Harju Elekter Group financial results, 1-3/2023
During the reporting quarter, Harju Elekter Group's revenue growth and profitability were significantly impacted by the review of the business processes, increased production efficiency, and reduced problems with material and component supply. Furthermore, the positive result can be attributed to important decisions made to optimize business operations and achieve cost savings, as well as successful price negotiations in framework procurements. The Group remains committed to improving efficiency in order to increase profitability.
Revenue and financial results
Harju Elekter Group’s revenue in the reporting quarter was 45.3 (2022 Q1: 37.3) million euros, which is 21,3% more than a year before and historically the best first quarterly result. More low-voltage switchgears and frequency converter switchboards were sold, and larger projects were realised.
| EUR ’000 | 3M | 3M | +/- | |
| 2023 | 2022 | |||
| Revenue | 45,269 | 37,321 | 21.3% | |
| Gross profit | 5,386 | 2,986 | 80.3% | |
| EBITDA | 2,382 | -68 | 3601.5% | |
| Operating profit/loss (-) (EBIT) | 1,309 | -1,125 | 216.3% | |
| Profit/loss (-) for the period | 749 | -1,294 | 157.9% | |
| Incl. attributable to owners of the parent company | 781 | -1,308 | 159.7% | |
| Earnings per share (EPS) (euros) | 0.04 | -0.07 | 157.1% |
The Group's operating expenses totalled 43.8 (2022 Q1: 38.4) million euros in the reporting quarter. Most of the increase in operating expenses was due to the 16.2 % increase in the cost of sales. At the same time, the growth of costs of sales was lower than the growth rate of revenue in the first quarters by 5.1 percentage points.
Distribution costs remained at the same level, being 1.4 million euros and making up 3.1% of the Group's operating expenses and 3.0% of revenue. Administrative expenses decreased by 0.1 million euros to 2.6 million euros, when comparing the first quarters, making up 5.9% of the Group's operating expenses and 5.7% of the revenue of the reporting quarter.
In a quarterly comparison, labour costs increased by 9.2%, amounting to 9.5 million euros. 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 first quarter was 5,386 (2022 Q1: 2,986) thousand euros and the gross profit margin was 11.9% (2022 Q1: 8.0%). Operating profit (EBIT) was 1,309 (2022 Q1: operating loss 1,125) thousand euros. The operating margin of the reporting quarter was 2.9% (2022 Q1: -3.0%). The net profit for the reporting quarter was 749 (2022 Q1: net loss 1,294) thousand euros, of which the share of the owners of the parent company was 781 (2022 Q1: net loss 1,308) thousand euros. Net profit per share in the first quarter was 0.04 euros, a year earlier the net loss per share was -0.07 euros.
Core business and markets
During the reporting quarter, the Group's core activity - production - accounted for 94.1% of its revenue. The revenue of the production segment increased by 30.1% in the reporting quarter, being 42.6 million euros.
In the reporting quarter, 5.0 (2022 Q1: 6.9) million euros were earned from Estonia, making up 10.9% (2022 Q1: 18.5%) of the revenue. The revenue to the Estonian market decreased by 1.9 million euros, and this is mainly related to the termination of the retail and project-based sale of electrical products in Estonia.
In the reporting quarter, the revenue earned from the Finnish market was 11.6% more than a year before, totalling 18.6 (2022 Q1: 16.7) million euros. The majority of the increase in revenue came from the sale of automation equipment and low-voltage switchgears to key customers and from the growth of orders for car heating and charging equipment and solar panel systems. In addition, the volume of electrical works in the Finnish shipbuilding sector increased. During the reporting quarter, 41.2% (2022 Q1: 44.7%) of Harju Elekter products and services were sold to the Group's largest market.
The revenue of the Swedish market increased by 11.1% in the comparison of first quarters due to the increase in sale of substations and the growth of project business, being 6.5 (2022 Q1: 5.8) million euros. Sweden accounted for 14.3% (2022 Q1: 15.6%) of the revenue of the reporting quarter.
Revenue from the Norwegian market decreased compared to the previous year, being 4.0 (2022 Q1: 4.5) million euros. The Norwegian market accounted for 8.9% (2022 Q1: 12.1%) of the revenue of the reporting quarter.
Investments
During the reporting period, the Group invested a total of 0.6 (2022 Q1: 1.5) million euros in non-current assets, incl 0.3 (2022 Q1: 1.0) million euros in investment properties, 0.2 (2022 Q1: 0.4) million euros in property, plant, and equipment and 0.1 (2022 Q1: 0.1) million euros in intangible assets. Investments were mostly made in production technology equipment, production, and process management systems.
The value of the Group's non-current financial investments totalled 23.8 (31.12.22: 23.7) million euros as of the reporting date.
