Harvia’s Interim report 1 January – 30 September 2023
Harvia Plc, Interim report 2 November 2023 at 9.00 a.m. EET
Harvia Q3 2023: Strong profitability and cash flow
while sales declined due to a challenging market in Europe
This release is a summary of Harvia Plc’s Interim Report
January–September 2023. 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
July–September 2023:
- Revenue decreased by 9.2% to EUR 34.0 million (37.4). At
comparable exchange rates, revenue decreased by 6.8% to EUR 34.9
million. Organic revenue growth was -4.9%.
- Operating profit was EUR 6.8 million (7.3), making up 20.0%
(19.5) of the revenue.
- Adjusted operating profit reached EUR 6.9 million (7.6), making
up 20.3% (20.4) of the revenue. At comparable exchange rates, the
adjusted operating profit was EUR 7.2 million (20.6% of the
revenue).
- Operating free cash flow amounted to EUR 8.3 million (9.8) and
cash conversion was 98.7% (105.6).
January–September 2023:
- Revenue decreased by 17.2% to EUR 111.1 million (134.3). At
comparable exchange rates, revenue decreased by 16.5% to EUR 112.1
million. Organic revenue growth was -13.6%.
- Operating profit was EUR 23.8 million (28.1), making up 21.4%
(20.9) of the revenue.
- Adjusted operating profit reached EUR 24.1 million (28.5),
making up 21.7% (21.2) of the revenue. At comparable exchange
rates, the adjusted operating profit was EUR 24.6 million (22.0% of
the revenue).
- Operating free cash flow amounted to EUR 29.1 million (18.9)
and cash conversion was 101.2% (56.4). The change in net working
capital increased the operating free cash flow and cash
conversion.
- Net debt amounted to EUR 40.6 million (60.1) and leverage,
calculated as net debt divided by 12 months’ adjusted EBITDA, was
1.1 (1.3).
- Equity ratio was 47.7% (44.9).
- Earnings per share were EUR 0.86 (1.23).
- On 28 March 2023, the Board of Directors of Harvia plc
appointed Matias Järnefelt as Harvia’s CEO. Järnefelt started in
his position on 1 June 2023.
Key figures
|
EUR million |
7-9/ 2023 |
7-9/ 2022 |
Change |
1-9/ 2023 |
1-9/ 2022 |
Change |
1-12/ 2022 |
| Revenue |
34.0 |
37.4 |
-9.2% |
111.1 |
134.3 |
-17.2% |
172.4 |
| EBITDA |
8.3 |
8.9 |
-6.8% |
28.5 |
33.0 |
-13.8% |
41.2 |
| % of
revenue |
24.5% |
23.9% |
|
25.6% |
24.6% |
|
23.9% |
| Items
affecting comparability * |
0.1 |
0.3 |
-68.4% |
0.3 |
0.4 |
-20.2% |
1.8 |
| Adjusted
EBITDA ** |
8.4 |
9.3 |
-9.1% |
28.8 |
33.4 |
-13.9% |
42.9 |
| % of
revenue |
24.8% |
24.8% |
|
25.9% |
24.9% |
|
24.9% |
| Operating
profit |
6.8 |
7.3 |
-7.1% |
23.8 |
28.1 |
-15.3% |
34.7 |
| % of
revenue |
20.0% |
19.5% |
|
21.4% |
20.9% |
|
20.1% |
| Adjusted
operating profit ** |
6.9 |
7.6 |
-9.8% |
24.1 |
28.5 |
-15.3% |
36.5 |
| % of
revenue |
20.3% |
20.4% |
|
21.7% |
21.2% |
|
21.1% |
| Basic EPS
(EUR) |
0.24 |
0.34 |
-29.9% |
0.86 |
1.23 |
-30.4% |
1.45 |
| Operating free
cash flow |
8.3 |
9.8 |
-14.9% |
29.1 |
18.9 |
54.5% |
34.0 |
| Cash
conversion |
98.7% |
105.6% |
|
101.2% |
56.4% |
|
79.1% |
| Investments in
tangible and intangible assets |
-0.5 |
-0.8 |
-32.5% |
-1.7 |
-2.9 |
-41.7% |
-3.6 |
| Net debt |
40.6 |
60.1 |
-32.5% |
40.6 |
60.1 |
-32.5% |
54.5 |
| Leverage |
1.1 |
1.3 |
|
1.1 |
1.3 |
|
1.3 |
| Net working
capital |
35.9 |
49.1 |
-26.9% |
35.9 |
49.1 |
-26.9% |
45.3 |
| Adjusted
return on capital employed (ROCE) |
42.5% |
61.5% |
|
42.5% |
61.5% |
|
54.5% |
| Equity
ratio |
47.7% |
44.9% |
|
47.7% |
44.9% |
|
47.3% |
| Number of
employees at end of period |
600 |
731 |
-17.9% |
600 |
731 |
-17.9% |
633 |
* Consists of items outside the ordinary course of business,
relating to the Group’s strategic development projects,
acquisitions, business divestments, restructuring and loss on sale
of fixed assets, and affecting comparability.
