Harvia’s Half-year financial review 1 January – 30 June 2024
Harvia Plc, Half-year financial review 8 August 2024 at 9:00 a.m. EEST
Harvia Q2 2024: Significant sales growth and strong profitability
This release is a summary of Harvia Plc’s Half-year financial review January–June 2024. 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
April–June 2024:
- Revenue increased by 20.7% to EUR 43.2 million (35.8). At comparable exchange rates, revenue increased by 20.3% to EUR 43.0 million. Organic revenue growth was 20.1%.
- Operating profit was EUR 8.9 million (7.8), making up 20.7% (21.9%) of the revenue.
- Adjusted operating profit was EUR 9.4 million (8.0), making up 21.8% (22.3%) of the revenue. At comparable exchange rates, the adjusted operating profit was EUR 9.4 million (21.8% of the revenue).
- Operating free cash flow amounted to EUR 5.5 million (9.1) and cash conversion was 50.0% (96.1%). The change in net working capital decreased the operating free cash flow and cash conversion.
- Harvia announced its updated strategy and long-term financial targets on 29 May 2024, when the company held its first Capital Markets Day.
January–June 2024:
- Revenue increased by 10.9% to EUR 85.5 million (77.2). At comparable exchange rates, revenue increased by 10.8% to EUR 85.5 million. Organic revenue growth was 10.4%.
- Operating profit was EUR 18.8 million (17.0), making up 22.0% (22.1%) of the revenue.
- Adjusted operating profit was EUR 19.5 million (17.3), making up 22.8% (22.4%) of the revenue. At comparable exchange rates, the adjusted operating profit was EUR 19.5 million (22.8% of the revenue).
- Operating free cash flow amounted to EUR 16.6 million (20.8) and cash conversion was 73.2% (102.2%). The change in net working capital decreased the operating free cash flow and cash conversion.
- Net debt amounted to EUR 32.6 million (45.8) and leverage, calculated as net debt divided by last 12 months’ adjusted EBITDA, was 0.8 (1.2).
- Equity ratio was 49.8% (46.3%).
- Earnings per share were EUR 0.71 (0.62).
Key figures
| EUR million | 4–6/ 2024 |
4–6/ 2023 |
Change | 1–6/ 2024 |
1–6/ 2023 |
Change | 1–12/ 2023 |
| Revenue | 43.2 | 35.8 | 20.7% | 85.5 | 77.2 | 10.9% | 150.5 |
| EBITDA | 10.5 | 9.4 | 12.3% | 22.0 | 20.1 | 9.2% | 39.3 |
| % of revenue | 24.4% | 26.2% | 25.7% | 26.1% | 26.1% | ||
| Items affecting comparability * | 0.5 | 0.1 | 263.2% | 0.7 | 0.2 | 237.2% | 0.6 |
| Adjusted EBITDA ** | 11.0 | 9.5 | 15.9% | 22.7 | 20.4 | 11.7% | 39.9 |
| % of revenue | 25.6% | 26.6% | 26.6% | 26.4% | 26.5% | ||
| Operating profit | 8.9 | 7.8 | 13.9% | 18.8 | 17.0 | 10.2% | 33.0 |
| % of revenue | 20.7% | 21.9% | 22.0% | 22.1% | 21.9% | ||
| Adjusted operating profit ** | 9.4 | 8.0 | 18.2% | 19.5 | 17.3 | 13.1% | 33.7 |
| % of revenue | 21.8% | 22.3% | 22.8% | 22.4% | 22.4% | ||
| Basic EPS (EUR) | 0.31 | 0.28 | 10.5% | 0.71 | 0.62 | 15.3% | 1.25 |
| Operating free cash flow | 5.5 | 9.1 | -39.6% | 16.6 | 20.8 | -20.0% | 44.6 |
| Cash conversion | 50.0% | 96.1% | 73.2% | 102.2% | 111.7% | ||
| Investments in tangible and intangible assets | -0.5 | -0.9 | -36.7% | -2.8 | -1.2 | 140.1% | -3.1 |
| Net debt | 32.6 | 45.8 | -28.8 % | 32.6 | 45.8 | -28.8% | 37.6 |
| Leverage | 0.8 | 1.2 | 0.8 | 1.2 | 0.9 | ||
| Net working capital | 33.0 | 36.5 | -9.6 % | 33.0 | 36.5 | -9.6% | 36.1 |
| Adjusted return on capital employed (ROCE) | 51.7% | 47.7% | 51.7% | 47.7% | 44.2% | ||
| Equity ratio | 49.8% | 46.3% | 49.8% | 46.3% | 51.0% | ||
| Number of employees at end of period | 683 | 619 | 10.3% | 683 | 619 | 10.3% | 605 |
* 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. In May 2024, Harvia’s long-term financial targets were adjusted to reflect the company’s growth ambitions. Harvia targets an average annual revenue growth of 10%, an adjusted operating profit margin exceeding 20%, and a net debt/adjusted EBITDA below 2.5x. The future impacts of changes in IFRS accounting standards have been excluded from 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:
I am pleased with Harvia’s performance in the second quarter of 2024, as we achieved significant sales growth and maintained strong profitability.
