Harvia Plc: Harvia’s Half-year financial review 1 January-30 June 2018

Stock Exchange Release | 16 August 2018

Harvia Plc, Half-year financial review, 16 August 2018 at 9.00 a.m. EET

Harvia's half-year financial review 1 January-30 June 2018:

Steady growth during the second quarter

This release is a summary of Harvia Plc's January-June 2018 Half-year financial review. The complete report is attached to this release as a pdf-file. It is also available on Harvia's website at www.harvia.fi.  

Highlights of the review period

April-June 2018

  • Revenue grew by 6.3% to EUR 15.3 million (14.4)
  • Adjusted operating profit was EUR 2.4 million (2.3) making up 16.0% (16.2) of the revenue
  • Operating free cash flow amounted to EUR 0.4 million (1.7)

January-June 2018

  • Revenue grew by 3.1% to EUR 31.8 million (30.8)
  • Adjusted operating profit was EUR 5.7 million (5.5) making up 17.8% (17.9) of the revenue
  • Operating free cash flow amounted to EUR 2.3 million (2.0)
  • Net debt decreased by 58% to EUR 31.0 million (73.7) and leverage was 2.4 (6.0)
  • Due to the share issue, equity ratio increased to 54.9% (16.5)

Key figures

EUR million 4-6/2018 4-6/2017 Change % 1-6/2018 1-6/2017 Change % 2017
Revenue 15.3 14.4 6.3% 31.8 30.8 3.1% 60.1
EBITDA 3.0 2.7 10.8% 5.4 6.2 -12.9% 11.2
% of revenue 19.4% 18.6%   16.9% 20.0%   18.6%
Items affecting comparability * 0.0 0.1 -74.0% 1.3 0.3 349.8% 1.4
Adjusted EBITDA ** 3.0 2.8 6.4% 6.7 6.5 3.6% 12.6
% of revenue 19.6% 19.6%   21.1% 21.0%   21.0%
Operating profit 2.4 2.2 10.0% 4.3 5.2 -16.9% 9.3
% of revenue 15.7% 15.2%   13.6% 16.9%   15.4%
Adjusted operating profit ** 2.4 2.3 4.7% 5.7 5.5 2.6% 10.7
% of revenue 16.0% 16.2%   17.8% 17.9%   17.8%
Basic EPS (EUR) 0.08 0.07 28.0% 0.22 0.22 1.2% 0.30
Operating free cash flow 0.4 1.7 -78.9% 2.3 2.0 18.8% 9.0
Cash conversion 11.8% 59.4%   34.9% 30.5%   71.6%
Investments in tangible and intangible assets -0.2 -0.3 -32.0% -0.8 -0.5 63.8% -1.2
Net debt 31.0 73.7 -58.0% 31.0 73.7 -58.0% 73.0
Leverage 2.4 6.0   2.4 6.0   5.8
Net working capital 20.4 17.6 16.2% 20.4 17.6 16.2% 17.3
Adjusted return on capital employed (ROCE) 30.8% 34.6%   30.8% 34.6%   32.7%
Equity ratio 54.9% 16.5%   54.9% 16.5%   16.9%
Number of employees at end of period 381 384 -0.8% 381 384 -0.8% 365
* Consists of items outside the ordinary course of business that are related to Group's strategic development projects, the listing, acquisitions and loss on sale of fixed assets and affect comparability.


** Adjusted by items affecting comparability.                    

Financial targets and outlook

Harvia does not publish its short-term outlook. However, the company has set targets related to growth, profitability and leverage. The company targets an average annual revenue growth of more than 5%, adjusted operating profit margin of 20% and a net debt/adjusted EBITDA between 1.5x-2.5x. The future impacts of changes in IFRS reporting standards have excluded in the net debt/adjusted EBITDA ratio target.

Harvia targets a regularly increasing dividend with a bi-annual dividend payout of at least 60 percent of net income, in total. The shareholders of the company unanimously resolved on 2 March 2018 to authorise the Board of Directors of the company to decide on distribution of dividend in the maximum amount of EUR 3.5 million paid from distributable funds of the year 2017. The Board of Directors of the company intends to decide the dividend payout based on the authorisation in autumn 2018.

Tapio Pajuharju, CEO:

Harvia's steady performance continued during January-June 2018. I'm very satisfied with the 6.3% year-on-year growth in the sales of Harvia's comprehensive Sauna and Spa offering during the second quarter, despite the exceptionally warm summer. We reached a revenue of EUR 31.8 million during the review period, which represents 3.1% growth year on year. During the review period, our revenue grew especially in Finland and in other EU countries.

