Good afternoon, everyone, and very welcome to the release and the presentation of the third quarter 2026 results for Relais Group. The people presenting here today is myself, Christian Gebauer, the CEO, and Sebastian Seppänen, the interim CFO. As you might know by this time, we are more than 25 niche leaders operating in Relais Group. We are more than 1,700 people in the group, and we are operating across 8 different countries in the Nordics as well as in the Baltics and in Benelux. The business is, since the beginning of this year, split into 3 business areas. We have the Commercial Vehicle Services, where it's all about keeping the vehicles on the road. Uptime matters, and that's what our customers are expecting from us. We have the leading independent chains in the Nordics in this business area, with more than 60 locations across the Nordics.
Then we have the Technical Wholesale business area. There it's about having the right part at the right time with the right technical competence to help our customers. We have 15 specialist wholesalers across 6 countries. Then finally, we have the Products and Solutions business area. There we build brands that professionals and enthusiasts love. Niche brands with strong profitability and growth potential, such as Strands and tershine. We build champions in the group. We acquire niche leaders, and we develop them to champions to get the full potential from each company. We do this with a toolbox of 5 different areas. I would like to highlight the playbook. We have a clear playbook in our business areas on how to develop our companies, how to make sure that the company, when they come to Relais Group, they are stronger than they would have been alone.
One plus one should become three. We see strong results from this playbook application in the Commercial Vehicle Services business area and in the Products and Solutions business area, with strong EBITA growth in this quarter. We are on a journey in Relais Group. 2026 is a transition year. We are now building our foundation, and we are improving the quality of growth. Once these 2 steps are finished, we will move on to scale the model, accelerating the M&A, and drive sustained return on capital employed improvement. Our financial targets that we released earlier this year is double-digit EBITA growth rate, average over a business cycle. The return on capital employed should be above 30%, and the dividend policy is 30% of fully diluted EPS. As you know, we are behind on the return on capital employed target so far.
We are not expecting to reach it this year, but we are working hard to close the gap to the 30% target. Let's move on to the Q3 financials. We have strong EBITA growth in 2 of our business areas, and we have launched efficiency measures in the Technical Wholesale business area. What went well in the quarter was the strong EBITA growth of 23% in Commercial Vehicle Services and 31% in Products and Solutions. We are also happy to see that our gross margins are improving in the quarter to 49.8%. We continue to have a strong cash flow from operations this year. So far, we have had EUR 22 million, more than double versus the last year.
Then looking at the profitability in the quarter, the Technical Wholesale business area had a gap versus last year's profitability, and this is explained by the growth initiatives that we have done in these companies coming into 2026. A majority of these companies had a higher cost base to get the growth in the businesses. What we have seen is that the volume has not come as we would require to get the profitability that we expect long term. So there, we are now taking actions. With regards to the central cost, it's higher than last year, but 50% of this increase is due to the long-term incentive program. The priorities at the moment is to execute the efficiency measures in the Technical Wholesale business area and maintain working capital discipline through the high season that is the Q4.
Looking at the top line, we had a 10% sales growth, whereof organic was 2%. The organic sales growth came from the Technical Wholesale business area and the Products and Solutions business area. In the Commercial Vehicle Services, we had a slight organic sales decline that was partly explained by the consolidation of the workshops in Finland and the softer demand that we saw in Norway in September due to the changes of the fuel price and the taxation of diesel in Norway. Looking at the profitability, the group-adjusted EBITA came up with 5%. We saw a strong EBITA growth in Commercial Vehicle Services and Products and Solutions, but we had this decline that we talked about before in the Technical Wholesale business area. It's very encouraging to see the strong growth in the Commercial Vehicle Services and Products and Solutions.
