Harvia’s Interim Report 1 January – 31 March 2024
Harvia Plc, Interim report 3 May 2024 at 9.00 a.m. EEST
Harvia Q1 2024: Strong profitability − good growth outside Europe
This release is a summary of Harvia Plc’s Interim Report January–March 2024. The complete report is attached to this release as a pdf file. It is also available on Harvia’s website at https://harviagroup.com/.
Highlights of the review period
January–March 2024:
- Revenue increased by 2.3% to EUR 42.4 million (41.4). At comparable exchange rates, revenue increased by 2.7% to EUR 42.5 million. Organic revenue growth was 1.4%.
- Operating profit was EUR 9.9 million (9.2), making up 23.3% (22.2) of the revenue.
- Adjusted operating profit reached EUR 10.1 million (9.3), making up 23.8% (22.4) of the revenue. At comparable exchange rates, the adjusted operating profit was EUR 10.2 million (24.0% of the revenue).
- Operating free cash flow amounted to EUR 11.1 million (11.6) and cash conversion was 95.0% (107.6).
- Net debt amounted to EUR 26.5 million (45.8) and leverage, calculated as net debt divided by 12 months’ adjusted EBITDA, was 0.6 (1.1).
- Equity ratio was 52.4% (49.3).
- Earnings per share were EUR 0.40 (0.34).
Key figures
| EUR million | 1–3/2024 | 1–3/2023 | Change % | 1–12/2023 |
| Revenue | 42.4 | 41.4 | 2.3% | 150.5 |
| EBITDA | 11.5 | 10.7 | 6.6% | 39.3 |
| % of revenue | 27.0% | 26.0% | 26.1% | |
| Items affecting comparability * | 0.2 | 0.1 | 193.3% | 0.6 |
| Adjusted EBITDA ** | 11.7 | 10.8 | 8.0% | 39.9 |
| % of revenue | 27.6% | 26.2% | 26.5% | |
| Operating profit | 9.9 | 9.2 | 7.1% | 33.0 |
| % of revenue | 23.3% | 22.2% | 21.9% | |
| Adjusted operating profit ** | 10.1 | 9.3 | 8.7% | 33.7 |
| % of revenue | 23.8% | 22.4% | 22.4% | |
| Basic EPS (EUR) | 0.40 | 0.34 | 19.4% | 1.25 |
| Operating free cash flow | 11.1 | 11.6 | -4.6% | 44.6 |
| Cash conversion | 95.0% | 107.6% | 111.7% | |
| Investments in tangible and intangible assets | -2.2 | -0.3 | 657.9% | -3.1 |
| Net debt | 26.5 | 45.8 | -42.2% | 37.6 |
| Leverage | 0.6 | 1.1 | 0.9 | |
| Net working capital | 34.9 | 43.6 | -19.9% | 36.1 |
| Adjusted return on capital employed (ROCE) | 47.1% | 49.3% | 44.2% | |
| Equity ratio | 52.4% | 49.3% | 51.0% | |
| Number of employees at end of period | 625 | 624 | 0.2% | 605 |
* Consists of items outside the ordinary course of business, relating to the Group’s strategic development projects, acquisitions, business divestments, restructuring and loss on sale of fixed assets, and affecting comparability.
** Adjusted by items affecting comparability.
Financial targets and outlook
The company has set long-term targets related to growth, profitability and leverage. Harvia targets an average annual revenue growth of more than 5%, an adjusted operating profit margin exceeding 20% and a net debt/adjusted EBITDA between 1.5x−2.5x in the long term. The future impacts of changes in IFRS accounting standards have been excluded from the net debt/adjusted EBITDA ratio target.
Harvia does not publish a short-term outlook.
Harvia’s dividend policy is to pay a regularly increasing dividend with a bi-annual payout.
Matias Järnefelt, CEO:
In the first quarter of 2024, Harvia achieved once again strong profitability. Growth outside Europe in our strategically important markets was strong, whereas the overall growth was modest. At the same time, we took steps forward with our actions to support future growth.
Our revenue was EUR 42.4 million, increasing by 2.3% from the comparison period. Our performance was supported by very good growth in North America and in Asia-Pacific, whereas in Northern Europe our sales were weakened by the challenging market conditions. The political strikes taking place in Finland during the quarter had a negative impact on Harvia’s Q1 sales, as we had to postpone some deliveries from March to April. Organic growth was 1.4%.
The market conditions in the first quarter remained largely similar to the latter part of 2023. Our key markets outside Europe, most importantly North America, continued to develop favorably in several product categories. At the Group level, we continued to increase the share of sauna rooms of our total sales, driven by our success in North America where the majority of our revenue comes from full sauna room solutions versus equipment such as heaters. I am also pleased with our sales growth in many key markets in Asia-Pacific and the Middle East.
In Central Europe, the market demand continued to stabilize but still has significant growth potential to meet its normal long-term level. Our most challenging market was Northern Europe, where continuing low consumer demand and the downturn in the construction sector were reflected in the revenue. Low demand in Northern Europe impacted our total revenue growth as well as sales performance of certain product groups, especially wood-burning heaters, for which Northern Europe is the most important market area. The revenue from accessories and heater stones developed well. This was driven by our successful actions in sales and pricing as well as several large orders.
The first quarter’s adjusted operating profit was EUR 10.1 million, increasing by 8.7% from the comparison period and corresponding to 23.8% of revenue. Harvia’s strong profitability and cash flow continue to demonstrate the excellent work done in pricing, management of net working capital and operations as a whole. They were also supported by the decreasing inflation in key materials and components in some market areas. Our operating free cash flow amounted to EUR 11.1 million and cash conversion was 95.0%.
To strengthen the foundations for future growth, we made a long-term investment to support our North American business by acquiring more land around our production facility in Lewisburg, West Virginia. We are working on improving our performance and position as the industry leader also in Europe. Our key priority is to accelerate growth while maintaining strong profitability and operative performance. Our new organizational structure, which came into effect on 1 January 2024, is fully operational and will support us in delivering our ambitions for growth, profitability and operative performance.
The sauna and spa market remains attractive and continues to offer Harvia exciting organic and inorganic growth opportunities. As industry leader, we aim to continue inspiring the market and delivering exciting innovations and more sustainable solutions. Industry consolidation is also part of our strategy, and we are ready to move when the right moment and opportunity arises. I want to express my gratitude to the entire team Harvia and our partners for the continuing good work.
Press conference on financial results
Harvia will hold a webcast for analysts, investors and media on 3 May 2024 at 11:00 a.m. EEST. The conference will be held in English. Harvia’s CEO Matias Järnefelt and CFO Ari Vesterinen will host the event. The webcast can be followed at https://harvia.videosync.fi/q1-2024
A recording of the webcast will be available after the event on the company’s website https://harviagroup.com/investor-relations/.
For more information, please contact:
Matias Järnefelt, CEO, tel. +358 40 5056 080
Ari Vesterinen, CFO, tel. +358 40 5050 440
Harvia is one of the leading companies operating in the sauna and spa market globally, as measured by revenue. Harvia’s brands and product portfolio are well known in the market, and the company’s comprehensive product portfolio strives to meet the needs of the international sauna and spa market of both private and professional customers.
Harvia’s revenue totaled EUR 150.5 million in 2023. Harvia Group employs approximately 600 professionals in Finland, Germany, United States, Romania, China and Hong Kong, Austria, Italy, Estonia, and Sweden. The company is headquartered in Muurame, Finland, adjacent to its largest sauna and sauna component manufacturing facility.
Read more: https://harviagroup.com
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