Relais Group Plc Financial Statements Review January-December 2025 (Unaudited): Strong cash flow from operations and slightly improved comparable EBITA in the fourth quarter

Relais Group reported 2025 net sales of EUR 383.4m (+19% y/y, Q4 EUR 116.6m +29%) driven largely by acquisitions, with comparable EBITA of EUR 38.4m (+5%) and a reduced comparable EBITA margin of 10.0% (2024: 11.4%). Comparable EPS fell to EUR 1.00 from EUR 1.06 and basic EPS to EUR 0.81 (2024: 1.02); cash flow from operations was EUR 33.9m (slightly below 2024) while interest-bearing net debt rose to EUR 209.6m (up 48%) and net debt/EBITDA to 3.8x. The Board proposes a lower dividend of EUR 0.30 (vs EUR 0.50 prior year), eight acquisitions added ~EUR 113m in pro forma annual net sales, and a new CEO has assumed the role; management flags focus on operational excellence and new long-term targets to be set in 2026.

Analysis

Market structure: Relais (RELAIS, Nasdaq Helsinki) is aggregating scale in a fragmented commercial-vehicle aftermarket; near-term winners are product/wholesale franchises (Strands, Matro, ABR) with higher EBITA margins, while repair & maintenance units (Team Verksted, workshops) dilute group margin but improve cash conversion. The 2025 acquisitions added ~€113m revenue and pushed Net Debt/EBITDA to 3.8x (from 2.72x); consolidation increases bargaining power vs small suppliers but risks margin compression while utilization is weak (-2% organic sales in Q4).

Risk assessment: Key tail risks are acquisition-integration failure, covenant pressure if EBITDA disappoints (threshold risk if Net Debt/EBITDA >4.5x), and a deeper demand drop in Nordic trailer markets; regulatory risk is low short term. Immediate (days) risk: share reaction to Q&A/webcast; short-term (weeks–months): strategic update before summer and Q1 report (13 May) are binary catalysts; long-term (12–24 months): synergies and “workshop excellence” must lift comparable EBITA toward pro forma ~€50m target to justify current leverage.

Trade implications: Construct directional exposure to differentiated margin recovery — favor wholesale/product names (ABR) and a hedged Relais position: partial long to capture M&A synergies but protected against downside from leverage. Options can cost-effectively express upside around the summer strategic update; selling covered calls can monetize near-term income given the €0.30 dividend. Avoid unhedged credit exposure until covenant headroom clears or spreads exceed compensation thresholds.

Contrarian view: The market overweights near-term margin dilution and underweights the capital-light, cash-generative nature of the repair model and proven post-acquisition margin uplifts (historical analogue: LKQ’s consolidation path). If Relais converts ~€45m pro forma EBITA to €50m within 12–18 months and Net Debt/EBITDA falls <3.0x, equity could re-rate 20–35%; main unintended consequence is dilution via directed issues—monitor share issuance closely.

Key Decisions for Investors

• Establish a 2–3% long position in RELAIS (ticker RELAIS) immediately, size as % of portfolio; hedge with a 6–9 month 25% OTM put (or construct a collar) to limit downside to ~–25%; add remaining target position on a positive strategic update before summer or if Net Debt/EBITDA falls below 3.2x.
• Buy 1–2% long exposure to ABR (ticker ABR) as a relative-value play on higher-margin wholesale growth vs repair-heavy RELAIS exposure; if ABR is not investable, use a long position in European aftermarket/parts wholesalers with similar metrics and hedge by shorting RELAIS by equal notional to express margin differential for 6–12 months.
• Trade a directional options spread on RELAIS: buy a 9–12 month call spread (buy ATM, sell +25% strike) sized at 0.5–1% notional to capture upside from the strategic update and potential multiple expansion while capping premium, with target 30% upside within 12 months and stop-loss if announcement delays >90 days.
• Avoid adding corporate credit exposure to Relais unless bond/CDS spread >300 bps over Nordic BBB or Net Debt/EBITDA guidance is reset to <3.0x; treat dividend cut to €0.30 as warning — reduce exposure if the company issues equity >3% of market cap or if Net Debt/EBITDA breaches 4.5x.