We are working through each of the companies in this business area with our playbook. In Commercial Vehicle Services at the moment, it's a lot about the profitability improvements and the tight cost control that is showing off in the figures. In Products and Solutions, we are applying the playbook to get the strong organic growth from a mix of pricing, changing the product mixes in the companies, as well as having an ongoing cost discipline. Then with the Technical Wholesale business area, as we had this higher cost going into the year, and we haven't seen yet that the volumes have come as we would expect, we are now taking actions to adjust the cost base to the volume that we see at hand, not to wait and hope that additional volume will come. Deep dive into the Commercial Vehicle Services business area.
As you see here, we had a 10% top-line growth that was driven by the acquisitions that we did during the last 12 months, Wetteri Workshop and TJ Fordonsservice, and LBP. We have seen in Norway, as I said, this more challenging market due to the diesel price increases. This has been handled exceptionally well by the team in Norway, and the impact has been limited and well kept with. That we can see in the profitability here in the business area that is coming up 23% in the adjusted EBITA, reaching close to 11% in margin in the business area. Looking at Products and Solutions, same story here. We see a strong growth. Here we have a big part of the growth also coming from organic growth in existing businesses. We also have acquisitions here. We acquired QPax and tershine.
When it comes to tershine, they are going into their big quarter now, quarter four, so the impact from tershine in the third quarter has been limited. Looking at the adjusted EBITA growing by 31% and the profitability reaching to some 22% is a strong proof that the activities that we have ongoing in the companies are paying off. The Technical Wholesale business area, we have sales growth as we would expect from the growth initiatives that we have done, but the profitability is below expectation. This is due to the fact that we have been building cost in the companies going into this year that has not yet paid off in enough volume, simply put. Here we are now taking the actions. The gross margin improved in the business area, which shows that the customers appreciate our products.
We have strong businesses fundamentally underlying, but this is an impact of the operational expenses in the companies. This program that we are now launching, we call it the profit improvement program. This is done company by company. Different measures will be applied in different companies. We are making sure that we are doing these measures not to impact and harm the sales for Q4 and for next year. So it is tailor-made actions to have efficiency impact, but not a sales impact. We have been closing or are closing down two depots in the business area. Those are depots where our investment cases are not holding, where the volumes are not coming as we are expecting. Now we are taking actions and winding down these two depots. We expect the full effect from this program to have impact in the full year 2027 figures.
We will start to see impact in Q4, and then quarter by quarter next year, the impact will come stronger and stronger. tershine, we acquired them in the summer. The onboarding is progressing well. We are now in preparation for tershine's most important sales season in the fourth quarter, and we are very much looking forward to see the results of that. We have a strong fit here with the Products and Solutions playbook, where Tobias and the team wants to go international with tershine, and we have exactly those skills in the business area to help the management team execute on this plan. Coming to acquisitions, we have done six acquisitions in the last 12 months, summing up to a revenue of EUR 34 million. With that, I would like to hand over to Sebastian Seppänen for the financials.
Thank you, Christian. Good afternoon, everyone. Starting off with adjusted EBITA, we had EUR 11.5 million in quarter three, and the reported EBITA was EUR 9.8 million. The difference here is items affecting comparability, which amounted to EUR 1.7 million in the quarter. EUR 1.3 million of these were restructuring costs relating to the profitability improvement measures in Technical Wholesale and in Commercial Vehicle Services. Then we also have had a one-off non-cash ERP change related impact in Technical Wholesale. The EUR 0.4 million here is relating to acquisition related costs. So we had advisory costs, and we had inventory step-ups from acquisitions. Cash flow, as Christian said, year-to-date cash flow is over double last year. In the quarter, we had EUR 4.8 million in cash flow from operations.
Cash flow before change in net working capital improved, and change in net working capital decreased operating cash flow slightly more than last year. This is mainly driven by receivable increase and not inventory. Cash flow from finance items increased mostly due to more taxes paid. Net working capital increased mainly due to acquired companies. Excluding acquisitions, net working capital decreased. As we said earlier in Q2, the net working capital in relation to sales decreased significantly again, which is a result of the capital efficiency focus across the group. Inventory turnover increased to 4.4 and net working capital turnover increased to 4.6.
