Harvia’s Financial statements bulletin 2021: Strong growth and profitability continued

Stock Exchange Release | 10 February 2022

Harvia Plc, Financial statements bulletin, 10 February 2022 at 9.00 a.m. EET

This release is a summary of Harvia Plc’s Financial statements bulletin 2021. The complete report is attached to this release as a pdf file. It is also available on Harvia’s website at https://harviagroup.com/.  

Highlights of the review period

October–December 2021:

  • Revenue increased by 31.9% to EUR 46.5 million (35.2). At comparable exchange rates, revenue increased by 29.8% to EUR 45.7 million. On top of strong organic revenue growth of 21.0%, Harvia enjoyed substantial revenue growth due to acquisitions.
  • Adjusted operating profit increased to EUR 11.1 million (8.8), making up 24.0% (24.9) of the revenue. At comparable exchange rates, the adjusted operating profit increased to EUR 11.0 million (24.0% of the revenue).
  • Operating profit was EUR 11.1 million (8.7), making up 23.9% (24.7) of the revenue.
  • Operating free cash flow amounted to EUR 3.8 million (10.3) and cash conversion was 30.2% (104.1%). EUR 3.8 million (0.8) investments in expanding capacity and improving productivity as well as EUR 5.1 million increase of net working capital decreased the operating free cash flow and cash conversion in the fourth quarter.

January–December 2021:

  • Revenue increased by 64.2% to EUR 179.1 million (109.1). At comparable exchange rates, revenue increased by 65.8% to EUR 180.9 million. Organic growth was very strong at 43.3%. The impact of acquisitions on growth was substantial, as well.
  • In 2021, the share of international business was EUR 142.2 million (81.4), making up 79.4% (74.6) of the revenue.
  • Adjusted operating profit increased to EUR 47.3 million (24.4), making up 26.4% (22.4) of the revenue. At comparable exchange rates, the adjusted operating profit increased to EUR 47.9 million (26.5% of the revenue).
  • Operating profit was EUR 46.6 million (22.4), making up 26.0% (20.5) of the revenue.
  • Operating free cash flow amounted to EUR 20.4 million (28.7). EUR 11.8 million (2.6) investments in expanding capacity and improving productivity as well as EUR 20.9 million increase of net working capital decreased the operating free cash flow and cash conversion. The acquisitions in 2021 were paid out of the company’s cash reserves.
  • Net debt amounted to EUR 43.8 million (31.9) and leverage was 0.8 (1.1).
  • Equity ratio was 42.4% (42.0).
  • Earnings per share was EUR 1.80 (0.83). The Board of Directors’ dividend proposal is EUR 0.60 per share, to be paid in two instalments.
  • On 28 May 2021, Harvia signed and closed an agreement to acquire Kirami, a leading Finnish still water hot tub manufacturer and pioneer in wood-heated hot tubs globally.
  • On 31 August 2021, Harvia signed and closed an agreement to acquire Sauna-Eurox Oy, and its sister company Parhaat Löylyt Oy.

Key figures

EUR million 10-12/
Change, % 1-12/
Change, %
Revenue 46.5 35.2 31.9% 179.1 109.1 64.2%
EBITDA 12.7 9.9 28.3% 52.5 26.7 96.5%
% of revenue 27.3% 28.0%   29.3% 24.5%  
Items affecting comparability * 0.0 0.1 -45.4% 0.6 2.1 -69.7%
Adjusted EBITDA ** 12.7 9.9 27.8% 53.1 28.8 84.6%
% of revenue 27.3% 28.2%   29.7% 26.4%  
Operating profit 11.1 8.7 27.6% 46.6 22.4 108.5%
% of revenue 23.9% 24.7%   26.0% 20.5%  
Adjusted operating profit ** 11.1 8.8 27.1% 47.3 24.4 93.4%
% of revenue 24.0% 24.9%   26.4% 22.4 %  
Basic EPS (EUR) 0.44 0.31 39.6% 1.80 0.83 117.3%
Operating free cash flow 3.8 10.3 -62.9% 20.4 28.7 -28.7%
Cash conversion 30.2% 104.1%   38.5% 99.7%  
Investments in tangible and intangible assets -3.8 -0.8 344.6% -11.8 -2.6 358.2%
Net debt 43.8 31.9 37.4% 43.8 31.9 37.4%
Leverage 0.8 1.1   0.8 1.1  
Net working capital 41.9 18.0 133.6% 41.9 18.0 133.6%
Adjusted return on capital employed (ROCE) 112.6% 73.3%   112.6% 73.3%  
Equity ratio 42.4% 42.0%   42.4% 42.0%  
Number of employees at end of period 824*** 617 33.5% 824*** 617 33.5%

* Consists of items outside the ordinary course of business, relating to the Group’s strategic development projects, acquisitions, restructuring expenses and loss on sale of fixed assets, and affecting comparability.

** Adjusted by items affecting comparability.

*** Includes the personnel of Kirami and Sauna-Eurox, totaling 71 employees on 31 December 2021.

Financial targets and outlook

Harvia targets an average annual revenue growth of more than 5%, an adjusted operating profit margin exceeding 20% and a net debt/adjusted EBITDA between 1.5x−2.5x in the long term. The future impacts of changes in IFRS reporting standards have been excluded in the net debt/adjusted EBITDA ratio target.

The company has set long-term targets related to growth, profitability and leverage. The company’s management estimates that due to the special circumstances caused by the COVID-19 pandemic, the sauna and spa market has experienced exceptionally high demand. This, however, is not expected to have an impact on the long-term growth expectations of the sauna and spa market, nor on Harvia’s long-term targets.

Harvia does not publish a short-term outlook.