** Adjusted by items affecting comparability.
Financial targets and outlook
The company has set long-term targets related to growth,
profitability and leverage. 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.
Harvia does not publish a short-term outlook.
Harvia’s dividend policy is to pay a regularly increasing
dividend with a bi-annual payout.
Matias Järnefelt, CEO:
The third quarter of 2023 showed again Harvia’s ability to
maintain good profitability and cash flow in challenging market
conditions.
In the third quarter, our revenue reached EUR 34.0 million,
showing a decline of 9.2% from the previous year. Our sales, as
well as our profitability, were still affected by our complete exit
from Russia and we faced increased headwind from the exchange
rates. Organic growth was -4.9%. Even if the revenue still
declined, the rate of change was smaller than in the previous
quarters of 2023.
The significant differences in sales development between
European and non-European market areas continued in the third
quarter. In North America, which has become our largest reported
market area, the market and Harvia’s sales continued on a very
positive growth path. This was also reflected in our group-level
sauna room sales, as sauna rooms form the majority of our business
in North America. In Asia, our sales performance was also strong.
This includes Japan, where our continuous work is visible in the
improving sales performance.
In Europe, low consumer confidence, higher interest rates and
difficulties in the construction sector continued to impact the
sales performance. Sales decline continued in the DACH area. The
challenging market environment was visible also in the weakened
demand in Finland and Scandinavia. The tough market conditions were
reflected in the sales of most product groups.
The third quarter’s adjusted operating profit was EUR 6.9
million, decreasing 9.8% from the comparison period and amounting
to 20.3% of revenue. Our systematic and diligent efforts to manage
pricing, capacity, and supply chain according to the market
environment again supported Harvia’s profitability which was in
line with our long-term financial target level. Operating free cash
flow was also strong, reaching EUR 8.3 million. Moreover, we
succeeded to decrease our inventories without compromising on our
service level. In September, we strengthened our supply chain
resilience through the acquisition of Italian electromechanical
timer manufacturer Phoenix El-Mec. I want to express my sincere
thanks to the entire team Harvia and our partners for the great
work done in the third quarter.
Harvia will continue to drive profitable growth especially
outside Europe in attractive and large markets, for example in
North America and Asia-Pacific. Additionally, we aim to strengthen
our position, increase efficiency, and seek avenues for growth also
in Europe, even if the challenging market environment largely seems
to prevail for the time being. All this is fully in line with
Harvia’s strategic cornerstones of geographical expansion,
increasing the value of average purchase, and systematic
improvement of productivity.
To strengthen the execution of strategy, Harvia will adjust its
organizational structure and make changes to its Group Management
Team as announced on 17 October. The new structure consists of four
sales regions and five group functions as well as a dedicated
management team position for our high-end brand EOS. With these
changes that will be effective as of 1 January 2024, we will
increase customer and market orientation and drive our organic
growth. Moreover, we want to strengthen our innovation and
differentiation capabilities and better leverage our synergies
across the Group.
While we are making some changes to our organization and ways of
working, Harvia continues to drive its strategic cornerstones. Our
long-term financial targets remain unchanged. We continue to seek
opportunities to grow also through M&A, for which the new
organization structure offers a good platform. Even if the market
conditions look mixed in the short-term, the long-term potential
and opportunities of the sauna and spa industry look attractive. I
feel confident that Harvia has a bright future as the leader of the
sauna and spa industry.
Press conference on financial results
Harvia will hold a webcast for analysts, investors and media on
2 November 2023 at 11:00 a.m. EET. The conference will be held in
English. Harvia’s CEO Matias Järnefelt and CFO Ari Vesterinen will
host the event. The webcast can be followed at
https://harvia.videosync.fi/q3-2023.
A recording of the webcast will be available later on the
company’s website https://harviagroup.com/investor-relations/.
For more information, please contact:
Matias Järnefelt, CEO, tel. +358 40 5056 080 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 172.4 million in 2022. Harvia Group
employs approximately 600 professionals in Finland, Germany, United
States, Romania, China and Hong Kong, Austria, Italy, Estonia, and
Sweden. The company is headquartered in Muurame, Finland, adjacent
to its largest sauna and sauna component manufacturing
facility.
Read more: https://harviagroup.com
- Harvia-Plc-Interim Report-Q3-2023-ENG
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