrification accelerates, we have purposefully increased our spare part offering for full electric and hybrid electric vehicles. This range is growing steadily. In addition, we have increased the capability and preparedness of our Raskone-workshops to also serve and repair electrical commercial vehicles.
Outlook for the rest of the year 2021
Relais Group is well prepared to continue the successful implementation of its strategy also during the last quarter of the year 2021. We have increased the inventory levels for critical product groups and strived to advance the deliveries, so that our ability to serve our customers would stay on a high level all through the year. We will continue our M&A activities with the aim of finding companies having a good strategic fit to our Group and a sufficient value creation potential to our shareholders.
The still ongoing disruptions in the global logistics and supply chains, the increase of material and delivery costs and the possible supply delays caused by the global lack of semiconductors make it however difficult to forecast the business performance during the rest of the year. Due to this Relais Group is not giving a numeric guidance for the year 2021.
Finally, I want to extend my warmest thanks to all our almost 850 professionals, who do their very best every day to serve our customers even better. In addition, I want to thank all our customers, business partners and shareholders for the trust you are placing in us. We strive to be worth that trust also during the coming months and years.
Chief Executive Officer