Good afternoon, everyone, and welcome to Relais Group's Capital Markets Day. My name is Sara Anttila, I will be your moderator today. It is my pleasure to welcome all of you here on site as well as everyone online. During this afternoon, you will hear more about Relais' strategy, business areas, and financial performance before we conclude with a joint Q&A session. Joining us from Relais Group today are, let me just find the pages and faces. Joining us from Relais Group today are President and CEO Christian Gebauer, as well as the business area heads Juan Garcia, Jan Popov, and Johan Carlos, and CFO Thomas Ekström, and Director of M&A Sebastian Seppänen. During the webcast, you can submit questions via the chat function, we may also take questions from the audience here in the room.
We will address as many questions as possible during the Q&A session after the presentations. Now it is my pleasure to introduce Relais Group's President and CEO Christian Gebauer, who will open today's presentations with an overview of the company strategy and investment case. Christian, the floor is yours.
Thank you so much, Sara, for that kind introduction, and very welcome to the first ever Relais Group Capital Markets Day. We are very happy to see all of you here with us in this studio in Helsinki, but also to all of you joining us online today. It's an impressive participation and we are really happy about that. I also hope that you like our new brand image. We have updated a web page and the logo and we think this significant shows the way forward for Relais Group. We are now entering the era of returns. We have in the last years had the era of EBITA growth. We have had a very strong growth of EBITA in the group. We are now entering the era of returns.
We are adding the return on capital employed to our financial targets to make sure that the EBITA that we are creating is converting into shareholder value. We will touch upon four questions today in this first session. We will tell you what we view what is Relais Group, why are our niche attractive, why is the vehicle aftermarket an attractive place to play for a serial acquirer like Relais Group, how are we gonna turn the growth into returns, and what is the next phase we are entering into? Relais Group is a leading European serial acquirer in the vehicle aftermarket. Our business is about identifying, acquiring, and developing leading niche businesses within the vehicle aftermarket. This is done through three cornerstones. We focus on local entrepreneurship.
We want the local management teams to have the mandate and the possibilities to develop and steer their business, but with clear accountability for the returns that they are creating. We also have a strong focus on M&A, a disciplined M&A, making sure that we allocate capital to the most interesting opportunities in our market to make sure that we create a good return for our shareholders. Finally, about the disciplined capital allocation. It comes both in the acquisition phase but also in the lifetime when we own the companies. We want to make sure that we employ the capital that we have in the group into the most exciting opportunities.
It can be that we are reshuffling capital from one company to another company, or it can be that we take away capital from some product groups in one company and put it into other product groups in the same company. Always with the mindset of, "Where do we get best return with the capital at hand?" Over the past years, Relais Group has been building an impressive portfolio of leading companies. We are today active in eight different countries. We moved outside of the Nordics last year through the acquisition of Matro Group. We are more than 1,700 professionals in the group. As communicated earlier this year, we are dividing our business into three areas. We have the Commercial Vehicle Services.
There we have our companies, everything is about keeping the vehicles on the road, making sure we have uptime on our customers' vehicles. Here we have leading chains like Raskone in Finland, Team Verkstad in Sweden, and Team Verksted in Norway. We have Products and Solutions. In the Products and Solutions Business Area, it's all about creating leading brands and distributing products globally. This business area have, for example, Strands Group, in the portfolio, where Johan Carlos, the CEO of Strands Group, and the Business Area Head for Products and Solutions later on will share more about this business area. I should also mention that Jan Popov, of course, will share more about the Commercial Vehicle Services Business Area. Finally, the Technical Wholesale led by Juan Garcia, our head of that business area.
Here we have companies that are focusing on availability, having the right solutions in place for our customers to get quick deliveries, but at the same time, making sure that we don't have too much inventory in our companies. It's really an optimization game to make sure that we get the most out of the capital that we allocate into these companies. We talk about local niche leaders. We wanna have, we wanna acquire, we want to build a group of niche leaders. This is important because throughout my career, I've seen that being a leader in a market or in a certain geographical area or in a certain amount of product groups, you are able to attract the best people. I mean, all of you are working for a company because you think that company is leading in the area where you are focusing on.
We will be able to attract the best people. They will help us create superior customer value. By doing that, we will become the preferred partner for our customers. Eventually we will earn leading margins. We already have several of these companies in our group today. For example, Strands in the premium lighting, Raskone we talked about, ABR in Sweden. Some of our companies are not yet in this position, but we have a clear path to get these companies to a leading position. When we look at acquisitions, these are the type of companies that we are looking for. We are coming from several years of strong EBITA growth. As reported last week in the Q1, we are having an impressive growth both on net sales and adjusted EBITA with over 40%.
We are proud to show also a significant amount of organic growth both in net sales and especially in adjusted EBITA. The cash flow from operations is and has been strong for Relais Group during the years. We are looking today at the return on working capital of 42.5% and return on capital employed on 11.1%. As you have noticed, we have put a new target of return on capital employed of 13%. That is the first step to improve the returns of our capital and return for our shareholders. We love the vehicle aftermarket. It is a niche that is resilient and fragmented. We don't think you can find a better place to deploy capital and build company groups than this niche.
Our business basically starts from when a vehicle is constructed and handed over to the first customer during the lifetime of the vehicle until it's time for demolition or end of life of the vehicle. In that span, we operate. In that value chain, we create value. Fragmented markets, as you know, there are many small, medium-sized companies across the Nordics, and especially in Europe, if you look beyond the Nordic countries, that are built by strong entrepreneurs and that are eventually looking for a new home. We think we are the best player to attract and continue to develop such companies. The resilient demand goes both in good times and bad times. We see that the fleets on our roads are aging.
There is more and more need for services and material to these vehicles. You know, even in a challenging geopolitical situation, the demand for our services are increasing. Combining the fragmented market and the resilient demand, it is an attractive niche to continue to deploy capital within. We are entering the era of returns. Let me make a concrete example of what we mean with this. We are working with trucks, right? Let's say I'm running my truck on a highway with a speed of 80 km /h . Depending on how this truck is configured, how the engine is optimized, how old the vehicle is, you will have a different fuel consumption to keep the speed of 80 km/h. This fuel consumption can be seen as the return on capital employed.
Now we will wanna increase the speed. We have EUR 38 million last year in EBITA. We wanna increase this. We wanna have double-digit EBITA growth, but we don't wanna increase the fuel consumption in the same way. We wanna reduce the fuel consumption so that the cash at hand can be used to acquire companies and develop our existing companies, so to have a higher growth with a less need for capital employed. By doing that, we will improve our return on capital employed. Our value creation model spans from when we buy a company to the development of the company and the reallocation of capital. For us, as important as buying the right companies, it is to step away from the opportunities that are not right for us.
When the valuations go too high and we don't feel it's a strategic fit for us, we don't feel that we can add as an owner to the company, we shouldn't do that. To be able to be selective, we need to have a high flow of acquisition opportunities. That's why we are now introducing the business area by business area deal pipelines, where the business area heads are working actively with their companies to make sure that we screen, identify, think about this in our daily work. What companies could fit in our environment? What do we wanna acquire? Who are the leading ones? We get up a good deal flow from the business areas, as well as working on structural processes that is coming from outside. Together, we will have good opportunities and do good acquisitions.
