CEO Arni Ekholm comments financial year 2022
Our decentralized and acquisition driven business model proved its resilience and strength. We reached an all-time high quarterly net sales of EUR 75 million and our cash flow from operations increased significantly by over EUR 9 million during the fourth quarter.
Buy and build strategy
A core component of Relais Group’s strategy is the consolidation of the vehicle aftermarket in the Nordic region. During 2022 Relais made three acquisitions and strengthened our position in both Denmark and Sweden. We are now clearly the leading operator of independent repair and maintenance workshops for commercial vehicles in Sweden and Finland. An important part of our acquisition driven strategy is also building and developing the operations of the acquired companies. I am pleased that we managed to clearly improve the sales and profitability of our workshop business and were among other things successful in recruiting more mechanics in both Finland and Sweden during the past year.
Strong growth in Scandinavia, challenging market conditions in Finland
After the generally weak market demand caused by the exceptional global circumstances during the first half of the year, the improved market situation combined with our increased commercial efforts started to show positive results. The sales growth was strong especially in Scandinavia, whilst Finland faced some challenges deriving from the weak consumer confidence and relatively mild winter conditions during the quarter.
The Group´s net sales increased by 2% to EUR 75.2 million during the quarter (+5% with comparable exchange rates). The organic growth in Scandinavia was +5% and -8% in Finland/Baltic compared to the record high sales of 2021, which reflects the general market conditions according to our estimates. The net sales for the full year 2022 reached an all-time high level of EUR 260.7 million, corresponding to a growth of 10% (+12% with comparable exchange rates). The organic growth in Scandinavia was 2% and -7% in Finland/Baltic.
Relais Group is one of the biggest actors within the European vehicle aftermarket lighting business. Despite the overall challenging market conditions, we managed to grow the Group’s lighting sales with 3 per cent with comparable exchange rates. The sluggish consumer demand in Finland was offset by the strong growth of our Strands-lighting business in Scandinavia and rest of Europe.
During the second half of the year, we took several measures in order to improve the profitability and cash flow of the Group. We succeeded in increasing prices in all our operating units to fence off the negative effects of the inflation-driven cost increases. We resolutely decreased the inventory levels by over 14 million euros from peak level in early Q3, without compromising the gross margin levels, which lead to a significant cash flow growth.
After the challenging first half of the year, the profitability of the Group started to recover during the third quarter. In the fourth quarter the EBITA amounted to EUR 6.2 million compared with EUR 8.0 million in the same quarter of the record strong year of 2021. This resulted in an EBITA margin of 8.2 (10.9) per cent. The EBITA level was impacted by items affecting comparability of EUR 1.7 million, mainly deriving from the costs relating to the Group’s transfer to Nasdaq Helsinki main list and some acquisition transaction costs. The comparable EBITA amounted to EUR 7.9 (8.7) million resulting in a comparable EBITA-margin of 10.5 (11.8) per cent. The decline of the comparable EBITA relates mainly to the weak consumer demand in Finland for discretionary products during Q4, the increased marketing and other operating costs in the Group’s on-line business in Finland and currency effects. The weakened SEK/EUR ratio had a negative impact of ca EUR 0.2 million during the quarter.
Outlook for 2023
We feel we are well prepared to continue the implementation of our strategy during 2023. The solid financial position of the Group is also reflected in the Board of Director’s dividend proposal. We will continue focusing on driving further acquisitions, accelerating organic sales growth and improving the profitability with operational efficiency measures during the year.
I want to express my warmest thanks to all our employees, shareholders, and business partners for the past year.
Chief Executive Officer