Harvia’s interim report 1 January – 30 September 2019
Harvia Plc, Interim report, 8 November 2019 at 9.00 a.m. EET
Strong growth with good profitability
This release is a summary of Harvia Plc’s Interim Report January–September 2019. The complete report is attached to this release as a pdf-file. It is also available on Harvia’s website at .
Highlights of the review period
July–September 2019
- Revenue grew by 22.3% to EUR 17.1 million (14.0). At comparable exchange rates, revenue grew by 21.2% to EUR 17.0 million.
- Adjusted operating profit was EUR 2.9 million (2.3), making up 17.2% (16.7) of the revenue. At comparable exchange rates, the adjusted operating profit grew to EUR 2.9 million (16.9% of the revenue).
- Operative free cash flow amounted to EUR 4.2 million (2.6).
January–September 2019
- Revenue grew by 16.7% to EUR 53.4 million (45.7). At comparable exchange rates, revenue grew by 16.2% to EUR 53.1 million.
- Adjusted operating profit was EUR 9.7 million (8.0), making up 18.2% (17.5) of the revenue. At comparable exchange rates, the adjusted operating profit grew to EUR 9.4 million (17.6% of the revenue).
- Operating free cash flow amounted to EUR 8.1 million (5.0).
- Net debt amounted to EUR 30.2 million (29.7) and leverage was 2.0 (2.3).
- Equity ratio was 57.4% (57.5).
Key figures
| EUR million | 7-9/2019 | 7-9/2018 | Change, % | 1-9/2019 | 1-9/2018 | Change,% | 2018 |
| Revenue | 17.1 | 14.0 | 22.3% | 53.4 | 45.7 | 16.7% | 61.9 |
| EBITDA * | 3.7 | 2.8 | 29.3% | 11.7 | 8.2 | 42.8% | 11.5 |
| % of revenue | 21.4% | 20.3% | 22.0% | 18.0% | 18.6% | ||
| Items affecting comparability ** | 0.0 | 0.1 | -7.2% | 0.3 | 1.4 | -77.9% | 1.5 |
| Adjusted EBITDA *** | 3.7 | 2.9 | 28.6% | 12.0 | 9.6 | 25.5% | 13.0 |
| % revenue | 21.7% | 20.7% | 22.6% | 21.0% | 21.0% | ||
| Operating profit | 2.9 | 2.3 | 26.0% | 9.4 | 6.6 | 42.0% | 9.4 |
| % revenue | 16.9% | 16.4% | 17.6% | 14.5% | 15.1% | ||
| Adjusted operating profit *** | 2.9 | 2.3 | 25.2% | 9.7 | 8.0 | 21.4% | 10.9 |
| % revenue | 17.2% | 16.7% | 18.2% | 17.5% | 17.5% | ||
| Basic EPS (EUR)**** | 0.11 | 0.09 | 33.4% | 0.36 | 0.30 | 18.3% | 0.41 |
| Operating free cash flow | 4.2 | 2.6 | 60.6% | 8.1 | 5.0 | 64.4% | 10.0 |
| Cash conversion | 112.9% | 90.4% | 67.6% | 51.6% | 77.0% | ||
| Investments in tangible and intangible assets | -0.4 | -0.4 | 1.2% | -1.4 | -1.2 | 19.9% | -1.6 |
| Net debt * | 30.2 | 29.7 | 1.7% | 30.2 | 29.7 | 1.7% | 30.3 |
| Leverage | 2.0 | 2.3 | 2.0 | 2.3 | 2.3 | ||
| Net working capital | 19.6 | 20.8 | -5.9% | 19.6 | 20.8 | -5.9% | 17.5 |
| Adjusted return on capital employed (ROCE) | 32.5% | 30.9% | 32.5% | 30.9% | 31.6% | ||
| Equity ratio | 57.4% | 57.5% | 57.4% | 57.5% | 56.3% | ||
| Personnel at the end of period | 389 | 376 | 3.5% | 389 | 376 | 3.5% | 400 |
* Adoption of IFRS 16 Leases standard increased EBITDA by EUR 432 thousand and net debt by EUR 2.6 million at the end of September 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–September 2018 were EUR 0.26, 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 during the review period was strong in all product groups and on almost all of our key markets. We achieved a revenue of EUR 53.4 million, growing by 16.7 percent year on year. Our growth was strong also during the third quarter, with our revenue increasing to EUR 17.1 million and exceeding the revenue of the comparison period by 22.3 percent.
Our journey from a sauna heater company into a comprehensive one-stop shop operator in the sauna and spa market is proceeding as planned. During the review period, revenue growth was especially strong in Finland, other Scandinavian countries, North America and other European countries. The sauna room product group continues its steady and strong growth. During the review period, revenue in the sauna room category increased by over 85 percent. Moreover, the success of the sauna heater product group in both professional and consumer channels showed as a favorable 8.7 percent growth during the review period. The third quarter was especially strong for steam generators, as their sales increased by 38.4 percent year on year.
I am very pleased that, in addition to strong growth, we have also succeeded in improving the profitability of our business operations. During the review period, our adjusted operating profit amounted to EUR 9.7 million (8.0) and the adjusted operating profit for the third quarter increased by 25.2 percent from the comparison period (2.3) to EUR 2.9 million. Our relative profitability has also had a favorable trend.
Demand in the US market remained strong, and profitable growth continued in saunas, heaters and components. Our offering has developed favorably, and we have opened new channels for sauna sales in the US. In Finland, we have begun the distribution and marketing of new remotely controlled Cilindro Plus Spot. We have expanded our customer base in Scandinavia and increased the volume of our premium offering in the markets. The development of revenue in Germany decreased from the comparison period due to the timing of deliveries and increased demand on entry price level products. The situation of the German market is also partly reflected on the demand of control units. The development of the Russian market is estimated to continue partly volatile, even though the past quarter was quite successful for Harvia.
Integration of the operations of the US-based Almost Heaven Saunas has proceeded according to plan and improving the profitability of operations has even proceeded slightly faster than anticipated. The continuous improvement of productivity has progressed as planned also in our other units. Regarding the Muurame factory operations and logistics, the past fall has been a very strong example of systematic and continuous development of operations.
Once again, the past quarter has been a great example of dedicated teamwork with our key partners. The season for sauna sales is currently well under way and Harvia is well-prepared for the coming season. We will keep our focus on the cornerstones of our strategy and its systematic implementation. We will continue to focus on increasing the value of the average purchase, geographical expansion and continuous improvement of productivity. In addition to organic growth, Harvia is actively looking into possibilities of growth in the sauna and spa market through business acquisitions in accordance with our strategy.
Press conference
Harvia will hold a press conference in English for analysts, investors and media on Friday, November 8, 2019 at 12:00 a.m. Finnish time. The press conference is held at Allas Sea Pool, Smart & Clean Showroom (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: .
A recording of the webcast will be available later at the company's website.
For further information, please contact:
CEO Tapio Pajuharju, tel. 0CFO Ari Vesterinen, , tel. 0
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.
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