Harju Elekter Group financial results, 1-9/2023
Harju Elekter’s Q3 financial results continue to
be profitable. A strong profit is Harju Elekter’s most important
sustainability objective, without which it will not be possible to
meet the growing expectations of stakeholders. The third quarter
saw a number of important and successful events: the appointment of
managing directors for subsidiaries in Sweden and Finland; winning
the procurement contract with Elektrilevi for supplying substations
for the next five years; and exiting the wholesale and retail
business in Estonia. Although the individual project contracts
signed by our Swedish subsidiary a few years ago have proven to be
more unprofitable than expected, the potential of the Swedish
market and the demand for our products are sufficient to continue
our efforts of starting up a factory in Sweden and reaching
profitability in the coming quarters and years. Evaluating Harju
Elekter's overall financial position and the developments resulting
from the restructuring of the Group's management structure, Harju
Elekter can be satisfied with the results as it celebrates its 55th
year of operation.
Revenue and financial
results
The Group's revenue for the reporting quarter
was 56.2 (2022 Q3: 46.1) million euros, growing by 22.1% compared
to the comparable period. Nine-month revenue increased by 26.3%
compared to the comparable period, being 158.3 (2022 9M: 125.3)
million euros. The majority of the increase in revenue came from
the sale of electrical equipment, increasing by 11.7 million euros
year-on-year. In the comparison of nine months, the revenue of
electrical equipment increased by 39.4 million euros.
|
EUR’000 |
|
Q3 |
Q3 |
+/- |
9 M |
9 M |
+/- |
| |
|
2023 |
2022 |
|
2023 |
2022 |
|
|
Revenue |
|
56,247 |
46,081 |
22.1% |
158,277 |
125,315 |
26.3% |
| Gross profit |
|
7,378 |
5,803 |
27.1% |
19,372 |
9,751 |
98.7% |
| EBITDA |
|
4,899 |
3,182 |
54.0% |
10,524 |
1,161 |
806.5% |
| Operating
profit/loss (-) (EBIT) |
|
3,846 |
1,691 |
127.4% |
7,323 |
-2,482 |
395.0% |
| Profit/loss (-)
for the period |
|
3,393 |
1,406 |
141.3% |
5,026 |
-3,085 |
262.9% |
|
Earnings per share (EPS) (euros) |
|
0.18 |
0.08 |
137.5% |
0.27 |
-0.17 |
258.8% |
The Group's operating expenses totaled 52.4
(2022 Q3: 44.3) in the reporting quarter and 150.4 (2022 9M: 127.8)
million in nine months. The majority of the increase in operating
expenses was caused by the increase in the costs of sales, which in
both periods was below the growth rate of revenue, by 0.8 in the
quarter and by 6.1 percentage points in the nine-month
comparison.
Distribution costs in the reporting quarter were
1.4 (2022 Q3: 1.3) and administration expenses 2.2 (2022 Q3: 2.7)
million euros. The total distribution costs for the nine months
were in the same order of magnitude as the year before – 4.1
million euros, and administrative expenses were 7.5 (2022 9M: 8.2)
million euros.
Labour costs increased in both periods, being 9.3 (2022 Q3: 7.5)
and 29.5 (2022 9M: 25.3) million euros, respectively. The majority
of the increase in labour costs originates from staff growth, and
the growth in average wages was influenced by wage pressure from
the overall economy.
The gross profit for the reporting quarter was
7,378 (2022 Q3: 5,803) thousand euros and the gross margin was
13.1% (2022 Q3: 12.6%). Operating profit (EBIT) was 3,846 (2022 Q3:
1,691) thousand euros. The operating margin of the third quarter
was 6.8% (2022 Q3: 3,7%). The net profit for the reporting quarter
was 3,393 (2022 Q3: 1,406) thousand euros. Net profit per share in
the third quarter was 0.18 (2022 Q3: 0.08) euros.
The gross profit for the nine months was 19,372
(2022 9M: 9,751) thousand euros and the gross margin was 12.2%
(2022 9M: 7.8%). During the nine months, operating profit (EBIT)
was 7,323 (2022 9M: operating loss -2,482) and net profit 5,026
(2022 9M: net loss -3,085) thousand euros. Net profit per share was
0.27 (2022 9M: net loss per share -0.17) euros.
Core business and markets
During the reporting quarter, the Group's core
activity - production - accounted for 95.2% (2022 Q3: 89.3%) of its
revenue. The revenue of the production segment increased by 30.1%
in the reporting quarter and 34.9% compared to nine months, being
53.6 and 150.1 million euros, respectively.