Once we acquire the company, the job starts. We acquire them because they have had a good development, because they have showed attractive financials. We want the companies, of course, to continue the organic growth after the acquisition. We wanna buy companies with management teams and entrepreneurs that are motivated to continue the journey. We should have focus on organic growth to be able to realize a high return on the capital that we deploy. The business area heads will tell you more about that, how we operate with this in different business areas. We have our playbooks by business area. We have our playbook centrally, how we wanna work with value creation, and this is central in our model. The reallocation of capital, we talked about it.
We take away cash from the companies that don't deliver a high enough return, and we put it into opportunities. It can be acquisitions, or it can be organic opportunities in another country, company in the Relais Group. Being successful on this journey requires a strong culture in the Relais Group. We need to enforce and emphasize and build this culture over time, and these are the pillars of our culture. We have local entrepreneurship. It goes with the situation where we wanna acquire a company, and we want the local management team to continue drive the value creation and the EBITA growth. The local management teams are the ones closest to the customers. They know what the market wants. They know what the competitors are doing.
They can take the decisions and are best suited to take the daily decisions on how to develop their business, but that comes with accountability. If you are deciding yourself what to do, you also are accountable for the results, right? This is a fundamental pillar in our model, and we need then management teams that wants to take this responsibility and that we think we have in our companies today. Commercial sharpness is the daily business of our companies, making sure that we work with pricing, the mix of products assortment, that we are doing what we can day by day to drive profit growth and EBITA development in our businesses. For us, cash flow is like a religion.
We are thinking about cash flow in everything we do, whether it being about writing an agreement with a customer or a supplier, about how we run our companies with inventory levels. Cash flow is critical and will remain critical to be able to get the efficient usage of the cash and continue to grow by acquisitions and organic investments. Speed and simplicity. The risk in a company like ours when we are growing is that we are also growing the bureaucracy, the administration. It gets heavy to work in our system. This we cannot allow. That means we will reduce the bureaucracy.
We will free up time for the management teams to focus on what creates value for their customers, what creates value for the shareholders, and we will have easy processes, good systems, use AI to make sure that we are focusing on the right things. We are now entering into the new era of Relais Group. We are entering into the era of shareholder return. We have been delivering an impressive EBITA growth during the last years. The fuel consumption has been quite stable, right? Coming in at 11.1% in the first quarter of 2026. This is now gonna increase. That's why we have put a financial target on return on capital employed, to balance the growth, making sure that the quality of growth is high. Why do return on capital employed matters?
I think all of you know this, and we talked about the fuel consumption, but it's actually about. We don't wanna grow EBITA for the sake of growing EBITA. That doesn't create shareholder value. It only creates shareholder value if the returns are high enough. First of all, the returns has to be above the cost of capital for the group. The bigger the delta between cost of capital and return on capital employed is, the more value we will create for our shareholders. This will be done through focus on organic profit growth in our companies, focusing on allocating capital right, focusing on finding the right acquisition opportunities that have attractive parameters. There are also some things that we will do more and some things we might do less.
What we're reinforcing in the group is the clear EBITA growth and return on operating net working capital targets at each group company. All our local MDs today have a target on EBITA growth and return on operating net working capital on their KPI card on the top. When we are talking with the companies monthly, following up the performance, we focus on EBITA growth and return on operating net working capital. Once if we have any deviations, we like to have deviations where we are doing better than our targets, but should we have any situation where we are not reaching our target, we are quick on taking actions. The business area heads are very close to the companies, taking the actions required to get back on track.
We have also clarified that organic growth is essential for us to deliver the best possible returns. We have gone through what should the responsibilities be on the group, what should sit in the BA, what should sit in the companies, making sure that it's clear who is responsible for what. For me, it's clear that the group are responsible for acting as a catalyst and an enabler for the local management teams to create value. I talked about the M&A, we have a strong M&A process, we have Sebastian, who is working on M&A at the group level. We have had a lot of, you know, processes coming into us from banks and people that are, you know, working with selling companies.
For us to reach to the right return levels, for us to really get the benefit of being, you know, present in the vehicle aftermarket, knowing what's going on, knowing the great companies, we have to use that advantage to increase the flow from, you know, bottom up about acquisition opportunities. This we are now introducing in each business areas to make sure that we get enough opportunities, that we are identifying the companies earlier than a private equity would be able to do because we are in the business. We have built relationships. When they are ready to sell, we are the preferred home. That leads me to the next page. We understand that we have to be a good place for entrepreneurs to come. If they join us, they will join a group of niche leaders.
You know, if you're a good football player, I'm sure you wanna play with Real Madrid or Barcelona or Manchester United. If you're a good company and entrepreneur in the vehicle aftermarket, you wanna come to Relais because then you will play with the stars. They get the freedom to continue running their business in the way they have done it before. We are promising a simple and pragmatic way of working. Even though we are listed, it shouldn't burden the companies to lose focus on the value creation. They keep the local brand or the culture that has been creating the value before acquisition. We are very active in our ownership, we work closely with the management teams. We put the right boards in place. We have MD days next week.
We have a MD day where we collect, gather all our MDs across the group. We are making sure that we give the companies the best possible conditions to succeed and reach their full potential. We only ask for one thing from our companies. Please continue the profitable growth that you have been doing so far, and please be careful with the capital that you deploy. We have been working a lot in the Nordics up to today. We have been acquiring many great companies across the Nordics in the three business areas. Last year, we did the first acquisition outside of kind of the Nordics and Baltics in Benelux with Matro Group.
If you look at the size of the market outside of, you know, the Nordics, we've taken Finland here as the kind of zero place and/or the baseline, then looked into the other markets across Europe, how big are they? As you see, we have huge markets across Europe. For us, going to another geography for the sake of doing it doesn't make sense, doesn't create any value. Like Matro Group, we are open for opportunities when we identify a company in a certain market We are ready to do the acquisition if the fit is right, and if we feel that we are the right owner, and it can add value to our ecosystem and to the group. Our financial targets released this morning. We are continuing on our, you know, strong EBITA growth.
We now put a target of double-digit EBITA growth rate. We are gonna focus as well on the returns to make sure that the EBITA that we are delivering and growing with are of good quality. We put 13% as the first target to reach. With regards to the dividend policy, we say that 30% of fully diluted EPS is our dividend policy. During the coming years, we will work, you know, a bit parallel in these steps, but it is about building the foundation, building a strong floor, a strong foundation for the further growth of the group. It is about improving quality of growth, improving quality of earnings by improving the return components, it's about scaling the model with a solid base with, you know, the processes and culture in place. The sky is the limit.
Finally, if you are investing in Relais Group, you get allocation to a decentralized platform of local niche leaders. We are operating in an attractive market. It's fragmented. It has a resilient demand. We are working with a proven model for value creation. We are fine-tuning it now to make sure that we get even more returns out of our growth model, and that is the next phase, the era of shareholder return. Thank you.
Yes. Thank you, Christian.
