Harvia Plc: Harvia’s interim report 1 January-31 March 2018

Stock Exchange Release | 16 May 2018

Harvia Plc, Interim Report, 16 May 2018 at 8.30 a.m.

Harvia's interim report 1 January-31 March 2018:

Strong and steady first quarter

This release is a summary of Harvia Plc's Interim Report January-March 2018. 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 January-March 2018

  • Revenue for the period, EUR 16.5 million, was at the same level as in the corresponding period
    (1-3/2017: EUR 16.4 million), a record quarterly revenue
  • Adjusted operating profit was consistent with the previous year at EUR 3.2 million, making up 19.5% of the revenue (19.3%)
  • Operating free cash flow increased to EUR 2.0 million (EUR 0.3 million)
  • Due to the share issue, equity ratio increased to 53.4% (16.2%)
  • Net debt decreased by 60.4% to EUR 29.8 million (EUR 75.3 million)

Key figures

EUR million Jan-Mar 2018 Jan-Mar 2017 Change, % 2017
Revenue 16.5 16.4 0.3% 60.1
EBITDA 2.4 3.5 -30.9% 11.2
% of revenue 14.7% 21.3%   18.6%
Items affecting comparability * 1.3 0.1 772.0% 1.4
Adjusted EBITDA ** 3.7 3.7 1.5% 12.6
% of revenue 22.5% 22.2%   21.0%
Operating profit 1.9 3.0 -36.3% 9.3
% of revenue 11.7% 18.4%   15.4%
Adjusted operating profit ** 3.2 3.2 1.1% 10.7
% of revenue 19.5 % 19.3%   17.8%
Basic EPS (EUR) 0.16 0.15 2.9% 0.30
Operating free cash flow 2.0 0.3 560.8% 9.0
Cash conversion 53.6% 8.2%    71.6%
Investments in tangible and intangible assets -0.6 -0.2 281.6% -1.2
Net debt 29.8 75.3 -60.4% 73.0
Leverage 2.4 6.2   5.8
Net working capital 18.2 17.8 2.4% 17.3
Adjusted return on capital employed (ROCE) 31.7% 33.5%   32.7%
Equity ratio 53.4% 16.2%   16.9%
Number of employees at end of period 370 357 3.6% 365

* Consists of items outside the ordinary course of business, related to the Group's strategic development projects, public listing, business acquisitions and losses from sales of fixed assets, which have an impact on comparability.

** Adjusted with 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 five per cent, adjusted operating profit of 20 per cent and a net debt/adjusted EBITDA ratio between 1.5x-2.5x. The future impacts of changes in IFRS reporting standards have excluded in the net debt/adjusted EBITDA ratio target.

Tapio Pajuharju, CEO:

I am very satisfied with Harvia's strong and steady first quarter. Harvia's team and our key customers and partners have again done a solid job and demonstrated excellent dedication, flexibility and activity in developing the business further.

During the first quarter, the implementation of Harvia's "one stop shop" strategy in the sauna and spa business continued successfully. Demand for a comprehensive product offering aimed both at professionals and consumers continued at a good level. We had a strong quarter when it comes to sales, and we reached a revenue of EUR 16.5 million, which exceeds the record high corresponding quarter last year measured in revenues. However, the early timing of Easter combined with a rather tough winter postponed the start of the wood burning heater sales season later to the spring.

Profitability remained steady and on a good level. The adjusted operating profit for the first quarter was EUR 3.2 million or 19.5% of the revenue, showing an increase of 0.2 percentage points from the corresponding period last year. Operating free cash flow developed positively as well, amounting to EUR 2.0 million (EUR 0.3 million).

The three cornerstones of Harvia's strategy are increasing the value of the average purchase, geographical expansion and improving productivity.

Increasing the value of the average purchase is proceeding as planned. Sales of control units, safety railings and sauna interior and installation equipment developed positively, as did the sales of premium heaters and components. In Scandinavia, we have updated and upgraded the product range to better suit the local market needs. Sales of complete saunas and sauna interiors developed positively as well.  Harvia is a true pioneer in the industry, and during the first quarter we introduced the advanced Harvia The Wall heater as well as the Harvia Glow heater, developed to offer the best sauna experience. Both products are good examples of Harvia's strong expertise in innovation, product development and of the seamless cooperation between production, marketing and development. Harvia will continue to launch new products during the remainder of the year.

Geographical expansion is proceeding according to schedule. We have expanded our distribution in EU countries and successfully taken over the operations and inventories of a long-term distributor in Germany. In Russia, the expansion of distribution in regional cities has proceeded well. In Central Europe, the integration of Sentiotec has proceeded as planned and the distribution strategy has been unified as planned.

The improvement of productivity has proceeded well at all production sites. In Finland, the largest investment of the year, the new layout of internal logistics at the Muurame factory, was carried out successfully. The product range of our Quanzhou China factory has been expanded. The new second-generation steam generator is ready for production and we have ramped up the production of new electric heater models.

An event falling outside normal business operations was Harvia's successful public offering in March. We attracted more than 2,000 new shareholders and an international ownership base. We are also very happy to have a large number of Harvia's employees participating in the listing both in Finland and Austria. Our capital structure strengthened considerably, and we are now better prepared to strengthen Harvia's leading position as an international sauna and spa player. I would like to take the opportunity to thank all those who participated in Harvia's IPO and warmly welcome them to the interesting and rewarding world of saunas and spas.

Press conference
Harvia will hold a press conference for analysts, investors and media today on Wednesday, 16 May 2018 at 11:00 a.m. Finnish time, at Hotel Kämp's Jean Sibelius cabinet (address Pohjoisesplanadi 29, 00100 Helsinki, Finland.) The conference will be held in Finnish.

A live audiocast of the conference will also be held today at 1:00 p.m. Finnish time. The audiocast can be watched at https://harvia.videosync.fi/2018-q1-results.

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. +358 405 050 440

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.