The Group's largest target markets are Estonia,
Finland, Sweden, and Norway, where a total of 81.7% (2022 Q3:
92.6%) of the Group's products and services were sold in the
reporting quarter.
In the third quarter, 5.1 (2022 Q3: 8.9) million
euros were earned from Estonia, which was 3.8 million euros less
than a year earlier. Compared to nine months, the revenue decreased
by 7.0 million to 15.6 million euros. The decrease in revenue in
both periods is mostly related to the termination of the retail and
project-based sale of electrical products in Estonia and the
decrease in sales of electrical equipment to contractual
customers.
Revenue from the Finnish market in the third
quarter was 20.5 (2022 Q3: 21.8) million euros in the third quarter
and 63.7 (2022 9M: 60.6) million in nine months. The majority of
the increase in revenue came from the sale of automation equipment
and low-voltage switchgears to key customers. During the reporting
quarter, 36.5% (2022 Q3: 47.3%) of Harju Elekter products and
services were sold to the Group's largest market.
The revenue of the Swedish market increased due
to the rise in the sale of substations and the growth of project
business, being 7.7 (2022 Q3: 6.4) in the reporting quarter and
23.3 (2022 9M: 15,8) million in the nine months. Sweden accounted
for 13.7% (2022 Q3: 14.0%) of the revenue of the reporting
quarter.
Revenue from the Norwegian market was 12.6 (2022
Q3: 5.5) in the reporting quarter and 28.1 (2022 9M: 12.9) million
euros in nine months. The Norwegian market accounted for 22.4%
(2022 Q3: 12.0%), of the revenue of the reporting quarter, growing
into the second largest market after Finland.
Investments
During the reporting period, Harju Elekter Group
invested a total of 5.0 (2022 9M: 3.1) million euros in non-current
assets, incl 4.2 (2022 9M: 1.6) in investment properties, 0.6 (2022
9M: 1.1) in property, plant, and equipment and 0.2 (2022 9M: 0.4)
million euros in intangible assets. Most of the investments during
the reporting period were made in the construction of the
production building to be rented out to Reimax Electronics OÜ in
the Allika Industrial Park, scheduled to be completed by the end of
the year. In addition, investments were made in other real estate
objects, production technology equipment, and production and
process management systems.
The value of the Group's non-current financial
investments totalled 32.5 (31.12.22: 23.7) million euros as of the
reporting date. Due to the revaluation of financial assets
performed in the second quarter, the estimated fair value of OÜ
Skeleton Technologies Group's investment increased by 8.8 million
euros to 30.6 million euros. The fair value didn't change in the
third quarter.
Share
The company's share price on the last trading
day of the reporting quarter on the Nasdaq Tallinn Stock Exchange
closed at 5.0 euros. As of 30 September 2023, AS Harju Elekter
Group had 11,269 shareholders. The number of shareholders increased
during the reporting quarter by 95 members.
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
|
|
|
|
|
Unaudited |
|
|
|
|
|
EUR '000 |
30.09.2023 |
31.12.2022 |
30.09.2022 |
|
|
ASSETS |
|
|
|
|
| Current
assets |
|
|
|
|
| Cash and cash
equivalents |
596 |
9,152 |
504 |
|
| Trade and
other receivables |
42,522 |
31,612 |
34,069 |
|
|
Prepayments |
1,818 |
1,126 |
1,497 |
|
|
Inventories |
40,183 |
37,068 |
43,809 |
|
| Total
current assets |
85,119 |
78,958 |
79,879 |
|
|
Non-current assets |
|
|
|
|
| Deferred
income tax assets |
994 |
1 008 |
756 |
|
| Non-current
financial investments |
32,509 |
23,731 |
23,707 |
|
| Investment
properties |
28,146 |
24,756 |
24,754 |
|
| Property,
plant, and equipment |
33,590 |
35,740 |
25,490 |
|
| Intangible
assets |
7,315 |
7,244 |