Tapio Pajuharju, CEO:

I am very happy and proud of being part of the outstanding Harvia team: Excellent performance and effort continued during the fourth quarter, and we are very pleased with 2021. Everyone in the team has done great job in demanding conditions. A job more than well done. Thank you!

The underlying market demand and sentiment have remained favorable in all product categories. In the last quarter, we continued on the growth path and reached a healthy topline growth of EUR 11.2 million or 31.9%. We experienced some shortages of critical componentry impacting sales of control units. The capacity constraints had an unfavorable impact on sales of sauna rooms.

We have continued to gain market share and improve our position in the market. We estimate that Harvia has taken the leading position in the global sauna and spa market. The gain has been strongest in Europe. We have also opened new markets, such as Japan, Australia, and New Zealand. Our growth in Finland and Scandinavia has been robust, and in Scandinavia, we are now very close to the market leader. 

The full-year figures reflect the excellent execution of our strategy. Our revenue amounted to EUR 179.1 million, increasing by EUR 70 million or 64.2% year on year. Despite the highly demanding situation in the supply chain and logistics, we were able to maintain excellent profitability in the fourth quarter. Our adjusted operating profit increased to EUR 11.1 million, an improvement of EUR 2.3 million year on year. The relative operating profit decreased by less than 1 percentage point, despite increases in raw material, packaging material prices, logistics costs and changes in the product mix. The recent acquisitions performed well and made a favorable contribution to profitability, yet lower than our average profit margin. The full-year adjusted operating profit landed at EUR 47.3 million, delivering a substantial year-on-year improvement of EUR 22.9 million or 93.9%.

Our cash flow remained strong. We deliberately increased our inventories of critical raw materials and componentry as well as our ready-made goods, which is visible in the increased net working capital. On top of this, we paid the acquisitions of Kirami and Sauna-Eurox as well as the investments of EUR 11.8 million with cash funds. This has temporarily impacted our cash position.

The availability of certain components and raw materials has caused some delay and increased our order stock, but our ability to serve our customers has remained good. We have addressed the escalating prices of raw materials and components as well as the increased logistics costs in our pricing with a firm grip. This process is ongoing.

Despite the challenges caused by the pandemic, all of our production units have performed well. Our capacity utilization has been excellent. To further boost the capacity and improve productivity, we completed an all-time high investment program of EUR 11.8 million during 2021. We opened a new sauna factory in Lewisburg, West Virginia, USA, expanded and upgraded the capabilities at the Muurame factory, expanded capacity at our sauna factory in Romania and the capabilities in our factory in China, expanded the warehousing and logistics capacity at Kirami, upgraded the EOS Driedorf machinery and capacity, as well as laid the ground for improving internal logistics at the Muurame facility. All our investments were completed on time and on budget.

I am extremely happy that the EOS team and operations are well integrated in the family and performing ahead of the plan. On top of this, the integration of the recently acquired Kirami business as well as Sauna-Eurox, manufacturer of high quality and sustainable sauna stones, has progressed according to plans.

Harvia has always paid a great deal of attention and effort on environmental, social, and corporate governance issues. The year 2021 was no exception. We created a sustainability program for 2022–2025. We also carried out a review of our current C02 impact. Our starting point for decreasing our CO2 footprint further is good, and we are committed to continuous improvement.

The sauna and spa market continues to enjoy good momentum. The general awareness of health benefits of regular sauna bathing is gaining attention globally. This applies to all sauna markets and all sauna types and cultures.

The year of 2021 was unusual by all standards and very demanding on our people. We remain committed to keeping all our people safe, fully functional, and highly motivated. We conducted a group-wide People Power Survey in the last quarter of the year. The results confirmed that the spirit and motivation of our personnel is on a very good level. This gives us an even better fundament to work focused on our strategy of increasing the value of the average purchase, geographical expansion, and continuous improvement of productivity and innovation. M&A activity in the sauna and spa market remains high. As stated in our strategy, we will continue to seek opportunities to grow both organically and through M&As.

After analyzing the market and its dynamics, we maintain our general outlook for the market and estimate that for the next few years the market growth will exceed the historical average. However, we continue to estimate that part of the growth is so-called advance demand, which is normalizing for the residential market while the professional market is gaining momentum. This is not expected to affect the long-term expectations of the sauna and spa market.

Press conference on financial results

Harvia will hold a webcast for analysts, investors and media on 10 February 2022 at 11:00 a.m. EET. The conference will be held in English. Harvia’s CEO Tapio Pajuharju and CFO Ari Vesterinen will host the event. The webcast can be followed at https://harvia.videosync.fi/2021-q4-results/.

You can also participate in the conference by calling:

Finland: +358 9 8171 0310
Sweden: +46 856 642 651
UK: +44 333 300 0804
US: +1 631 913 1422

PIN: 60749534#

A recording of the webcast will be available later at the company’s website https://harviagroup.com/investor-relations/.

For more information, please contact:

Tapio Pajuharju, CEO, tel. +358 50 5774 200
Ari Vesterinen, CFO, tel. +358 40 5050 440

Harvia is one of the leading companies operating in the sauna and spa market globally, as measured by revenue. Harvia’s brands and product portfolio are well known in the market, and the company’s comprehensive product portfolio strives to meet the needs of the international sauna and spa market of both private and professional customers.

Harvia’s revenue totaled EUR 179.1 million in 2021. Harvia Group employs more than 800 professionals in Finland, China and Hong Kong, Romania, Austria, United States, Germany, Estonia and Russia. The company is headquartered in Muurame, Finland, adjacent to its largest sauna and sauna component manufacturing facility.

Read more: https://harviagroup.com