Yeah.
Thanks for the introduction to Relais the strategy and investment case. We will see you back on stage for closing remarks and the Q&A. Thanks for this point. Now we are moving on to our first business area presentation. Please welcome Juan Garcia, who will speak about Technical Wholesale. Juan, the floor is yours.
Good afternoon, all of you. I have been in the automotive industry for more than 30 years. Over the years, I have had several CEO positions, and today I'm proud to be responsible for our great Business Area Technical Wholesale, which I would like to shortly present for you today. We are a group of 15 specialized companies focused on the automotive aftermarket, serving both commercial vehicles and passenger cars. Across the group, we have strong industry expertise and service customers throughout the value chain, from vehicle customization, workshop equipment, to spare parts and accessories. Just to give you a few examples of the companies in the group, we have a company called Awimex, which are specialized in fleet customization for applications such as service vans and airport vehicles.
Another example of our companies is Huzells Tunga Delar, HTD, which focuses on spare parts for trucks, trailers, and buses, segments where uptime is absolutely critical. In businesses like ours, data is becoming increasingly important. We have therefore started to combine large amount of proprietary data with AI-based tools to support smarter decision-making and create even stronger customer offerings. Several of the founders of the acquired companies are still active in the businesses today, and we are a trusted long-term home for entrepreneur-led companies. This makes us stable and predictable, as well as a cash generating in the whole group. Our running 12 months net sales is around EUR 216 million, and the EBITA percentage is almost 11%. However, our aim is still to increase the EBITA percentage.
We operate mainly within automotive aftermarket with a focus on on-road vehicles. As long as goods and people needs to move, we believe the market will remain stable with limited seasonal fluctuations. Vehicles are becoming more and more advanced, both technically and digitally, which favor our specialized companies like our companies with deep expertise in their own respective niches. At the same time, the demand for uptime and operational reliability continues to grow. Our offering is evolving beyond products alone to include co-developed technical solutions tailored for our customer needs. I do get a lot of questions regarding EVs, electrical vehicles, my answer is that electrification creates new opportunities for us. We follow and adapt to the development.
At the same time, we can also see a growing interest in alternative drivelines such as hydrogen, and we will continue to prepare for future technologies and changing customer needs. The vehicle fleet changes slowly, and the average today is more than 10 years of the vehicles. Electrification has also progressed further in passenger cars compared to commercial vehicles, while city buses are currently leading the transition very much due to the predictable pattern. We see electrification and new vehicles as an opportunity. Many companies' components, and systems are becoming more advanced, more expensive, and subject to higher wear due to higher weight from the batteries. This increases the importance of technical competence, service, and special solutions, and these are areas where we are well-positioned. Our strategic priorities are centered around disciplined, profitable growth and long-term value creation.
We see significant potential to further improve profitability through operational excellence by sharing best practice, utilizing our combined purchasing power, and our deep technical competencies that we have in the companies. We will continue to grow organically by expanded assortments. However, for all new expansions will be evaluated by a kind of RONWC KPI to ensure that the capital is allocated in the most value-creating way. Finally, we will continue to pursue selective acquisitions of companies with strong local or niche market positions where it is a clear strategic and operational fit for us. To summarize, we see a clear path to continue EBITA growth and improved capital efficiency through category expansion, private brands, which is very interesting, operational excellence, and stricter working capital discipline. We believe there is a significant potential to further strengthen both profitability and returns.
Combined with our strong market position, technical expertise, and decentralized entrepreneurial culture, we are well-positioned to continue creating long-term values. Thank you so much for showing interest in the Business Area Technical Wholesale.
Thank you, Juan. Next, we will continue with another business area presentation. At this point, I would like to welcome Jan Popov, who will present Commercial Vehicle Services. Jan, please.
Good afternoon, and also warm welcome on my behalf. I joined Raskone in 2018, and following the acquisition by Relais, I have had the opportunity to help build and develop Commercial Vehicle Services platform across the Nordics. Today, I want to give you a better understanding on the attractiveness of our market as well as our market positioning. At the core, our business is not about spare parts, workshops, or maintenance hours. We are selling uptime. Our customers operate mission-critical assets, trucks, trailers, buses, vans, and industrial equipment that generate revenue only when they are moving and operating safely. Road transportation is the backbone of a well-functioning country. Every hour of downtime has a real economic cost for our clients. Missed deliveries, idle drivers, utilization losses, and contractual penalties.
That's why our value precision is much broader than just repair and maintenance. We help customers maximize availability, improve safety, and reduce total life cycle cost. What makes this attractive is that these needs are non-cyclical and operationally critical. Fleets still need maintenance regardless of the economic environment because vehicles must stay compliant, safe, and operational at all times. Importantly, customers increasingly prefer partners who can support their support multiple brands and different kind of vehicles across broad geographic footprint. Scale, network coverage, and technical capability matter more every year. That positions us well in a fragmented market where reliability and responsiveness are becoming key competitive differentiators. As I said, scale and coverage matter increasingly in the market. Today, we operate across three Nordic countries. We have over 60 service locations, and we have approximately 1,100 employees.
Our network is supported by strong OEM authorizations across key and truck and trailer brands, which is strategically important in the serving large professional fleets. Our customers wanting increasingly reliable service partners that can support them consistently across different regions, vehicle brands and equipment types. This is where our platform stands out. Importantly, our independent multi-brand model reflects the reality of our customer needs. Most operators run mixed fleets, they increasingly value partners who can support all major brand and different kind of vehicles through one relationship and one network. The market itself also remains fragmented, which creates attractive opportunities for scale operators with strong technical capability and broad service coverage. Our scale creates clear operational advantages, stronger purchasing power, better technician specialization, improved workshop utilization, and faster response time for our customers.
Now, as our platform grows, these advantages become increasingly difficult to replicate. At the same time, the long-term market fundamentals remain attractive. Commercial vehicles and transport equipment require ongoing maintenance regardless of the economic cycles and uptime requirements continue to increase as fleets become more professional and technically advanced. Therefore, we believe that our combination of scale, multi-brand capability, technical expertise and geographic coverage positions us well for the continued long-term growth. What we are demonstrating here is the earnings profile of a scalable service platform. During Q1 2026, we delivered strong net sales growth while simultaneously improving our profitability. Now the growth in sales has been supported by a combination of the acquisitions we made last year, but also healthy underlying organic development across our platforms.
Importantly, this growth is supported by natural structural demand drivers rather than just short-term market timing. As said, commercial vehicles require ongoing maintenance regardless of the economic cycles and fleet operators increasingly outsource service needs to capable network partners. At the same time, our scale is improving our operational efficiency. As volumes increase across our network, we benefit from better mechanic utilization, procurement synergies, technical specialization, as well as broader customer mix, and this creates operating leverage in our business. We also continue to see opportunities from consolidation in the still fragmented market, where scale and multi-brand capability are becoming increasingly valuable. The key message here is that our growth and profitability are reinforcing each other. One of the most attractive characteristic of this business is the quality of earnings and cash flow generation.
