Harvia Plc, Half-Year Financial Report 8 August 2024, 9:00 EEST
Harvia Q2 2024: Significant sales growth and strong profitability
This press release is a summary of Harvia Plc’s half-year financial report for the period January to June 2024. The full report is attached to this press release as a PDF file. It is also available on Harvia’s website at https://harviagroup.com/.
Highlights of the reporting period
April–June 2024:
-
Sales increased by 20.7% to EUR 43.2 million (35.8). At comparable exchange rates, sales increased by 20.3% to EUR 43.0 million. Organic sales growth was 20.1%.
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The operating result amounted to EUR 8.9 million (7.8) and corresponds to 20.7% (21.9%) of sales.
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Adjusted operating profit amounted to EUR 9.4 million (8.0) and corresponds to 21.8% (22.3%) of sales. At comparable exchange rates, adjusted operating profit amounted to EUR 9.4 million (21.8% of sales).
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Operating free cash flow amounted to EUR 5.5 million (9.1) and cash conversion was 50.0% (96.1%). The change in net working capital reduced operating free cash flow and cash conversion.
-
Harvia announced its updated strategy and long-term financial targets on 29 May 2024, when the company held its first Capital Markets Day.
January–June 2024:
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Sales increased by 10.9% to EUR 85.5 million (77.2). At comparable exchange rates, sales increased by 10.8% to EUR 85.5 million. Organic sales growth was 10.4%.
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The operating result amounted to EUR 18.8 million (17.0) and corresponds to 22.0% (22.1%) of sales.
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Adjusted operating profit amounted to EUR 19.5 million (17.3), corresponding to 22.8% (22.4%) of sales. At comparable exchange rates, adjusted operating profit amounted to EUR 19.5 million (22.8% of sales).
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Operating free cash flow amounted to EUR 16.6 million (20.8) and cash conversion was 73.2% (102.2%). The change in net working capital reduced operating free cash flow and cash conversion.
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Net debt amounted to EUR 32.6 million (45.8) and the leverage ratio, calculated as net debt divided by adjusted EBITDA for the last 12 months, was 0.8 (1.2).
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The equity ratio was 49.8% (46.3%).
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Earnings per share amounted to EUR 0.71 (0.62).
Key figures
|
million EUR |
4–6/ |
4–6/ |
Change |
1–6/ |
1–6/ |
Change |
1–12/ |
|
revenue |
43.2 |
35.8 |
20.7% |
85.5 |
77.2 |
10.9% |
150.5 |
|
EBITDA |
10.5 |
9.4 |
12.3% |
22.0 |
20.1 |
9.2% |
39.3 |
|
% of sales |
24.4% |
26.2% |
25.7% |
26.1% |
26.1% |
||
|
Elements affecting comparability * |
0.5 |
0.1 |
263.2% |
0.7 |
0.2 |
237.2% |
0.6 |
|
Adjusted EBITDA ** |
11.0 |
9.5 |
15.9% |
22.7 |
20.4 |
11.7% |
39.9 |
|
% of sales |
25.6% |
26.6% |
26.6% |
26.4% |
26.5% |
||
|
Operating result |
8.9 |
7.8 |
13.9% |
18.8 |
17.0 |
10.2% |
33.0 |
|
% of sales |
20.7% |
21.9% |
22.0% |
22.1% |
21.9% |
||
|
Adjusted operating result ** |
9.4 |
8.0 |
18.2% |
19.5 |
17.3 |
13.1% |
33.7 |
|
% of sales |
21.8% |
22.3% |
22.8% |
22.4% |
22.4% |
||
|
Basic earnings per share (EUR) |
0.31 |
0.28 |
10.5% |
0.71 |
0.62 |
15.3% |
1.25 |
|
Free cash flow from operating activities |
5.5 |
9.1 |
-39.6% |
16.6 |
20.8 |
-20.0% |
44.6 |
|
Cash conversion |
50.0% |
96.1% |
73.2% |
102.2% |
111.7% |
||
|
Investments in property, plant and equipment and intangible assets |
-0.5 |
-0.9 |
-36.7% |
-2.8 |
-1.2 |
140.1% |
-3.1 |
|
Net debt |
32.6 |
45.8 |
-28.8% |
32.6 |
45.8 |
-28.8% |
37.6 |
|
Leverage |
0.8 |
1.2 |
0.8 |
1.2 |
0.9 |
||
|
Net working capital |
33.0 |
36.5 |
-9.6% |
33.0 |
36.5 |
-9.6% |
36.1 |
|
Adjusted return on capital employed (ROCE) |
51.7% |
47.7% |
51.7% |
47.7% |
44.2% |
||
|
Equity ratio |
49.8% |
46.3% |
49.8% |
46.3% |
51.0% |
||
|
Number of employees at the end of the period |
683 |
619 |
10.3% |
683 |
619 |
10.3% |
605 |
* Consists of items outside the normal course of business related to the Group’s strategic development projects, acquisitions, divestitures, restructurings and losses on disposal of fixed assets that affect comparability.
