Harvia’s half-year financial review 1 January – 30 June 2019

Stock Exchange Release | 16 August 2019

Harvia Plc, Half-year financial review, 16 August 2019 at 9.00 a.m. EET

Profitable growth continued

This release is a summary of Harvia Plc’s January–June 2019 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 2019

  • Revenue grew by 11.4% to EUR 17.0 million (15.3). At comparable exchange rates, revenue grew by 11.0% to EUR 16.9 million.
  • Adjusted operating profit was EUR 2.8 million (2.4), making up 16,5% (16.0) of the revenue. At comparable exchange rates, the adjusted operating profit grew by 9.4% to EUR 2.7 million (15.8% of the revenue).
  • Operative free cash flow amounted to EUR 2.2 million (0.4).

January–June 2019

  • Revenue grew by 14.3% to EUR 36.3 million (31.8). At comparable exchange rates, revenue grew by 13.9% to EUR 36.2 million.
  • Adjusted operating profit was EUR 6.8 million (5.7), making up 18.7% (17.8) of the revenue. At comparable exchange rates, the adjusted operating profit grew by 15.6% to EUR 6.5 million (18.1% of the revenue).
  • Operating free cash flow amounted to EUR 3.9 million (2.3).
  • Net debt amounted to EUR 33.9 million (31.0) and leverage was 2.3 (2.4).
  • Equity ratio increased to 56.0% (54.9).

Key figures

EUR million4-6/20194-6/2018Change, %1-6/20191-6/2018Change,%2018
% of revenue20.4%19.4% 22.2%16.9% 18.6%
Items affecting comparability **0.10.0230.5%0.31.3-80.8%1.5
Adjusted EBITDA ***
% revenue21.1%19.6% 22.9%21.1% 21.0%
Operating profit2.72.411.5%6.54.350.5%9.4
% revenue15.8%15.7% 18.0%13.6% 15.1%
Adjusted operating profit ***2.82.414.9%6.85.719.8%10.9
% revenue16.5%16.0% 18.7%17.8% 17.5%
Basic EPS (EUR)****0.100.0822.6%0.240.2210.1%0.41
Operating free cash flow2.20.4532.3%3.92.368.6%10.0
Cash conversion62.2%11.8% 47.4%34.9% 77.0%
Investments in tangible and intangible assets-0.6-0.2151.3%-1.1-0.828.2%-1.6
Net debt *33.931.09.4%33.931.09.4%30.3
Leverage2.32.4 2.32.4 2.3
Net working capital20.520.40.3%20.520.40.3%17.5
Adjusted return on capital employed (ROCE)30.6%30.8% 30.6%30.8% 31.6%
Equity ratio56.0%54.9% 56.0%54.9% 56.3%
Personnel at the end of period4043816.0%4043816.0%400

* Adoption of IFRS 16 Leases standard increased EBITDA by EUR 289 thousand and net debt by EUR 2.7 million at the end of June 2019.

** 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.

**** Earnings per share (EPS) in January–June 2018 were EUR 0.17, calculated based on the number of shares after the listing.

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:

Harvia’s growth and profitability remained stable and strong in January−June 2019. We achieved a revenue of EUR 36.3 million during the review period, exceeding the revenue of the comparison period by 14.3 percent. Our positive revenue trend continued also during the second quarter.

During the review period, revenue growth was especially strong in the sauna room product group, which grew by 90.4 percent. The growth of sauna heaters exceeded the five percent growth target as well, in both electric and wood-burning heaters. Control units saw an improvement from the weak demand at the beginning of the year, and during the first half-year, we exceeded the level of last year’s comparison period. The demand for other product groups remained steady.

Revenue development was mainly positive in all our key markets. The US market continued its strong growth, and at the same time we strengthened our position in the Scandinavian countries, France, the Benelux countries and in the UK. The development of revenue in Germany was good in the second quarter, and we were able to achieve a three percent growth in sales after a challenging beginning of the year.  In Finland, the very strong first quarter temporarily increased our customers’ stock levels, but the situation normalized in the second quarter. The Russian market has been exceptionally volatile, and the strong beginning of the year turned into a slight decline before summer.

The profitability of business operations remained strong and the adjusted operating profit of the review period grew to EUR 6.8 million, or 18.7 percent of revenue.

The integration of the US-based Almost Heaven Saunas, acquired at the end of 2018, proceeded as planned. The business operations were also profitable. At the same, AHS’s product range has been renewed, its customer base and distribution network have been expanded, and production as well as logistics have been streamlined.

Harvia’s first half of 2019 is a strong demonstration of good cooperation, and I am extremely pleased with the efforts of the Harvia team and our key customers. During the remainder of 2019, we will continue the systematic implementation of our strategy, focusing on increasing the value of the average purchase, geographical expansion as well as the continuous improvement of productivity. In addition to organic growth, Harvia is actively looking into possibilities of growth through business acquisitions.

Press conference

Harvia will hold a press conference in English for analysts, investors and media today, Friday August 16, 2019 at 11:00 a.m. Finnish time. The press conference is held at Allas Sea Pool, Itämerikeskus (address: Katajanokanlaituri 2a, Helsinki, Finland). CEO Tapio Pajuharju and CFO Ari Vesterinen will host the event.

A live webcast of the conference is available at: https://harvia.videosync.fi/2019-q2-results.

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 40 505 0440

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.

Read more www.harvia.fi