The workshop model naturally supports strong cash conversion. Billing cycles are short, working capital requirements are low, and reinvestment needs are relatively moderate compared to many other industrial businesses. Also, inventory requirements are limited considering the scale of our operations, which of course support our capital efficiency. In addition, the underlying demand profile remains extremely resilient. Many of the end markets we serve, such as logistics, public transportation, waste management or emergency services, are essential functions of a society that continue operating across different economic cycles. Combined with our diversified customer base, this creates business profile with relatively stable demand and good visibility. When we think about the long-term characteristics of our platform, we see resilient earnings, strong cash generation and attractive returns on capital.
Raskone is our Finnish platform in the Commercial Vehicle Services, and case Raskone is important for us because this clearly demonstrates our ability to execute operational improvement over time. The operation EBITA in eight-year period improved from approximately - EUR 0.3 million to around EUR 5.5 million. Most importantly, this is not only an earnings improvement story. It's the story about the people and the change in the company's culture. During this period, we significantly improved cash conversion, returns from capital, working capital efficiency, and currently we are operating Raskone with negative net working capital, personnel satisfaction and most importantly, of course, customer satisfaction.
But the key point is here that the improvements made, they were driven by operational levers and discipline that are repeatable across the group in different countries and different companies. Raskone has built very strong operational culture, which is focused on workshop excellence, customer service, technician productivity, and utilization management. Based on our learnings in Raskone, we have developed a workshop excellence framework with more than 100 concrete operational best practices that we can implement systematically across our platform. In Raskone, this translated into higher customer satisfaction, stronger customer relationships, improved workshop utilization, expanded technical capability, and ultimately, significantly improved profitability. It's good to bear in mind that our strategy is not based on turnaround situations, but on partnering with strong businesses and helping them to improve further by operational excellence, customer focus and scale.
We help these companies go from good to great. Now we see similar opportunities across several markets where operational maturity and profitability are still at their earlier stages. We see a case Raskone not just as a one-off success story, but as an evidence that our operating model can be replicated across the countries over time. Going forward, our focus is primarily on three value creation levers. First, operational excellence. We continue to see significant opportunities in improving workshop utilization, our technician productivity, service quality, and overall operational efficiency. Now, as demonstrated in the last or previous slide, relatively small improvements when done consistently in utilization and operating discipline can have a meaningful impact on the overall profitability. Second, deepening customer relationships. Both large fleet operations and smaller entrepreneurs increasingly value reliability, coverage, and multi-brand capability.
By expanding our service quality, service offerings, and geographic coverage, we can increase customer stickiness and grow our share of the aftermarket spending. Third, selective consolidation. The Nordic commercial vehicle aftermarket still remains fragmented, and we believe scale advantages are becoming increasingly important. Our focus is discipline and value creative M&A, where we can apply our operational capabilities and strengthen the broader platform we have. Taken together, these initiatives support continued profitable growth and long-term value creation. Looking ahead, we see a clear path for continued earnings and return improvement. The foundation is already in place. We have a scaled Nordic platform, strong market positions, and resilient underlying demand. From here on, the value creation is driven by three primary factors. First, continued operational efficiency improvements and higher utilization across our network.
Second, increasing our scale benefits and synergies as we continue to build the best platform. Third, disciplined consolidation in a fragmented market where we can apply our operating model effectively. Now, combined with the capital -light characteristic of our business, strong cash conversion, we believe that this creates an attractive framework for long-term EBITA growth and improved returns on capital. Ultimately, our ambition is to continue building the leading independent commercial vehicle aftermarket platform, and we believe that this positions us well to continue compounding earnings, cash flow, and shareholder value over the long term. Thank you.
Thank you, Jan. Before we move on, a quick reminder to those of you following us online, please feel free to continue to send in your questions, and we will get to them shortly. Before that, we still have three presentations to go. We will now move on to the next business area presentation, and I would like to welcome Johan Carlos on stage, who will talk about Products and Solutions. Johan, the floor is yours.
That's good. A good start, yeah? You're pumped. This is not, you have to do this as well. I want to start this slightly differently. I believe that many viewers here, we have many today, and you here, are thinking that our business is something kind of practical. Lights, bars, sun visors, work lights and accessories. Today, I want to show you something else. I want to show you why this can be one of the most interesting area in the whole Relais Group. I would guess that many of you viewers or you in here do not drive a truck as a daily business or work with your vehicle on a daily base. That's exactly why it's so easy for you to miss what is happening in the market.
Because what may look as a simple product on the surface has something much stronger underneath. There is a shift in the market. That is the foundation of Products and Solutions. Let me start with the main thesis of today. I see a market where function meets identity, where products that people need in their work also can become products that they love, that they choose, and feel proud of. That is the foundation of this business area. We are not just building more and more products. We are building premium brands that users and professional customers actively seek out. My main thesis is, we take products that people need in their daily work, we build them into products that people want to have.
That is what we have done with Strands Lighting Division. That is the playbook we now gonna use more broadly across our business area. What makes our area strong is the combination of two forces that rarely exist together. Number one, the product solves real needs. You need work to have light to work. You need bars for protection, mounting, and function. You will need accessories that makes your vehicle better, safer, and more useful. Secondly, the same products that carry identity, design, image, and pride. The feeling that the vehicle becomes more personal, more professional, and more you. This has already happened in many other categories. Nike went from sports equipment to identity. Here in Finland, everyone knows what happened when phone went from a functional tool to a personal product and an ecosystem.
Apple captured the user's heart, not only the technology. The same type of shift is now entering our world. These are not only need to have products. We also turn them into want to have products, and then that is why this category is much more interesting than it looks on the surface. It has the stability of functional-based products, but the potential of classic brand-driven items. The old market has treated these products like classic article numbers. I believe that is a fundamental mistake. The new market will be won by the brands that users actively choose. The future does not automatically belong to the biggest one. It belongs to the fastest one, the most relevant, and those who dare to challenge old truth. This is not just a theory. Strands Lighting Division is the living proof of this. This model has a fantastic potential.
We have taken Strands Lighting Division from a sales of EUR 0.6 million to a sales of over EUR 30 million in less than a decade. We have gone from one market to 50 countries. We have done it organically with our own products and with strong profitability. This is not a coincidence. It's a result of a clear playbook, products, brand, user focus, speed, and execution. For me, this did not start as a strategy plan. It started in the warehouse. About 15 years ago, I walked into Strands as an 18-year-old kid. I was supposed to work there for a few days, but I immediately felt there was something in the air, something in the culture, something in the energy that I wanted to be a part of.
I got the chance to go out on the road and meet the real ambassadors of our market, the haulers, the drivers, the installers, and the people who not just use the product, use the vehicle, they are living through the vehicles. That was the point where I understand something that has changed my whole career and it was a game changer in my life. Light is not just about lumen, watts, or the cables. It is about how the vehicle is experienced, how it looks, how it works, and how it makes the user feel. That was the gap in the market, and we decided to take that and build something different. For me, a strong brand starts with the culture, with the people, and the passion, and a clear vision for the product. Brand building do not start in Excel.