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 31 March 2023, AS Harju Elekter had 11,232 shareholders. The number of shareholders increased during the reporting quarter by 648 members.
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||
| Unaudited | ||||
| EUR '000 | 31.03.2023 | 31.12.2022 | 31.03.2022 | |
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | 1,028 | 9,152 | 286 | |
| Trade and other receivables | 37,627 | 31,612 | 35,663 | |
| Prepayments | 1,945 | 1,126 | 3,119 | |
| Inventories | 44,704 | 37,068 | 37,692 | |
| Total current assets | 85,304 | 79,958 | 76,760 | |
| Non-current assets | ||||
| Deferred income tax assets | 1,002 | 1,008 | 776 | |
| Non-current financial investments | 23,767 | 23,731 | 24,410 | |
| Investment properties | 24,766 | 24,756 | 24,603 | |
| Property, plant, and equipment | 35 042 | 35 740 | 26,303 | |
| Intangible assets | 7,284 | 7,244 | 7,659 | |
| Total non-current assets | 91,861 | 92,479 | 83,751 | |
| TOTAL ASSETS | 177,165 | 171,437 | 160,511 | |
| LIABILITIES AND EQUITY | ||||
| Liabilities | ||||
| Borrowings | 18,366 | 24,385 | 21,354 | |
| Prepayments from customers | 21,310 | 16,827 | 6,681 | |
| Trade and other payables | 31,888 | 24,502 | 31,063 | |
| Tax liabilities | 3,033 | 3,478 | 3,663 | |
| Current provisions | 1,950 | 2,103 | 51 | |
| Total current liabilities | 76,547 | 71,295 | 62,812 | |
| Borrowings | 20,412 | 20,732 | 12,401 | |
| Other non-current liabilities | 0 | 0 | 33 | |
| Total non-current liabilities | 20,412 | 20,732 | 12,434 | |
| TOTAL LIABILITIES | 96,959 | 92,027 | 75,246 | |
| Equity | ||||
| Share capital | 11,523 | 11,523 | 11,352 | |
| Share premium | 2,509 | 2,509 | 1,601 | |
| Reserves | 17,815 | 17,768 | 18,278 | |
| Retained earnings | 48,552 | 47,771 | 54,158 | |
| Total equity attributable to the owners of the parent company | 80,399 | 79,571 | 85,389 | |
| Non-controlling interests | -193 | -161 | -124 | |
| Total equity | 80,206 | 79,410 | 85,265 | |
| TOTAL LIABILITIES AND EQUITY | 177,165 | 171,437 | 160,511 |
| CONSOLIDATED STATEMENT OF PROFIT AND LOSS | ||||||
| Unaudited | ||||||
| EUR '000 | 3M | 3M | ||||
| 2023 | 2022 | |||||
| Revenue | 45,269 | 37,321 | ||||
| Cost of sales | -39,883 | -34,335 | ||||
| Gross profit | 5,386 | 2,986 | ||||
| Distribution costs | - 1,356 | - 1,350 | ||||
| Administrative expenses | -2,580 | -2,655 | ||||
| Other income | 18 | 56 | ||||
| Other expenses | -159 | -152 | ||||
| Operating profit/loss (-) | 1,309 | -1,125 | ||||
| Finance income | 75 | 39 | ||||
| Finance costs | -549 | -119 | ||||
| Profit/loss (-) before tax | 835 | -1,205 | ||||
| Income tax | -86 | -89 | ||||
| Profit/loss (-) for the period | 749 | -1,294 | ||||
| Profit /loss (-) attributable to: | ||||||
| Owners of the parent company | 781 | -1,308 | ||||
| Non-controlling interests | -32 | 14 | ||||
| Earnings per share | ||||||
| Basic earnings per share (euros) | 0.04 | -0.07 | ||||
| Diluted earnings per share (euros) | 0.04 | -0.07 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
| Unaudited | ||||
| EUR '000 | 3M | 3M | ||
| 2023 | 2022 | |||
| Profit/loss (-) for the period | 749 | -1,294 | ||
| Other comprehensive income (loss) | ||||
| Items that may be reclassified to profit or loss | ||||
| Impact of exchange rate changes of a foreign subsidiaries | -41 | 20 | ||
| Items that will not be reclassified to profit or loss | ||||
| Gain on sales of financial assets | 0 | 151 | ||
| Net gain/loss (-) on revaluation of financial assets | 36 | -521 | ||
| Total comprehensive income (loss) for the period | -5 | -350 | ||
| Other comprehensive income (loss) | 744 | -1,644 | ||
| Total comprehensive income (loss) attributable to: | ||||
| Owners of the Company | 776 | -1,658 | ||
| Non-controlling interests | -32 | 14 | ||
Priit Treial
CFO and Member of the Management Board
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