CEO's review

For Harvia, the first half of 2020 was very strong and steady despite the impacts of the COVID-19 pandemic. We have actively taken care of the health and safety of our personnel and thereby succeeded in maintaining good operational capability.

During the review period, Harvia’s revenue increased significantly to EUR 45.9 million, representing growth of more than 25 percent year-on-year. Sales growth further accelerated during the second quarter, our sales reaching EUR 25.5 million. The year-on-year increase amounted to 50.1 percent, of which 32 percent was organic growth.

Revenue increased very strongly in the sauna heater product group, improving by 26.6 percent during the half-year period. In the sauna heater product group, Harvia’s solid development has been complemented with the robust sauna heater sales figures of EOS, which have been included for May and June. During the half-year period, the sauna room product group grew by 40.3 percent, with strongest growth in the United States and Central Europe. The demand for Almost Heaven Saunas remained high and their order book was strong. At the end of the review period, we made an investment decision to substantially increase AHS’s capacity in order to maintain our strong growth and high-quality customer service. According to the plan, the additional capacity will be fully operational at the end of 2020. Due to challenging situation in the Arab countries’, Asian and, in part, Russian markets, the sales of steam generators declined clearly from last year’s level.

Revenue growth was particularly strong in Finland, North America and Germany. Our strategy and actions to Increase the value of the average purchase and expanding our distribution in line with our strategy have supported sales growth well. Increased interest in home improvement and renovation projects in both the consumer and professional channel was clearly reflected in the favorablesales development in Finland, the other Nordic countries and Germany. The increase in total domestic sales was excellent, and our premium price category novelty, the Harvia Legend Greenflame with cleaner burning, was well received in the market. In the United States, demand for sauna heaters and components was strong and steady. Almost Heaven Saunas performed very well in the overall sauna market.

COVID-19 does not seem to have had a significant impact on the sauna and spa market as a whole. Although some of our key markets have been practically closed down, the interest and activity around the sauna and spa market in general have increased significantly. In certain markets, interest and activity have been on an exceptionally high level. We estimate, however, that some of this interest and demand is so-called advance demand, and in our view, there have been no significant changes in the long-term growth drivers or targets in the sauna and spa market.

Our business performance has also been favorable, and we were able to substantially improve our profitability in the first half-year. Our adjusted operating profit increased to EUR 9.8 million, representing an increase of 44.3 percent compared to the previous year. The adjusted operating profit for the second quarter amounted to EUR 5.6 million, increasing by 98.7 percent. Relative profitability developed favorably, with the operating profit margin for the half-year period standing at 21.3 percent and for the second quarter at 21.9 percent.

Our supply chain has been able to respond efficiently to the very volatile demand brought on by the COVID-19 pandemic, and we have been able to continuously improve our productivity while maintaining our customer service capabilities on a good level. Our personnel in all units have once again shown excellent commitment to maintaining their operational capability and health in an extremely professional way in the challenging COVID-19 environment.

The acquisition of the German EOS Group was completed at the end of April. The integration following the acquisition has proceeded with good team spirit, and all areas of the integration have been initiated as planned and are proceeding according to targets and in a timely manner.

The latest quarter was in many ways very exceptional for Harvia. Our entire personnel stretched to an outstanding performance in exceptional circumstances. Seamless cooperation and intensive communication with our key customers and key partners have enabled us to successfully implement our strategy together and, at the same time, respond to clearly increased changes in demand. Once again, I am happy to offer my humble thanks to the entire team for an excellent team performance. Thank you!

The sauna and spa market does not seem to be very sensitive to the impacts of COVID-19, and we are now shifting closer to the new normal in stages, one market at a time. We will continue our measures to promote and safeguard operational capabilities and health in all our activities, and we remain prepared for higher than normal fluctuation in demand continuing. We closely monitor the market together with our customers and partners in order to maintain the speed and agility of our operations in the future. Demand for our products is strong, but we estimate that a part of the sales is advance demand.

We will naturally keep our eye determinedly on the cornerstones of our strategy and will implement the strategy with focus on increasing the value of the average purchase, geographical expansion and continuous improvement of productivity. The integration following the EOS acquisition will continue according to plan with high priority. In addition to organic growth, we continue to actively explore opportunities to grow in the sauna and spa market 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