It starts with conviction, product, and user insight. When it's done right, it will show up in your Excels, KPIs, and P&Ls. The most important thing is product, product. You can talk as much as you like about strategy, but in the end, the product speaks for itself. If the product doesn't give you or create real functional value, trust, or desire, there are no real foundation to build upon. Strands grew because we early realized that we could not compete just selling a product. We had to sell the concept. We were not just selling products longer.
We were building a brand, a sense of belonging, and we put a new standard of quality in our niche. We built a concept that gave the user better products, more freedom of choice, and a stronger feeling for the vehicle, while we also gave the reseller a real brand that drive demand. Our motto is feel the passion for every driver every day. That is not just a slogan. That's our filter on how we build products, brand, and customer experience. This brings us to our business model. It's very important to me to be clear. This is just not a story about passion. This is a business model. When we build premium products and brands, we gain greater control over quality, positioning, pricing, and long-term value. That's what make this really interesting is that if the user actively choose a brand, we become less interchangeable.
If we become less interchangeable, we gain stronger pricing power, If we have stronger pricing power combined with discipline in cost and capital, we can create both growth and profitability at the same time. That is why I see the Business Area Products and Solutions as more than a group of companies. I see it as a platform from where we can accelerate companies, brands, and people. We operated in a niche where users care so much more than the market historically have understood. This is also where the case become interesting as investment. We have strong functional demand, very important, strong functional demand. We have strong brand potential, We have a model that can create international profitable growth. Preferences creates pricing power. Pricing power together with cost control and capital discipline creates what? Margin ROCE, That is where passion becomes shareholder value.
Where do we play and how do we win this? Our play field is very clear. We are not building a scattered portfolio. We are not chasing everything. We will own and develop companies with great brands for vehicle and users in categories where products has real functional need and emotional potential. When a product is functionally needed, creates pride, identity, and desire, you can build more than sales. You can build loyalty. You can build pricing power, and you can build a strong brand. That is why we are focusing on accessories, components, software, and services in the aftermarket area where we can get really close to the customers and the users. Just as important as where we play is how we win this. We will develop and scale our existing companies.
We will acquire complementary premium brands. We will expand internationally through strong distributors. We will stay disciplined at all times. For me, passion, economics, and best is just not three nice words on a slide. It's a decision system. Passion means that we must understand the user better than everybody else, not only the customer in the chain, but the person behind the vehicle. What does that person need? What does that person want to express? Why do they actively choose us? Economics means that our passion must never become our hobby. We build strong brands. We will do it with gross margin, cost control, capital discipline, and a clear responsibility for the result. Best means that we will never accept good enough.
We must have the ambition to create the most innovative and most attractive products in our niche, not the biggest everywhere, but the best where it matters. When those three meet, we have something powerful: products that users care about, a business model that works, and a culture that do not accept mediocracy. Strands, Qpax, Nedking are all different categories, but they share the same foundation: design, identity, and premium execution. With this logic, the strategy going forward is very simple. Our strategic priorities are fundamentally based on four things. First, building brands and selling concepts, not just products. That's the difference between being interchangeable or being chosen. Second, selective M&A. We look for the hidden gems with the unique DNA, a strong niche, entrepreneurial passion, and a loyal user base, and the potential to scale internationally with our playbook.
Third, to be international. Strands has shown that it's possible to take a strong local niche to become global. We will use our knowledge and spread it across the area. Four, the most important thing, people. These type of companies are not built by bureaucracy. It's built by entrepreneurs, product people, salesperson, and teams that generally care and live the brand. I strongly believe in decentralization. We do not want to buy away the entrepreneurial spirit and power. We want to amplify it. Decentralization does not mean lack of clarity. It means that entrepreneurial power is close to the market with common direction, common principle, and clear responsibilities for value creation. For you, very important, how does this become shareholder value? If I was boil it down to value creation, it comes down to three levers. Innovation and product creation, that is the engine.
We will create products that makes us the first choice for passionate users and professional customers. Scalable brand power, we will take proven concepts out to many more markets, without killing the DNA. That's super important. You must not industrialize away the DNA of a strong brand. Premium margins and ROCE. We will grow with discipline. Growth without profitability is just action. Profitability without growth is not enough. We will do both. What I want you to take with you is that our market is much more interesting than it first appear. On the surface, it might look like easy products, light bars and accessories, but underneath the surface, there's a category where function, design, user identity, and brand power meet. That is where we have built Strands Lighting Division.
That is where we see the opportunity in Qpax and Nedking, there is where we believe that the future winners will be created. We are not just building products for vehicles. We are building brands for people who use the vehicle to work, create, live, and express themselves. In a market that still thinks commodity, we see enormous opportunity to build strong brands and companies and create long-term shareholder value. If you're only gonna take one thing with you today, take this. We take necessary products and build them into brands that people want. That is where function meets identity. That is where passion become demand. That is where demand become pricing power, that is where pricing power, discipline, and execution become shareholder value. Thank you.
Thank you, Johan. I am sure we have all felt that passion. Now, without not less passion about this, we are turning into the financial review. Please welcome Thomas Ekström, who will now present Relais' financials. Thomas, please go ahead.
Thank you. I will show you now the kind of key financials and key financial characteristics of Relais Group. First slide here is to show, and it is an evidence sort of you had profitable growth and strong cash flow for a long time. The Q1 report, the Q1 financials shows, as Christian also already mentioned, that we had really strong net sales growth. We had really strong EBITDA growth, and we also had a fourfold increase in cash flow from operations. These kind of levers behind this is acquired growth and acquired businesses. We had organic growth, which then comes from both increased sales, but also improved operational excellence that we have stressed a lot here in these earlier sessions.
This is really a testimony that we are on the right track and will even improve in the coming years. What is also important is that we have a really healthy financial position. Our equity ratio is almost 37%, and our leverage, which means net debt to LTM EBITDA, is 3.5x, and this even after a series of strong and big acquisitions in 2025. If you take in the pro forma figures for the acquired businesses, this leverage number is slightly lower than now reported here. We have grown into a big corporation. We have total assets of more than EUR 500 million. Really kind of a healthy financial position to build on. I said we have delivered profitable long-term growth.
If you look at the 2019 figures, we had net sales of EUR 100 million. Now we are going way above EUR 400 million in 2026. Also EBITA was EUR 13 million back then, and now we actually have a pro forma run rate of about EUR 45 million, as said, in connection with the Q4 report earlier this year. Really good delivered profitable growth. Coming to net working capital, which has been mentioned many times here today, it's really a strategic asset for us. It's kind of a really, especially in Technical Wholesale business area, it's a balancing act between availability, have something to sell, but also capital efficiency.
As capital efficiency is really important for us to free up as much capital for acquisitions and also to improve the business. As we know, we have now about 31 companies in the group. It's really important that we have a benchmarking platform to compare these companies between each other, and this will also drive increased capital efficiency, which we now have a big focus on, as indicated in Christian's speech earlier today. Going to cash flow, as said, we have produced really strong cash flow. Here it's really important that we have a steady, good, profitable growth. We have a predictable maintenance CapEx. Then we have really a controlled net working capital fostering.
