CEO's review

11.2.2021

One could hardly hope for a better performance on Harvia’s work-filled 70-year anniversary: Harvia’s business continued to pick up pace towards the end of the year, and the full year turned out exceptionally strong. When it comes to net sales, Harvia has reached a position at par with the largest player in the industry.

Sales were very strong in the fourth quarter of the year: revenue increased by 70.0 percent to EUR 35.2 million with organic revenue growth standing at 39.1 percent. At the same time, our full year figures exceeded EUR 100 million as our full-year revenue landed at EUR 109.1 million.

Most importantly, the Harvia team along with our partners has remained healthy and safe. This would not have been possible without significant efforts towards well-being and safety as well as very diligent and careful cooperation. The leap in the efficiency of the entire supply chain in a rather traditional industry is strong indication of excellent knowhow and agility. Our order book was exceptionally strong at the end of the year. This has led to somewhat longer than normal delivery times. However, due to smooth cooperation, customer satisfaction remained on its usual good level. Awesome team effort, and everyone involved deserves my warmest thanks!

Revenue growth was strong in nearly all markets and all product groups in the fourth quarter of the year. The only exceptions were Southern Europe, Asia and the Arab countries, which were clearly hit hardest by the impact of the COVID-19 pandemic. The same effect is visible in the steam generators business, where the cumulative revenue did not reach the previous year’s level.

The EOS integration has proceeded well despite the travel restrictions brought on by the pandemic, and we are almost exactly on schedule. Growing the average purchase has progressed favorably, of which a great example is the strong growth of the sauna business in both Europe and the United States. The sauna heater and component business in the United States has developed favorably. On top of this, the performance of Almost Heaven Saunas’ business and especially its own webstore and direct sales have been excellent. In Finland growth has been good and Harvia has improved its market position.

As recognition for our accomplishments and especially for the skills and efforts of our personnel, we received the Internationalization Award of the President of the Republic of Finland in November. It is an annual recognition given to Finnish, internationally successful companies and communities for their meritorious activities that have benefited the economy and business life.

In the Nordic countries, we are still a challenger, but our position has strengthened considerably. The German market has taken a turn to strong growth and both Harvia’s sales in Central Europe and EOS’s success in the premium and professional channel have been excellent. The sauna and spa market as a whole has been well supported by the health and well-being trends.

Business performance continued on a very good level and we succeeded in improving our profitability. Operating profit for the fourth quarter of the year was EUR 8.7 million (operating profit margin at 24.7%) and the operating profit for the full year reached EUR 22.4 million (20.5%). Although the sauna and spa market as a whole has experienced growth due to favorable trends, we nevertheless estimate that part of this demand is still so-called advance demand, which will level out at least partly on the medium term as the pandemic subsides.

Investments made in 2020 were started according to plan. There have been delays in machinery deliveries in the United States, and the machinery will be installed in the first quarter of 2021. However, market demand is so strong that we have accelerated screening and planning of incremental investment opportunities particularly for the AHS factory in the United States and the Harvia factory in Muurame.

In 2021, we will continue to keep our eyes focused on the cornerstones of our strategy by focusing on increasing the value of the average purchase, geographical expansion, and continuous improvement of productivity. M&A activity in the sauna and spa market increased throughout the year 2020. In line with our strategy, we continue to seek opportunities to grow in the sauna and spa market also through acquisitions.

Our strategy
Our key strategic priorities to achieve our objectives
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Increasing the value of the average purchase
Geographical expansion
Improving productivity