7,372 |
|
|
Total non-current assets |
102,554 |
92,479 |
82,079 |
|
|
TOTAL ASSETS |
187,673 |
171,437 |
161,958 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Liabilities |
|
|
|
|
|
Borrowings |
19,839 |
24,385 |
20,667 |
|
| Prepayments
from customers |
18,675 |
16,827 |
8,021 |
|
| Trade and
other payables |
28,343 |
24,502 |
32,720 |
|
| Tax
liabilities |
3,618 |
3,478 |
3,881 |
|
| Current
provisions |
60 |
2,103 |
535 |
|
| Total
current liabilities |
70,535 |
71,295 |
65,824 |
|
|
Borrowings |
23,743 |
20,732 |
14,222 |
|
| Other
non-current liabilities |
0 |
0 |
32 |
|
| Total
non-current liabilities |
23,743 |
20,732 |
14,254 |
|
|
TOTAL LIABILITIES |
94,278 |
92,027 |
80,078 |
|
|
Equity |
|
|
|
|
| Share
capital |
11,655 |
11,523 |
11,523 |
|
| Share
premium |
3,306 |
2,509 |
2,509 |
|
| Reserves |
26,580 |
17,768 |
17,756 |
|
| Retained
earnings |
51,854 |
47,771 |
50,291 |
|
| Total
equity attributable to the owners of the parent
company |
93,395 |
79,571 |
82,079 |
|
|
Non-controlling interests |
0 |
-161 |
-199 |
|
|
Total equity |
93,395 |
79,410 |
81,880 |
|
|
TOTAL LIABILITIES AND EQUITY |
187,673 |
171,437 |
161,958 |
|
|
CONSOLIDATED STATEMENT OF PROFIT AND LOSS |
|
|
|
|
|
|
|
|
| Unaudited |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
EUR '000 |
Q3 |
Q3 |
9 M |
9 M |
|
|
|
|
| |
2023 |
2022 |
2023 |
2022 |
|
|
|
|
|
Revenue |
56,247 |
46,081 |
158,277 |
125,315 |
|
|
|
|
| Cost of
sales |
-48,869 |
-40,278 |
-138,905 |
-115,564 |
|
|
|
|
| Gross
profit |
7,378 |
5,803 |
19,372 |
9,751 |
|
|
|
|
| Distribution
costs |
-1,392 |
-1,264 |
-4,060 |
-4,128 |
|
|
|
|
| Administrative
expenses |
-2,164 |
-2 728 |
-7,455 |
-8,157 |
|
|
|
|
| Other
income |
24 |
0 |
223 |
342 |
|
|
|
|
| Other
expenses |
0 |
-120 |
-757 |
-290 |
|
|
|
|
|
Operating profit/loss (-) |
3,846 |
1,691 |
7,323 |
-2,482 |
|
|
|
|
| Finance
income |
3 |
0 |
71 |
74 |
|
|
|
|
| Finance
costs |
-340 |
-146 |
-1,910 |
-377 |
|
|
|
|
|
Profit/loss (-) before tax |
3,509 |
1,545 |
5,484 |
-2,785 |
|
|
|
|
| Income
tax |
-116 |
-139 |
-458 |
-300 |
|
|
|
|
|
Profit/loss (-) for the period |
3,393 |
1,406 |
5,026 |
-3,085 |
|
|
|
|
|
Profit /loss (-) attributable to: |
|
|
|
|
|
|
|
|
| Owners of the
parent company |
3,393 |
1,493 |
5,026 |
-3,024 |
|
|
|
|
|
Non-controlling interests |
0 |
-87 |
0 |
-61 |
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
| Basic earnings
per share (euros) |
0.18 |
-0.08 |
0.27 |
-0.17 |
|
|
|
|
|
Diluted earnings per share (euros) |
0.18 |
-0.08 |
0.27 |
-0.17 |
|
|
|
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME |
|
|
|
|
|
|
| Unaudited |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
EUR '000 |
Q3 |
Q3 |
9 M |
9 M |
|
|
| |
2023 |
2022 |
2023 |
2022 |
|
|
|
Profit/loss (-) for the period |
3,393 |
1,406 |
5,026 |
-3,085 |
|
|
| Other
comprehensive income (loss) |
|
|
|
|
|
|
| Items that may
be reclassified to profit or loss |
|
|
|
|
|
|
| Impact of
exchange rate changes of a foreign subsidi¬aries |
-49 |
-96 |
74 |
-161 |
|
|
| Items that
will not be reclassified to profit or loss |
|
|
|
|
|
|
| Gain on sales
of financial assets |
0 |
0 |
0 |
320 |
|
|
| Net gain/loss
(-) on revaluation of financial assets |
-83 |
112 |
8,782 |
-746 |
|
|
| Total
comprehensive income (loss) for the period |
-132 |
16 |
8,856 |
-587 |
|
|
| Other
comprehensive income (loss) |
3,261 |
1,422 |
13,882 |
-3,672 |
|
|
|
Total comprehensive income (loss) attributable
to: |
|
|
|
|
|
|
| Owners of the
Company |
3,261 |
1,412 |
13,882 |
-3,708 |
|
|
|
Non-controlling interests |
0 |
10 |
0 |
36 |
|
|
|
|
|
|
|
|
|
|
Priit TreialCFO and Member of the Management
Board+372 674 7400
- HEG Interim Report Q3 2023
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