As said, we think that we have a lot to do still on the net working capital side, really kind of good, important cash flow here. Looking at us, this picture pretty much characterizes who we are as a business. We prepare the acquisitions many years. They take many years to foster and to land, when the acquisitions merge, mature, we happen to do many acquisitions at the same time as we did also in 2025, that of course pushes the leverage higher temporarily. You see from this chart that we have been able to then de-lever and free up lowered leverage over the years prepare for the next kind of bigger acquisitions.
This is really a key takeaway also characterizing us as a business. I think that's it, shortly.
Thank you, Thomas, for walking us through the financials.
Thank you.
Now to conclude the presentation section for today, I would like to invite Christian back on stage for the closing remarks, and by after that, we will get to the Q&A session. Welcome, Christian.
Thank you very much to the business area heads and to Thomas for their presentations. It becomes quite obvious when you listen to the business area heads that they have been through development journeys with the for companies within their respective field and delivered impressive value in their respective companies. That makes me comfortable that the companies that we have acquired and are gonna acquire in the future in these business areas are gonna be taken care of and are gonna reach their full potentials. I think that's what is unique with Relais Group. You know, talking about us as an investment, we are having the characteristics that you see from a serial acquirer, there are several of them, and the ability to create value has been proven over and over again.
What they don't have and what we have is Johan, Jan, Juan, our companies, our expertise in the area where we are operating. We are the best suited to identify the best companies to acquire. After the acquisition, no one can beat us on the value creation of the companies that we have acquired. This combination, I think, is a real strength for Relais Group, and that is basically the investment thesis that I would like to share with you today. We have been creating substantial shareholder value up until today. We have outperformed OMX Helsinki 25 by some 1.3 x since the IPO, and if you put in EUR 1 in the IPO back in 2019, I think it was, you have EUR 2.36 today. We have introduced new financial targets.
In essence, it means we will continue on the strong EBITA growth, but we will only do that when we are certain that the quality of the EBITA that we are creating is good, that we get the right returns from the capital we deploy into our company. The dividend policy has been presented 30% of diluted earnings per share. The final slide, I hope it has become clear for all of you joining us today that we have a clear direction. We have a clear accountability throughout the group, and we have a clear performance, and we will continue growing. With that, it's time for Q&A, and for this session, I would like to welcome up on stage the business area heads, Thomas and Sebastian.
We hope that you have submitted your questions online and you in audience have your questions ready to deliver to us live here in the studio. Welcome.
Thank you.
Good. Thank you, Christian, and thank you everyone for the presentations today. We have already received a whole lot of questions, and we will of course try to cover as many of those as possible. I'm pretty sure that we will still need to leave some for the next time. Again, I remind you that if you have questions here in the room, please raise your hand and we will bring you a microphone so that everyone online will also hear the questions. Let's start with a few questions here in the room. If we can get the mic here, to the front row first, and then we will move on to the questions online.
Hello. Thank you for the presentation, everyone. If I start with the more generic questions regarding your financial targets, and then I'll save some questions for the business leaders, later. Yeah, my name is Pia Rosqvist-Heinsalmi. I represent DNB Carnegie. I start by asking about your double-digit EBITDA growth ambition. Can you specify how much of this growth would come from organic improvements and how much is driven by M&A?
Thank you, Pia. Organic growth will be essential for us in the coming years. After the acquisitions, we need to ensure that the companies are continue growing, and that is essential to be able to get the return on capital employed to increase. Organic growth, very important. We will fuel that by acquisitions. How much will come from organic growth and how much from acquisitions will vary over time, but both of them are required and will be in focus for the next strategy period.
Thank you. Regarding your, maybe geographical, focus, you didn't specifically mention your ambition now during the next three years. Is your ambition to strengthen your presence also outside of the Nordics? How do you view this?
My ambition and the management team's ambition are to deliver on the financial targets and create a strong shareholder value. We will continue to do that in the Nordics. If the right opportunities arise for our shareholders where we can create a lot of value in other countries outside of the existing ones, we will go there. We won't go there for the sake of expanding geographically. I don't know if that was the answer, but first of all, it's about creating shareholder value, and we will navigate in the different markets depending on what opportunities comes up.
Thank you. If I still can continue with a few questions. You have now set an ambition regarding EBITA growth, but how would you describe the sustainable profitability level for Relais in its current form and business split? Do you have some kind of an EBITA margin ambition which you think is sustainable?
Yes, I have one, and the business areas have, that we're not gonna share with you today. Let me put it like this. When we do benchmarking across our business areas, we see quite wide range of, you know, the similar type of companies operating in a similar market, same conditions, where one is clearly above the other one in the margin. That for me signals opportunity. That's the potential to bring and raise the bar overall for all the companies to get them to the Raskone level when it comes to Jan, to get them to Strands level, you know. We have an opportunity to increase the overall margin, and we will do that by, you know, improving the whole kind of group, reaching to the best practices.
If I saw correctly, I think was there a raised hand also in the back? Pia, would it be okay if we take one question from there and then come back?
Hi. Stefan Knutsson from Redeye here. Thank you for the presentations. I want to talk a little bit about acquisition targets. And you do have some internal recruits, so maybe we will have good answers. How does the typical acquisition target look like? Why do they want to sell? And also, what is usually the first action you take after an acquisition is done?
To open up here, maybe Sebastian, would you like to, because Sebastian is our Head of M&A, would you like to elaborate a bit on this?
Yeah, I think we see some specific characteristics of acquisition targets. We have situations where you have an entrepreneur who has built his company or her company to some specific level, and then they feel that, hey, now I need support to take it to the next level. We of course have experienced people in the group. We have the benchmarking. We have the tools. We have the kind of experience to help them do that. The other one, of course, is, you know, you have built a company for your whole life and you are nearing retirement and you are worried about what happens to my employees, what happens to my customers, and then they try to find a good home for the company, and that is also work what we can do.
Was there a second part to the question?
Yeah. What is usually the first action you do post-acquisition?
Post-acquisition, we have a kind of Relais onboarding initiative 100. We have a 100-day onboarding initiative in order to get the company up and running in the processes, reporting and stuff.
We have, of course, in every situation, every acquisition we have a value creation plan, which we start to roll out immediately. In some parts of the value creation plan, you know, you can do it overnight. Some part take months or even over a year, to get the full effect out. We do have a plan in every single case.
Also to follow up, you have done some sizable acquisitions, mainly in Commercial Vehicle Services of late. How does the growth runway look like in the Nordics for that type of the business?
Jan, would you like to take that?
Yeah, sure. Well, as Christian just told there, I mean, we see still a clear possibility for improvement in the profitability and in also improving the working capital we have in the company so that we can also get all the platforms to the level that Raskone currently is sitting at. We acquired from Norway Team Verksted last year. I mean, so far we have a clear plan what we are trying to achieve with the team there, and so far we have been very happy with their progress. I mean, they are going according to the plan we have.
Very good.
Also the consolidation in the market, I mean, in all three Nordic countries we still see possibilities for the consolidation.
Very good. One last from me for Johan. You, really nice story on Strands. How many product categories outside of lighting do you see similar potentially?
