Harvia’s Financial statements bulletin January 1 – December 31, 2018: Steady profitability and investing in growth

Stock Exchange Release | 14 February 2019


This release is a summary of Harvia Plc's Financial statements bulletin 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

October-December 2018:

  • Revenue grew by 0.5% to EUR 16.2 million (16.1). At comparable exchange rates, revenue grew by 2.1%, to EUR 16.5 million.
  • Adjusted operating profit was EUR 2.9 million (2.8), making up 17.6% (17.6) of the revenue. At comparable exchange rates, the adjusted operating profit grew by 1.9% to EUR 2.9 million (17.6% of the revenue).
  • Operating free cash flow amounted to EUR 5.1 million (5.0).
  • Harvia acquired the business operations of Almost Heaven Saunas LCC in the United States on December 28, 2018.

January-December 2018:

  • Revenue grew by 3.1% to EUR 61.9 million (60.1). At comparable exchange rates, revenue grew by 4.6%, to EUR 62.9 million.
  • Adjusted operating profit was EUR 10.9 million (10.7), making up 17.5% (17.8) of the revenue. At comparable exchange rates, the adjusted operating profit grew by 5.2 % and was EUR 11.3 million (17.9% of the revenue). 
  • Operating free cash flow amounted to EUR 10.0 million (9.0).
  • Net debt decreased by 58.5% to EUR 30.3 million (73.0) and leverage was 2.3 (5.8).
  • Due to the share issue, equity ratio increased to 56.3% (16.9).
  • Special efforts during the year: IPO in the first quarter, recruitment of the new Scandinavian sales director, focus on new product launches, especially the launch of SENTIO by Harvia, acquisition of the business operations of Almost Heaven Saunas LLC.
  • The Board of Director's proposal for the distribution of profit is EUR 0.37 per share, to be paid in two instalments.


Key figures

EUR million 10-12/
Change 1-12/
Revenue 16.2 16.1 0.5 % 61.9 60.1 3.1 %
EBITDA 3.3 2.2 48.9 % 11.5 11.2 3.1 %
% of revenue 20.5 % 13.8 %   18.6 % 18.6 %  
Items affecting comparability * 0.1 1.1 -90.9 % 1.5 1.4 3.0 %
Adjusted EBITDA ** 3.4 3.3 2.7 % 13.0 12.6 3.1 %
% of revenue 21.1 % 20.6 %   21.0 % 21.0 %  
Operating profit 2.8 1.7 57.9 % 9.4 9.3 1.2 %
% of revenue 17.0 % 10.8 %   15.1 % 15.4 %  
Adjusted operating profit ** 2.9 2.8 0.4 % 10.9 10.7 1.5 %
% of revenue 17.6 % 17.6 %   17.5 % 17.8 %  
Basic EPS (EUR) 0.11 0.00 2651.0 % 0.41 0.30 34.1 %
Operating free cash flow 5.1 5.0 1.7 % 10.0 9.0 10.9 %
Cash conversion 148.2 % 149.8 %   77.0 % 71.6 %  
Investments in tangible and intangible assets -0.4 -0.4 12.8 % -1.6 -1.2 35.2 %
Net debt 30.3 73.0 -58.5 % 30.3 73.0 -58.5 %
Leverage 2.3 5.8   2.3 5.8  
Net working capital 17.5 17.3 1.4 % 17.5 17.3 1.4 %
Adjusted return on capital employed (ROCE) 31.6 % 32.7 %   31.6 % 32.7 %  
Equity ratio 56.3 % 16.9 %   56.3 % 16.9 %  
Number of employees at end of period 400 365 9.6 % 400 365 9.6 %
* 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 long-term 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 been 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.

Tapio Pajuharju, CEO:
The fourth quarter was very solid for Harvia. In Finland, Scandinavia and other countries, the positive trend in sales remained strong. The final quarter of the year was very active and included exceptionally wide promotion of the Harvia product range and new products. Harvia's products and the SENTIO by Harvia range and its professional offering were launched in Finland at both Habitare and Finnbuild trade fairs. In international and especially Central European markets, Harvia participated in the Interbad fair in Stuttgart, Germany, as well as in the largest swimming pool event in Europe, the Piscine fair in Lyon, France. Harvia's comprehensive offering for both the consumer and professional market was well presented at both events.

Revenue for the final quarter, EUR 16.2 million, remained at the same level year on year (16.1). The adjusted operating profit increased to EUR 2.9 million from the previous year's EUR 2.8 million. The adjusted operating profit margin was 17.6% and remained at the same level year on year. With most of our customers, the exceptionally long break during Christmas and New Year caused some changes in the timing of some deliveries. In addition, the timing of the deliveries in the Russian market was reflected in the sales in December. The acquisition of Almost Heaven Saunas was a big and favorable step for Harvia but for the last quarter of the year, it did have an unfavorable impact on the US deliveries.

In 2018, our total revenue grew by 3.1% to EUR 61.9 million. The revenue faced some currency headwinds, but at comparable exchange rates we experienced 4.6% growth, which is approaching the targeted level. We were able to generate growth in all product groups, when taking into consideration the discontinued private label sales in Central Europe in the control units' revenue. This is a clear signal that we are on the right path and have developed well into a comprehensive one-stop shop operator in the sauna and spa market. The adjusted operating profit, EUR 10.9 million, improved year on year (EUR 10.7 million) and was 17.5% of revenue (17.8%). The slight reduction in relative profitability was caused by the relatively strong revenue growth in low-margin product groups, such as sauna rooms.