In the second quarter, our revenue reached EUR 43.3 million, increasing by 20.7% from the comparison period. The revenue growth was driven especially by the strong performance in North America as well as in Asia-Pacific and the Middle East. The strikes in Finland in March postponed some deliveries from Finland from the first quarter to the second one, also impacting the revenue positively. Organic growth was 20.1%.
The market conditions in the second quarter remained favorable in North America and APAC & MEA, where the awareness of sauna and its health benefits have continued to increase. In North America, market demand was high across channels and product groups, and our sales performance was excellent in both full sauna solutions and heaters. In APAC & MEA, our rapid growth reflects the systematic work we are doing to grow our business in several strategically important markets. The region’s revenue was also supported by the timing of some major deliveries.
In Continental Europe, the market has shown some signs of recovery since the last quarter of 2023, and the gradual improvement continued also during the second quarter of 2024. In Northern Europe, gradual positive market development combined with our sales actions resulted in revenue growth in the region after two years of declining revenue. We expect the market in Europe to continue improving gradually, and we are working diligently to capture that growth and further strengthen our position in the market. Our overall strong sales performance was generated by the growth of all product categories except spare parts and services.
The second quarter’s adjusted operating profit was EUR 9.4 million, increasing by 18.2% from the comparison period. The adjusted operating profit margin was 21.8% of revenue. We succeeded in maintaining strong profitability while simultaneously increasing investments aiming to drive growth. We have added resources especially into sales and portfolio development.
Harvia’s operating free cash flow amounted to EUR 5.5 million. During the quarter, we increased our inventories. Our materials inventory in Finland normalized after inbound transportation was impacted by the strikes in the first quarter. In addition, we increased our inventories in the United States and Japan to support sales. All this was visible in our cash conversion of 50.0% for the period. For many previous quarters, the cash conversion has been exceptionally high, even above 100%. Overall, our operative performance during the quarter was robust, and I want to thank the entire Harvia team and our partners for their dedication and good work.
In May, Harvia arranged its first Capital Markets Day and updated its long-term financial targets and strategy to reflect the company’s strategic role, which the company defines as “Shaping the global sauna market so that everyone has a reason to experience sauna”. Harvia’s updated four strategic focus areas are: 1. Delivering the full sauna experience; 2. Winning in strategically important markets; 3. Leading in key channels, and 4. Best-in-class operations and great people. We want to be an active market maker to grow the global sauna market and create exciting innovations and sustainable solutions while maintaining strong profitability and operational performance.
The long-term attractiveness of the sauna market remains unchanged. In addition to capitalizing on the organic growth opportunities in different regions, Harvia intends to be an active market consolidator in the industry and grow through acquisitions when the right moment and opportunity arise. After the reporting period on 23 July, Harvia announced the acquisition of ThermaSol, a U.S. steam solutions manufacturer with net sales of USD 14.4 million in 2023. The acquisition will strengthen Harvia’s position in North America and our capabilities especially in steam and digital solutions. The transaction is another significant step forward on Harvia’s growth journey, further solidifying our industry leadership.
Press conference on financial results
Harvia will hold a webcast for analysts, investors and media on 8 August 2024 at 11:30 a.m. EEST. 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/q2-2024/.
A recording of the webcast will be available after the event 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 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 market of both private and professional customers.
Harvia’s revenue totaled EUR 150.5 million in 2023. Harvia Group employs over 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
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