Harvia’s Interim Report 1 January – 31 March 2021

Stock Exchange Release | 5 May 2021

Harvia Plc, Interim report 5 May 2021 at 9.00 a.m. EET

Harvia’s revenue and operating result exceptionally strong during the first quarter of 2021

This release is a summary of Harvia Plc’s Interim Report January–March 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

January–March 2021:

  • Revenue increased by 94.6% to EUR 39.6 million (20.4). At comparable exchange rates, revenue increased by 100.3% to EUR 40.8 million. The impact of EOS on growth was substantial, but organic revenue growth was also strong at 61.9%.
  • Adjusted operating profit increased to EUR 11.1 million (4.2), making up 28.1% (20.6) of the revenue. At comparable exchange rates, the adjusted operating profit increased to EUR 11.6 million (28.5% of the revenue).
  • Operating profit was EUR 11.0 million (3.1), making up 27.9% (15.3) of the revenue.
  • Operating free cash flow amounted to EUR 8.1 million (5.9).
  • Net debt amounted to EUR 26.9 million (24.3) and leverage was 0.7 (1.4).
  • Equity ratio was 44.2% (57.1).
  • Harvia has taken special measures in all of its operating countries to ensure the safety of its personnel and safeguard the continuity of its operations and services in the exceptional situation caused by the COVID-19 pandemic. Despite the pandemic, we have maintained our operative and customer service capabilities close to their regular level.

Key figures

EUR million1-3/20211-3/2020Change, %2020
% of revenue31.0%19.3% 24.5%
Items affecting comparability*0.11.1-93.4%2.1
Adjusted EBITDA**12.35.0145.7%28.8
% of revenue31.1%24.7% 26.4%
Operating profit11.03.1255.5%22.4
% of revenue27.9%15.3% 20.5%
Adjusted operating profit**11.14.2164.8%24.4
% of revenue28.1%20.6% 22.4%
Basic EPS (EUR)0.440.13246.7%0.83
Operating free cash flow8.15.938.2%28.7
Cash conversion66.0%117.4% 99.7%
Investments in tangible and intangible assets-1.5-0.3383.8%-2.6
Net debt26.924.310.5%31.9
Leverage0.71.4 1.1
Net working capital21.015.237.7%18.0
Adjusted return on capital employed (ROCE)91.0%37.7% 73.3%
Equity ratio44.2%57.1% 42.0%
Number of employees at end of period***686***39971.9%617***


* 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 EOS Group, totaling 168 employees on 31 March 2021.

Financial targets and outlook

The company targets an average annual revenue growth of more than 5%, an adjusted operating profit margin of 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.

Harvia targets a regularly increasing dividend with a bi-annual dividend payout of at least 60% of Group net income, in total.

Tapio Pajuharju, CEO:

Traditionally, the first quarter is very good in the sauna and spa industry. During the first quarter of 2021, we experienced exceptional demand in all of our key markets and product categories. Despite incremental challenges caused by the pandemic and limitations in availability of key raw materials and componentry, the whole Harvia team and especially operations and supply chain have done amazing work in ramping up production volumes and productivity during the first quarter. The outcome is best reflected in the substantial growth in our revenue as well as in improved profitability. I would like to pass my humble and sincere thanks to everyone involved in making this happen. Great work, all of you! Thank You.

Our revenue landed at EUR 39.6 million, representing a record growth of EUR 19.2 million, or 94.6%, year on year. The impact of the EOS acquisition is clear and visible, but having said this, we remain very happy that also our organic growth was an excellent 61.9%. Altogether, the sales performance was so strong that this level brings us on par, if not slightly ahead, of the largest player in the sauna and spa market. By the same token, it is good to reinforce the management judgement regarding the sauna and spa market. According to Harvia’s estimate, the sauna and spa market is experiencing some incremental growth due to the increased awareness and appreciation of sauna and spa related health benefits. Furthermore, it is good to recognize that a part of the demand is so-called advance demand.

On top of the strong performance in sales, we continued our robust improvement of profitability, even somewhat ahead of plans. The first quarter’s operating profit was EUR 11.0 million (operating profit margin 27.9%), which represents a staggering growth of 255% year on year.

Volatility in the availability of key raw materials has caused some changes in our sourcing policy, and we have been gradually increasing the stock levels of critical raw materials and components. This is somewhat visible in our net working capital. The volatility is expected to continue for the time being. We have also seen substantial volatility in the prices of some key raw materials like steel, lumber, and electronics. We have analyzed the situation in great detail, and with good cooperation with our customers and partners. We have implemented an action plan where we are landing on a balance between incoming and outgoing pricing. The solid and strong demand has led to a situation where we have prolonged some of our standard delivery times. I am very pleased with how this has been discussed with and received by our customers.

EOS is becoming an integral part of the Group, and both the integration process and collaboration are progressing well. Despite the pandemic, the sales of EOS products in new markets are progressing, and we expect to receive product approvals for the North American and Asian markets for selected flagship products as planned before the end of 2021.

Regarding our operational capacity, we have been able to finalize the new machinery installations at the Renick facility in the US, at the sauna factory in Romania, as well as in the heater manufacturing in Muurame, Finland. During the first quarter, the expansion plans for Muurame and the acquisition of a new production facility in Lewisburg, West Virginia in the US have been finalized. We have been adding new labor as well as new flexible shift models in order to further increase the available capacity. For Harvia, the mid-term demand seems to remain strong, and we may need to consider further expanding our capacity, especially in the sauna category.

During the remainder of 2021, we will continue to be fully focused on the cornerstones of our strategy by working on increasing the value of the average purchase, geographical expansion, and continuous improvement of productivity. M&A activity in the sauna and spa market increased throughout the year 2020. In line with our strategy, we continue to seek opportunities to grow in the sauna and spa market also through M&A.

Press conference on financial results

Harvia will hold a webcast for analysts, investors and media on 5 May 2021 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-q1-results.

You can also participate in the conference by calling:

Finland: +358 981 710 310

Sweden: +46 856 642 651

UK: +44 333 300 0804

US: +1 631 913 1422

PIN: 85857878#

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 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 109.1 million in 2020. Harvia Group employs more than 600 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/