A significant step in our geographical expansion was the acquisition of the American Almost Heaven Saunas LLC's business operations at the end of 2018. Almost Heaven Saunas is one of the leading companies specialized in sauna and spa products in the United States. Almost Heaven Saunas has been Harvia's customer since 2013 and has experience in the US sauna business since 1978. The company's strong growth has contributed to the good development of our product sales. Together with Harvia's current long-term partners, Almost Heaven Saunas offers an opportunity to serve our North American customers better and faster with a wider offering.

In Sweden, we updated Harvia's offering and renewed our in-store visibility. In addition, we strengthened the organization as the new Scandinavian Sales Director started in November. In other EU markets, distribution strengthened as planned, and thanks to Sentiotec we have been able to get significantly closer to the Central European sauna culture and our customers. In Central and Southern Europe, we have increased our cooperation with the two largest operators in the swimming pool sector, Fluidra and SCP. In Russia, in addition to expanding into new regions, we have improved our distribution and product range in Moscow and St. Petersburg. In China, we have an expanded product range and a highly efficient production facility.

At the end of the year, SENTIO by Harvia products became available to our professional customers. In Helsinki, for example, a SENTIO by Harvia sauna heater equipped with a control unit was installed at the Allas Sea Pool at the end of the year. The Wall product family grew as planned, and we completed The Wall Combi heater featuring a steamer, as well as high-power models that were launched at the end of the year. The popular Harvia Cilindro pillar heater was complemented with a taller, impressive-looking and modern Cilindro Plus model, equipped with an illuminated and childproof control unit, which also became available in key markets in late fall.

All of the above-mentioned new products and the positive development in sales of, for example, infrared saunas, steam generators and spare parts, are implementing our strategy of increasing the value of the average purchase and raising our share in our customers' purchases.

The continuous and systematic improvement of productivity progressed as planned at all of our production facilities during 2018. At the Muurame factory we invested into new automation technology which further improves productivity of component manufacturing. We also implemented a software which improves the efficiency of inner and outer logistics by optimizing product flow and the layout of the factory. By the same token, we also implemented a precise QR code based control system and an individual tracking system for products. In Romania, the focus was on developing the production process and training personnel. In China, we further diversified the factory's product range, changed the layout and successfully completed the Lean project in order to further drive productivity improvements.

During the year, we also continued to focus on sustainable development and responsibility. We organized trainings and further developed our methods to systematically measure the sustainability themes.

The starting point for the new year remains positive. We do not anticipate any significant changes in the operating environment in 2019, and we believe that the current market situation will support the company's business operations also in 2019. The gradual expansion of our sales network continues as we aim to diversify our clientele in the current operating markets and to further expand our geographical operating regions.

Proposal by the Board of Directors for distribution of profit
The unrestricted equity of Harvia Plc amounts to EUR 63,238,441.27, of which the result for the financial period 2018 amounts to EUR 7,860,902.59.

Harvia targets a regularly increasing dividend with a bi-annual dividend payout of at least 60 percent of net income, in total. To set the dividend, the Board of Directors has assessed the liquidity and financial position of Harvia Plc after the end of the financial period.

The Board of Directors of Harvia Plc proposes to the Annual General Meeting that a dividend of EUR 0.18 per share be distributed after the Annual General Meeting in April 2019 for the financial period that ended on December 31, 2018. In addition, the Board of Directors of Harvia Plc requests the Annual General Meeting to authorize the Board to distribute a dividend amounting to a maximum of EUR 0.19 per share in October 2019.

Thus, the dividends distributed by Harvia for 2018 based on the Board of Director's proposal would amount to a maximum of EUR 0.37 per share, or a maximum of EUR 6,916,867.32 in total.

Press conference on financial results
Harvia will hold a press conference in English for analysts, investors and media today, Thursday February 14 at 11:00 a.m. Finnish time. The press conference is held in the Smart & Clean Showroom of Allas Sea Pool (address: Katajanokanlaituri 2a, Helsinki). The CEO Tapio Pajuharju and CFO Ari Vesterinen will host the event.

A live webcast of the conference is available at: https://harvia.videosync.fi/2018-results/register.

You can also participate in the conference by telephone:

FI: +358 9 8171 03 10

SE: +46 8 5664 26 51

UK: +443 333000804

US: +1 6319131422

PIN: 32075725#

Questions to the presenters can be made in Finnish or in English at the end of the press conference. The webcast is recorded and will be made available on Harvia's website.

For further information, please contact:
CEO Tapio Pajuharju,  tel. +358 50 577 4200
CFO Ari Vesterinen, tel. +358 40 505 0440

Harvia in short
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 61.9 million in 2018, its operating profit was EUR 9.4 million and adjusted operating profit EUR 10.9 million during the same period. The company employs some 400 professionals in Finland, China and Hong Kong, Romania, Austria, United States, Germany and Estonia. The company is headquartered in Muurame, Finland, adjacent to its largest sauna and sauna component manufacturing facility.