The adjusted operating profit for the second quarter grew year on year, totalling EUR 2.4 million or 16.0% (16.2) of the revenue. Growth in Sauna sales combined with an increase in the price of timber reduced the operating profit margin slightly year on year. The adjusted operating profit for January-June was EUR 5.7 million or 17.8% of revenue.

The public listing of Harvia's shares that took place in March strengthened our capital structure, which supports Harvia's leading position as an international provider of sauna and spa products. The strengthened financing structure is reflected in reduced finance costs.

During the review period, we launched a hybrid sauna, which were presented at the Pori Housing Fair. The hybrid sauna combines the features and benefits of an infrared sauna with a traditional electric sauna. The hybrid sauna is a good indication of how new technology can renew and diversify the sauna experience. At the Housing Fair, we also introduced some of the premium range Sentio by Harvia products, which will become available in the second half of this year.

During the first half-year, we launched new premium sauna heater products, such as the advanced wall-mounted Harvia The Wall heaters and the stylish Harvia Glow design heaters. In the steam generator category, we launched a new Harvia HGD generator for the consumer market with new innovations to further increase functionality and reliability. These new products are good examples of Harvia's strong expertise in product development and the seamless and productive cooperation between production, marketing and development.

The implementation of Harvia's "one-stop shop" strategy in the sauna and spa business continued as planned during the review period. We made progress on our strategic goal of increasing the value of the average purchase and saw favourable development in, for example, infrared saunas, steam generators and the sales of spare parts. At the same time, the sales of traditional and steam saunas continued favourably. The sales of electric heaters experienced good growth in the second quarter. The sales of wood burning heaters started to develop favourably in Finland and in the neighbouring markets during the second quarter. Due to tight local competition in the Russian market combined with the delay of the renewed local Harvia Russia offering from the best sales season, the sales of wood burning heaters dropped slightly year-on-year in the first half of 2018. During the review period, the sales of control units were impacted negatively by the discontinuation of private label deliveries to two large clients in Germany, and the delay of delivery of more affordable control units closer towards the autumn sales season in Russia.

Geographical expansion progressed as planned during the review period. Distribution in the EU countries has been expanded according to plan. In Russia, the expansion of distribution in regional cities continued. The upgrading of our retailers' shops in Sweden has proceeded as planned and the Harvia shop-in-shop concept has been implemented in six stores.

Improving productivity progressed as planned at all factories. Renewing and expanding the product offering of our factory in China is proceeding and will create further sales opportunities for heaters as well as steam generators.

We will continue to carry out our strategy in second half of 2018 with a focus on increasing the value of the average purchase, continuing our geographical expansion and improving our productivity.

Press conference
Harvia will hold a press conference for analysts, investors and media today, Thursday, 16 August 2018, at 11:00 a.m. Finnish time, at Harvia's headquarters and factory premises in Muurame (address Teollisuustie 1-7, Muurame). The conference will be held in Finnish.

A live audiocast of the conference will also be held today, Thursday, 16 August 2018, at 1:00 p.m. Finnish time. You can follow the audiocast at https://harvia.videosync.fi/2018-q2-result.

You can also participate by calling:

  • Finland: +358 9 817 104 95
  • UK: +44 203 194 055 2
  • Sweden: +46 856 642 702
  • US: +1 855 716 159 7

A recording of the audiocast will be available later at the company's website.


For further information, please contact:
CEO Tapio Pajuharju, tapio.pajuharju@harvia.fi, tel. +358 50 577 4200
CFO Ari Vesterinen, ari.vesterinen@harvia.fi, tel. +358 40 5050 440

Harvia is one of the leading companies operating in the sauna and spa market globally, as measured by revenue.[1] Harvia's brands and product offering are well-known in the market[2] and the Company's comprehensive product offering strives to meet the needs of the international sauna and spa market, of both private and professional customers.

Harvia's revenue amounted to EUR 60.1 million in 2017, its operating profit was EUR 9.3 million and adjusted operating profit EUR 10.7 million during the same period. The Company employs some 365 professionals in Finland, China and Hong Kong, Romania, Austria, Germany and Estonia. The company's headquarters in Muurame, Finland are adjacent to its largest sauna and sauna component manufacturing facility.

[1] International Management Consultant Analysis conducted in autumn 2017 and commissioned by Harvia.

[2] The Harvia brand was the most recognised sauna brand in a survey of Finnish, Swedish, German, Russian and American consumers (altogether 810 consumers) conducted by an international management consultant company in autumn 2017 and commissioned by Harvia.