** Adjusted for comparable values.
Financial goals and outlook
The company has set long-term targets for growth, profitability and debt. In May 2024, Harvia’s long-term financial targets were adjusted to reflect the company’s growth ambitions. Harvia aims for average annual sales growth of 10%, an adjusted operating profit margin of over 20% and a net debt to adjusted EBITDA ratio of below 2.5x. The future impact of changes in IFRS accounting standards has been excluded from the net debt to 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 semi-annual payout.
Matias Järnefelt, CEO:
I am pleased with Harvia’s performance in the second quarter of 2024 as we delivered significant sales growth and maintained strong profitability.
In the second quarter, our sales reached EUR 43.3 million, an increase of 20.7% compared to the same period last year. Sales growth was mainly driven by strong performance in North America, Asia Pacific and the Middle East. The strikes in Finland in March resulted in some deliveries from Finland being postponed from the first to the second quarter, which also had a positive impact on sales. Organic growth was 20.1%.
Market conditions remained favorable in the second quarter in North America and APAC & MEA, where awareness of sauna and its health benefits has continued to grow. In North America, market demand was strong across all channels and product groups and our sales figures were excellent for both complete sauna solutions and heaters. In APAC & MEA, our rapid growth reflects the systematic work we are doing to grow our business in several strategically important markets. The region’s sales were also supported by the timing of some key deliveries.
In Continental Europe, the market has shown some signs of recovery since the last quarter of 2023, and the gradual improvement continued in the second quarter of 2024. In Northern Europe, the gradual positive market development combined with our sales actions led to sales growth in the region after two years of declining sales. We expect the market in Europe to continue to gradually improve, and we are working diligently to capitalize on this growth and further strengthen our position in the market. Our overall strong sales performance was achieved through growth in all product categories except spare parts and services.
Adjusted operating profit in the second quarter was EUR 9.4 million, 18.2% above the comparable figure. The adjusted operating profit margin was 21.8% of sales. We managed to maintain strong profitability while increasing investments to drive growth. In particular, we invested additional resources in sales and portfolio development.
Harvia’s operating free cash flow amounted to EUR 5.5 million. During the quarter, we increased our inventory levels. Our material inventory in Finland normalized after inbound transport was impacted by the strikes in the first quarter. In addition, we increased our inventory levels in the United States and Japan to support sales. All of this was visible in our cash conversion of 50.0% for the period. In many previous quarters, cash conversion was exceptionally high, even above 100%. Overall, our operating performance during the quarter was robust and I would like to thank the entire Harvia team and our partners for their commitment and good work.
In May, Harvia held its first Capital Markets Day and updated its long-term financial goals and strategy to reflect the company’s strategic role, which the company defines as: “Shaping the global sauna market so that everyone has a reason to experience a sauna.” Harvia’s updated four strategic focus areas are: 1. Providing the complete sauna experience; 2. Succeeding in strategically important markets; 3. Leading in key channels and 4. World-class operations and great people. We want to be an active market maker to grow the global sauna market and create exciting innovations and sustainable solutions, while maintaining strong profitability and operating performance.
The long-term attractiveness of the sauna market remains unchanged. In addition to exploiting organic growth opportunities in various regions, Harvia intends to be an active market consolidator in the industry and to grow through acquisitions when the right time and opportunity arise. After the reporting period, on 23 July, Harvia announced the acquisition of ThermaSol, a US-based manufacturer of steam solutions with net sales of USD 14.4 million in 2023. The acquisition will strengthen Harvia’s position in North America and our capabilities particularly in steam and digital solutions. The transaction is another significant step forward on Harvia’s growth trajectory and further consolidates our industry leadership.
Press conference on financial results
Harvia will host a webcast for analysts, investors and media on 8 August 2024 at 11:30 EEST. The conference will be held in English. Harvia’s CEO Matias Järnefelt and CFO Ari Vesterinen will moderate the event. The webcast can be followed at: https://harvia.videosync.fi/q2-2024/.
A replay of the webcast will be available on the Company’s website following the event. 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 world’s leading companies in the sauna market in terms of sales. Harvia’s brands and product portfolio are well known in the market and the company’s comprehensive product portfolio aims to meet the needs of the international sauna market of both private and professional customers.
Harvia’s turnover in 2023 was EUR 150.5 million. The Harvia Group employs over 600 people in Finland, Germany, the USA, Romania, China and Hong Kong, Austria, Italy, Estonia and Sweden. The company’s headquarters are in Muurame, Finland, next to its largest production facility for saunas and sauna components.
Read more: https://harviagroup.com
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