I would say the potential is very big. If you see the market, you know, you just need to identify where we have a functional product that can be turned in as well to want to have item. As I had an example of the phones went into from functional to a personal item. We have lighting, we have accessories, we have car, you know, there is a broad spectra. Everything that is used on car on a daily basis, or trucks, we can turn in if it's the right mix. It's mostly about the person and the brand behind it to see that they have the potential, or if we can use our playbook to scale it or build a brand from already a big platform of products.
Thank you.
If I then take couple of questions from online, or Christian, did you want to-
Please.
Yeah. I saw a hand here, so if we can move the mic back to the front again. A couple of questions from online. When will we see focus on EPS?
I mean, we don't have EPS as a financial target, if we deliver and when we deliver on our financial targets of EBITA growth and return on capital employed improvements, it will trickle down to an EPS increase. Even though we don't have it as a target, it will benefit from the focus that we are now putting in.
Another one, is there a risk that you will run out of acquisition targets in the Nordics? Are you forced to look into new countries?
No. It's not a risk. By the way, we are not forced. We like other geographies as well. We will continue acquire companies in the Nordics. There are many left to be looked at and identified and acquired. We will look in the broader European arena as well.
Maybe one last question from online at this point. You did not speak about your general principles of financing acquisitions. Do you always prefer to use cash and new debt instead of your own shares?
We have a toolbox, and we will use the means of fund that is best fitting for our shareholders to create shareholder value. It can be by paying by cash and using debt. It can be by using our own shares to get the entrepreneurs on board on the ownership side, so to say, and be joining us in the value creation journey. It will be case by case.
Thanks. Did we already get the mic to the front? Thank you.
Yeah, thanks, Joni Sandvall from Nordea. Maybe starting first maybe to Christian, following the, let's say, acquisition spree last year, you were speaking more about synergy benefits at that time. Any update on that front?
About synergies, we don't work with, you know, forcing our companies to cooperate or buy from each other or, you know, but we do that on a win-win basis between the companies we have in the group. Synergies is also learning, that you can learn from each other in the group. We can learn from how Raskone are doing things and take that to Norway, to Team Verksted. We are getting a lot of, you know, soft synergies if you want out of the acquisitions that we have done. We are progressing according to the plan that we have had, and we believe that together our companies become stronger.
Okay, thanks. Maybe on the M&A, Relais has been expanding during the past years. Where is the current focus in M&A? Is it fully driven by ROCE or do you have any more color on what is the current focus area to grow in?
I mean, simple said, and Sebastian was interview, we're looking for the diamonds, right? The business area heads are now developing, you know, pipeline of the leading companies, that they wanna acquire and that they would like to attract to our group. We do this across the Nordics, we also do this in several other countries within Europe as we speak. We wanna have the top players. I think Johan talked about that. They wanna play with us in Champions League. Yeah. Was that a good answer for-
Yeah.
Yeah.
Yeah, thanks. Maybe then a question also to Johan. Not to let you out of lease yet. You were speaking about, you know, expanding product categories or to adjacent categories. How will this place with the target to reduce the working capital? What categories you are, let's say, under presented currently?
The goal is not to reduce the working capital itself. It comes together with the profitability of the products that we sell. When we see a product line that we on one side see a market demand for, it could be on the electrical side, diagnostic systems, et cetera, and we can see that the profitability aligns with the inventory value for it, then it makes sense. Of course, the market demand has to be there as well.
Okay, thanks. I give floor for others.
Hi. Mika Karppinen from Danske Bank. Concerning the service capital reallocation, for how big part of your current capital employed you are looking for new home, so better returns? Is there some areas where you have really sizable problems compared to average in this capital employed area? Are you planning to use a part of that reallocated capital to pay back debt? What kind of firepower you have left for M&A?
Thank you. We have put targets in the business areas on each company on what are the returns that we are expecting from each of our companies. We have to deep dive and double-click to see how is this spread across the assortment and the categories that we have in the companies. Startax is an example where that we announced in the Q1 report that where we are now freeing up the cash, reducing the assortment because we have seen that the expansion did not pay off in the return that we wanted to have. Now it's kind of back to excellence and back to the core assortment that we know is valued by the customers and where we get a good enough return.
I don't have an exact amount, but it's, it is, where we don't reach our thresholds, simply. We are doing screenings in all our companies about, where do we have the capital and where does it bring enough value. It, I think the capital review that we free up should be used in organic growth initiatives. That should probably be priority one. Priority two would be, you know, acquisitions. Then, of course, we have to make sure that we are, you know, having a balance of distribution to shareholders and reinvestments in our kind of growth engine, if you want. I guess there our new dividend policy will kind of help us, get the right levels.
M&A firepower.
M&A, sorry. Pipeline?
M&A firepower.
Firepower. After the acquisitions in 2025, of course, the debt level has increased. This doesn't impact the ambition that we have, but it can impact the pace of our acquisitions. We are continuing to look at acquisitions. We have a strong pipeline. We have ongoing dialogues. Whether they, you know, materialize this year or next year, let's see. We are not actively looking for the larger acquisitions at this moment, but they might come anyway, and then we have to decide should we execute or not, right? We have dry powder if the right opportunities are there.
Let's again take a few questions from here. I promise you we will get back to your questions. You currently have an adjusted EBITA margin of 11% in Technical Wholesale. Are you satisfied with this level or is it possible to improve?
Yes. We are partly satisfied. We still believe there is room for improvement. We are doing a lot of activities to make that happen. I wouldn't be surprised if we can see a nice increase in the near future.
Again, for the business areas maybe more, you talked about the improvement playbook in Commercial Vehicle Services with over 100 concrete measure. Can you give examples of the most important ones? Can you also give some color on the lower margin compared to other business areas?
Without giving away any secrets to our competitors, of course.
Yeah. Well, then probably not. But no. Customer service and operational capabilities sits at the core of our operational excellence playbook. We are in the business of selling uptime. If we do our job right, meaning that we get our customers' vehicles quickly back on the road, which means that they are enabled to earn money. If we do that job right, I mean, they place their trust on us, which means that they trust their fleet on our hands, which ultimately drives better utilization. Better utilization then, of course, it drives better margins. Actually the logic is quite simple. Great service, happy customers, better utilization, and better margins. Ultimately all the measures we take, ultimately service that purpose. There was another question.
Let me check. I was too quick.
Maybe the margins on the business area.
Yeah.
That's true. We have been very transparent about that Commercial Vehicle Services structurally have lower profitability than other business areas, but it's not the right lens to look at this. In addition to the EBITA percentage, we can drive the business with very low net working capital. Also, this business area converts earnings to cash very effectively. We believe that creates this, you know, business area that creates value and has great returns. We run this business not for, we run this business for cash flow, and returns on capital, not just the headline EBITA percentage.
Maybe to add on that, of course, Jan has his playbook for the workshops. Johan has his playbook for the business area he is driving, right? Juan has his playbook. Of course, we have the playbook on how to, you know, help the companies reach their full potential in each of our business areas. As well, you can call it the playbook, the overall playbook, and the culture about being decentralized and disciplined, which is, you know, the framing everything. That is just I want to make that clear.