Good to note that inventory and net working capital turnover are both positively impacted, of course, by the efficiency measures, but there is also a negative impact from the timing of acquisitions, as net sales component in those formulas do not include the full year of all acquired companies. Cash flow in summary. Cash flow from operating activities, as discussed, was EUR 4.8 million versus EUR 6.6 million last year. Cash flow from investing activities was -EUR 14.3 million, and last year it was -EUR 15.6 million.
Acquisition of subsidiaries was EUR 13 million of this, and then we had capital expenditure of -EUR 1.4 million. Cash flow from financing activities was -EUR 1.9 million, and these were mainly normal business related. In the review period, we had negative cash flow from repayment of lease liabilities and then interest on hybrid bond, and then we had proceeds from loans, basically acquisition financing.
Last year was impacted heavily by acquisition financing and the hybrid bond issue, so that is why there is a huge gap from last year. Net debt. Net debt increased mainly as a result of acquisitions. We had loans from financial institutions at the end of the quarter of EUR 128.6 million, and then we had lease liabilities of EUR 114.5 million. Other liabilities amount to EUR 28.2 million. Net debt thus was EUR 255.6 million and net debt to rolling 12-month EBITDA is 4.01. Good to note here that the EBITDA figure here is a reported figure, so it does not include the full year impact of all the acquired companies. The uncommitted facility is now fully drawn. That is to note. Net financials. Net financials improved, meaning that the net financial expenses decreased from last year despite the higher interest on loans and leases.
The reason is mainly the change in fair value of interest rate swaps. We had an interest expense on loans. Net of the change in fair value of floating to fixed interest rate swaps were -EUR 1.1 million versus -EUR 2 million last year. Interest expense on lease liabilities was -EUR 1.6 million versus -EUR 1.2 million last year. The increase in interest on lease liabilities was mostly due to the increased lease liabilities from acquisitions and then Raskone's new flagship workshop.
Exchange rate differences included in the net financial items were EUR 0.7 million, the same as last year. Then going down to EPS. Basic EPS in the quarter was EUR 0.11 per share, compared to EUR 0.18 per share last year. The decrease is due to a one-time non-cash negative impact of approximately EUR 1.4 million, which was due to a change in deferred taxes from the previous year.
Then we also have a decrease due to increased amortization of acquisition-related intangible assets. Then we also have the hybrid bond interest in the full Q3 this year. Adjusted EPS excluding acquisitions was 32 cents per share versus 39 cents per share last year. Here as well, the negative tax impact of non-cash one time negative cash impact of non-cash impact of taxes of EUR 1.4 million due to the change in deferred tax assets from the previous year impacted. Then we had a decrease again due to the hybrid bond interest. Return figures. Return on net working capital was 43.1% versus 44.5% last year, and return on capital employed was 10.6% versus 12.2%. Both of these measures are impacted by the way we calculate those.
Partially, the profit component of the formula includes partial year profits from the acquired companies, but the balance sheet is more heavily impacting that. Return on equity was 7.1%. Closing the gap, of course, we have the return on capital employed target of 13%. Of course, closing the gap is a priority for us and requires, of course, both improving earnings but also improving capital efficiency. Good. Profitable growth and cash flow generation are key to our focus in this year. As we have seen this year, operational discipline and working capital discipline can show results, and this is what we're focusing on. M&A is of course a key part of the strategy, but we are very disciplined in our capital employment as usual.
Thank you, Sebastian. Coming into the market, the market conditions were mixed during the quarter. It was largely stable but softened in some markets towards the end of the period. Here we are specifically talking about the Norwegian market, where we had the increase in fuel taxes. Our priorities are clear. They remain the same for the rest of the year. Execute the efficiency measures that we have put in place in the Technical Wholesale business area and maintain working capital discipline through the high season. We don't provide numerical guidances for the full year 2026. To summarize the quarter, Relais Group are in a transition period. We are implementing a fully decentralized business model. We are adding the active ownership part of the value creation besides acquisitions.
