CEO’s review

CEO Matias Järnefelt:

Harvia’s revenue in the second quarter was EUR 52.8 million, up by 11.7% from the corresponding period last year. All revenue growth was organic, and at comparable exchange rates, total revenue grew by 12.9%. This double-digit revenue growth was driven particularly by the strong performance in North America. As anticipated, our growth and profitability were weakened by a major IT and process project implementation at the Muurame factory and headquarters. This postponed approximately EUR 4 million of deliveries, a majority of which will be realized in the third quarter.

Entering the third quarter, our delivery performance from the Muurame factory had almost returned to a normal level, and we expect to reach operating at full capacity during the quarter. I would like to thank Team Harvia and our partners for their outstanding support throughout the implementation. I also want to thank our customers for their cooperation and patience during this important transformation.

In North America, demand in the sauna market remained strong. Furthermore, our performance reflects the growing awareness and adoption of saunas in North America, where they are increasingly becoming a mainstream wellness product rather than a niche offering. In North America, Harvia’s revenue increased by 38.6%. Our sales were also supported by the expanded distribution of our sauna cabins. Conversely, softer market demand in the steam sauna segment resulted in lower Group-level revenue from steam products. Recognizing steam as a core strategic category, we are actively executing targeted initiatives to optimize our product offering and accelerate sales momentum.

In Europe, the market conditions remained broadly stable, and we made progress with our commercial initiatives across several key markets and product groups. Reported revenue in both Northern Europe and in Continental Europe declined slightly, primarily due to the postponement of deliveries from our Muurame factory. Within Northern Europe, Scandinavia and the Baltics demonstrated robust momentum, which helped offset softer demand dynamics in the Finnish market.

In the APAC & MEA region, key markets such as Japan, China, and Australia demonstrated sustained positive momentum. However, this was offset by the geopolitical headwinds in the Persian Gulf region, which constrained our performance in the Middle East. Consequently, revenue of the APAC & MEA region declined by 4.9%. This was primarily due to customers postponing projects in the Middle East, a strong comparison period that included a high level of project deliveries in the region, and the postponement of some deliveries from our Muurame factory. The situation in the Middle East will likely continue to be unpredictable, and we expect this to negatively influence our sales in the region also in the second half of the year.

Harvia’s adjusted operating profit in the second quarter was EUR 8.6 million, corresponding to a margin of 16.2%.

During the second quarter, we completed the implementation of a major IT infrastructure and business process upgrade project at our Muurame factory and headquarters. The strategic investment enhances automation, improves transparency across our operations, and solidifies the foundation for Harvia’s profitable long-term growth. As anticipated, the upgrade temporarily extended lead times and postponed approximately EUR 4 million of deliveries and related gross margin, a majority of which will be realized in the third quarter. This had a negative one-off impact on our sales and profitability, affecting especially Northern Europe and Continental Europe, where heaters produced in Muurame account for a significant share of revenue. The project also resulted in some additional one-off costs, although their impact on profitability was significantly smaller. Despite these temporary effects, the increase in our indirect costs remained below our revenue growth, and our gross margin remained healthy, although product and channel mix had a slight negative effect.

Entering the third quarter, our delivery performance from the Muurame factory had almost returned to a normal level, and we expect to reach operating at full capacity during the quarter. I would like to thank Team Harvia and our partners for their outstanding support throughout the implementation. I also want to thank our customers for their cooperation and patience during this important transformation.

Looking ahead, Harvia remains fully focused on driving profitable growth across all our regions. We continue to shape the global sauna market through product innovation and by increasing awareness of the health benefits of sauna. Underscoring this commitment, our Harvia Fenix control unit recently received the prestigious Red Dot Award for design excellence. We also published groundbreaking research on the physiological effects of sauna and its humidity together with the University of Jyväskylä, further advancing the science of sauna. While global macroeconomic and geopolitical uncertainty is expected to remain elevated, we continue to view the long-term outlook for the sauna market positively. We see compelling opportunities for both organic growth and value-creating acquisitions, and Harvia is well positioned to capitalize on them.