Maybe I'll take one more here, 'cause it probably goes to same direction. How does electrification impact Commercial Vehicle Services?
Transition to electrification, it's real, but gradual. Fleet renewal cycles are long. Infrastructure is still taking its place, or it's building up. Operators are also still figuring out the economics of electric trucks. In the long term, we see also opportunities since electric trucks, I mean, they require more from their premises, they require more from the tools, and they require more from our personnel. This actually raises the bar of entry, and benefits larger players such as us. To sum up, it's gradual, and also creates opportunity for those who are ready, and we intend to be.
If we then come back to questions here in the room. Thank you again. Yes?
Hi. Thank you. It's Pia again. Regarding your targets, still I'm coming back to the mentioning of a business cycle. What is a business cycle for you? I mean, your business is relatively stable and defensive, not that cyclical. What is the business cycle you refer to, and where are we in the business cycle right now?
I guess what we mean with that is that some years will be higher growth, some years will be lower growth, but over a cycle of, you know, to get a average value, so you can put that to five to seven years maybe as a business cycle. Where we are in that now, I mean, at the moment, we have 40%+ growth, so I guess we are in a steep increase in EBITA at the moment, due to the acquisitions that we did last year.
Thank you. A very small nitty-gritty. When I look at your targets, does your target include or exclude non-recurring items when you set this EBITA growth?
I think I would say it's adjusted EBITA, that is, the basis for this target.
All right. Thank you. If I can continue with a few questions still, regarding your balance sheet, you strengthened it with a hybrid bond last year, and I can't recall now when the reset date is. Is it in 2029, or maybe 2029? Looking now at your strategy period, extending into 2028, does this really tie your hand? I mean, you gather capital, but it doesn't leave you much room. I'm coming back to the question on the M&A headroom you have.
Yeah. We believe that we have a very good relationship with our bank. We have a strong shareholder base. We have still dry powder to make acquisitions should we decide to. Also larger ones can be done in the current with the current balance sheet. We are proactively looking into, you know, the future kind of funding needs and how to manage that in the best way. We are comfortable with the situation that we have the right tools, so to say, to continue growing also through acquisitions.
Can I, Christian, can I add to that?
Please.
I'd just like to add that of course, as we have a growth target, some of that is organic growth, and as, you know, profitability improves, that creates headroom for the credit metrics as well. I think keep that in mind. Of course, we generate cash flow during our business.
Thank you and one question still and then I'll move back in the line. I'm thinking about the Commercial Vehicle Services and maintenance business, and you referred to selling uptime. Does this convert into a revenue model? I mean, do you have a profit-sharing agreement with your customer or your customers?
That would be quite unordinary in this business.
Great. Thank you.
Yeah, Joni Sandvall, maybe question to Joh an. Thinking your geographical, you know, footprint, where you see best opportunities in terms of, you know, growing your business?
Where?
Yeah, where.
For me it's kind of clear. We need to move there, where the market is sizable enough, so Germany, U.K., and we have just entered in the Benelux area. I'm not seeing it just as that. I'm seeing it as where do we have the real lever in the company that we acquire, and then we will take them there as well. That's also key important. We can find something in the Nordics that we can bring out to Europe, and then we will have a real strong lever on the organic growth and vice versa. We can take something from Germany and bring it to the Nordics. It's just using the playbook and entering more markets is the key.
Okay, thanks. Final from my side, maybe to you, Jan. Thinking about your utilization ratios, you were speaking that you have improved those clearly in Raskone. How large upside you have from the utilization ratios if we are thinking acquired companies?
I mean, we're not disclosing any targets for the utilization rate, but, I mean, we can clearly see that there is possibility for improvement, and we are working on them.
Okay, thanks.
Tom Westerholm, Inderes. Moving back to the topic of M&A and focusing on the deals that never get done, what are usually the main reasons for Relais not to complete an acquisition you have been negotiating on? Just to make it more interesting, let's not focus on price here.
Sebastian , would you like to take that?
I mean, if I may start with valuation, of course, is a key part of that because it plays into the return on capital potential. Beyond that, it's we know our business area heads, we know the business, so we, of course, look at the risk profile. If it feels correct, then it's okay. If it doesn't feel correct, something is off, then we often also use that as a metric. There are, you know, we look into customers, we look into suppliers, we look into the market niches, you know. This product group is really strong in a small niche, and there are barriers to entry and stuff like that, so It's a really dynamic equation that we look into and try to analyze during the process.
Generally, demand-related risk seems to be a really relevant one here.
Correct, because of course our business model is dependent on us being able to create stable cash flows to acquire more companies and yeah.
Thank you, and throwing one Christian's way, in your presentation, you really highlighted how you're going from an era of growth to an era of shareholder returns. How has your organization and your subsidiaries adjusted to this change of focus?
I mean, we have had focus on the returns as well before. Now we're just kind of pushing that 1 step further. I mean, even since I joined the company in January, I've heard from the business area heads and from Thomas the importance of returns, and that they are already working on this and that they are working with their companies to get good returns. We haven't had it as a financial target, and we haven't communicated into the market in the same way that we are going to do now. It's not a big change, in the way it has been a change, it has been very positively received by the BA heads and also by the MDs in the companies.
You would say it has already been part of your DNA from before?
Of course. We haven't just bought whatever, right? That's for sure.
Thank you.
Let me just take a few more questions from online, and then I'll promise we will still come back for final questions here to the room. Let's have a look. Products and Solutions sounds more consumer or lifestyle -oriented. How does it fit with the vehicle aftermarket strategy?
Can I take it?
Yes, please.
That is a common mistake. I as I expressed for you in the presentation, we are taking functional products and make them want to have. In real terms, north of 80% are used by professionals. You know, you can take Makita if you do your home, you know, that's the drive. We are north of 80% is professional, so this is misunderstanding and a misinterpretation of our potential.
Then a couple more from here. How do you feel about leverage? Is current level comfortable, or do you want to increase, decrease it?
I think we already covered that one.
Yeah
We are comfortable with the current level.
Yeah.
In the previous strategy period, you communicated possible interest in transformational M&A, potentially meaning larger, more complex, and riskier deals. Is this off the table going forward, are you just focusing on smaller deals?
Smaller deals is our bread and butter that we will do every day, every quarter. Larger deal is to some extent more complicated and comes with a higher risk. However, if we are able to identify a platform that is attractive and that is broadening our scope and putting us into a market or a niche where we're not yet present, we will still look into platforms and do platform acquisitions. The bread and butter should be on the bolt-ons and the smaller acquisitions.
Now I think we still have time for couple of questions if there are still some questions here in the room. In case we are more than satisfied for this information, then I think we are ready to close the Q&A session. Christian, you probably want to wrap up this afternoon.
Yeah, I'm not gonna take any more of your time. Thank you very much to the management team for the preparation and presentations here today. Thank you all of you for joining us, both here in the studio and online. We are very much looking forward to the next phase of Relais Group, turning growth into returns. Thank you.
Thank you.
Thank you.
Thank you.
Thank you.
Thank you.