Active ownership is the key part to ensure that we have a long-term value creation for our shareholders. On this part, we are now working intensively. We're spending very much of our time on exactly that. We are applying our playbooks in Commercial Vehicle Services. We have the playbook in place in Products and Solutions. We have the playbook in play. You see the results here. You have the adjusted EBITA increase in Commercial Vehicle Services of 23%. In Products and Solutions, it is 31%. This is the proof that our model is working. In Technical Wholesale, we came into the year with higher cost base. We have been acting, and we have been chasing the volumes, but at the moment, we have to adjust our businesses to the volume we get from the market, not the volume that we hope that the market might give us eventually.
Therefore, we are doing company-by-company actions to ensure that we are running each company in an efficient way. We are closing down 2 depots to get reduced cost and adjust to the volumes that we get, where we haven't seen that our business case for opening these depots are playing out as we expected. We're going to see the full effect of this in the year 2027, and we are very committed to deliver on this program. With that, we would like to open up for questions.
Good. Thank you. I will do the reading of questions here. We have quite a few. First one from Stefan, from Redeye. "Technical Wholesale's adjusted EBITA margin fell from 10.5% to 8.7%. What annual savings does the profit improvement program target, and what total restructuring costs should we expect in Q4 2026 and in 2027?
What we are doing is that we are going through company by company what actions should we take. We have more than 10 companies in this business area. The situation is different for each company. They operate in different markets. They have different type of offerings, and some have some challenges. Some are performing very well. It's a tailor-made program company by company. We are putting together, and we have started implementing the actions, and those actions will be seen in the financial results for the fourth quarter of this year as well as for the quarters coming in 2027. That's where you'll see the impact of this program.
Good. Thank you. Stefan from Redeye again. "How does the tershine seasonality look like?
If you go into their web shop at the moment, they have a Christmas calendar on sale, and that's a very big, important period in the fourth quarter for tershine. So fourth quarter is a strong quarter and as well in the spring, when we are getting the cars out, getting ready after the winter. We have Easter coming up, and in that period, you have another high season for tershine. We are working to smoothen out the demand also on the other quarters by doing sales initiatives in tershine.
Thank you. Stefan from Redeye. "In Q3, you booked a one-time non-cash tax charge of approximately EUR 1.4 million related to changes in deferred taxes from previous year. Could you explain what caused it? For example, a revaluation of deferred tax assets or liabilities, and should we expect any further adjustments of this kind in Q4 or 2027?
Please, Sebastian.
Yeah. I can answer that. So, this is a one-time non-cash impact from changes in deferred tax asset from the previous year, and this is of course not something that we expect to see in the coming quarters. Then Stefan from Redeye, last question from him. Organic growth was 2%. How was it split between the three business areas, and how much sales did the Finnish workshop consolidations and the Norwegian fuel subsidy removal cost Commercial Vehicle Services in the quarter?
In the quarter, we saw organic growth in the Technical Wholesale business area, as we should expect to see due to the growth initiatives. We also saw that Products and Solutions were continuing to perform very well in the existing businesses with a strong organic growth. When it comes to Commercial Vehicle Services, we had this workshop merge and the fuel price subsidies. So far, the impact has been limited due to the excellent execution in Norway in September.
Thank you. We have a question from Kalle. Net debt to EBITA stood at 4.01 or 5.02 on an alternative calculation basis. What leverage level would you consider acceptable before pursuing further material acquisitions?
The leverage has gone up since last year due to the acquisitions we did in 2025. As well, we have done the tershine acquisition this year. We have a resilient and strong business with good cash flows. We are able to still do acquisitions, and we are mainly focusing on smaller, high-value, accretive acquisitions. For example, workshop add-ons in the Commercial Vehicle Services business area. At the moment, we are not chasing the larger acquisitions. I think our focus on our existing companies should get the priorities it deserves. We will eventually get to the situation where we will accelerate the M&A activity.
Good. Thank you. Miro Peltomäki from Danske Bank. Can you give a little more color on the Technical Wholesale turnaround program? What is the scale of the targeted EBITA improvement, and when is this expected to materialize?
I wouldn't call it a turnaround program, but rather an efficiency program where we have strong gross margins in the companies. They are among the most profitable companies in their niches. They're going to stay like that. But the cost that we took on to grow sales has to be adjusted in the situations where we don't see that the sales are coming as we have been expecting, and that is what the program is about. The impact will come in the first quarter as well as in the quarters to follow in 2027, and the impact will be seen in the quarterly reports.
Thank you. Miro from Danske Bank again. Do you have an estimate of how much working capital will you be able to release after the high season? Will you prioritize deleveraging over acquisitions until financing headroom improves?
Do you want to take that first part of the question, Sebastian?
Yeah. Thank you. I think we have done, of course, this year quite a lot. I think a lot of the improvement from net working capital has been done. But of course, we are doing that as well, a part of the Technical Wholesale improvement program and it's part of the DNA in many businesses that they are very capital efficient. That's what we are trying to do. Regarding the headroom and leverage, I think Christian answered that, but of course we have a very stable underlying business with a high debt capacity. But we are, of course, very prudent when looking at these future acquisitions. Joni from Nordea. You have closed the local depot in Technical Wholesale and aim to close a second one. How large one-off should we expect in the coming quarters, and how large annualized cost savings are you expecting from taking actions?
There was already a one-off in the third quarter related to one of these depot closes. The other one is going to come in the fourth quarter. I am not going to quantify the impact on the items affecting comparability, but we will do the measures that are required to restore the profitability in the business area.
Good. Joni again from Nordea. Outside Norway, how do you view the demand for Commercial Vehicle Services with higher fuel prices?
In Finland, the demand is stable, I would say. We do not get much for free from the market in Finland in Commercial Vehicle Services, but we are operating on a very efficient way, and therefore we can increase the profitability that we get in the business. In Sweden, there is similar adjustments to the taxes coming up in December this year. The learnings that we have from the Norway situation now in September will be brought to the Swedish operation, and we are taking measures to make sure that we handle that situation, whatever situation will be and how it will impact the customers. We will make sure that we are prepared, and we handle that in the best way possible.
Thank you. Joni from Nordea, last question: How has the lighting season started to realize?
So far it has been as expected, I would say. In Strands we have strong demand. We are taking market shares. We are expanding the business to new locations. So far so good with the lighting season. I guess the biggest part of that is coming in the fourth quarter, so that is really when it will be clarified.
Good. Thank you. Petri from Inderes: You mentioned pricing as one of the ways to improve financials in Products and Solutions. In which products or businesses do you see most room for price increases?
Price increases is part of our business model in all the business areas. As we have said many times, we want to have the niche leading companies, the companies that have strong pricing power, loyal customer base, and are the go-to player for the products in their niche. If you have that position, you also have ability to increase the prices. I would say we are working with that measure across the group.
Good. Petri from Inderes: Do you expect changes in fuel subsidies taxation in Sweden in the coming months, or how do you see the market environment regarding these topics?
Yeah, there is a change coming up. There was one already in the third quarter. There is another one coming up in December this year. We are prepared. We have the learnings from Norway. We have our playbook. I am confident that we will handle the situation in Sweden in December in a good way.
Thank you. Pia from DNB Carnegie: What savings in millions of euros do you aim at extracting in Technical Wholesale in 2026 and 2027 based on your current efficiency program? What level of restructuring costs should we expect?
Yeah, we have already covered that question.
Correct. Pia from DNB Carnegie: What do you consider a sustainable profitability level adjusted EBITA margin for Technical Wholesale?
We wrote in the report that in my CEO letter, I wrote that we are aiming to restore the profitability in the business area. It is, of course, different company by company, and we are looking through company by company what levers can we pull and what profitability levels should we aim for. So that is the target for the program.
Okay. That was all for the questions I have here.
Okay. If there are no further questions, thanks a lot for listening in today, and looking forward to see you again in the Q4 report in February next year.
Thank you.
Thank you.