Harvia FY 2022: Revenue Down 3.7% as Pandemic Demand Normalizes

Harvia Plc reported full-year 2022 revenue of EUR 172.4 million on 9 February 2023, down 3.7% from the pandemic-era peak of EUR 179.1 million in 2021. The print closed out a year of what CEO Tapio Pajuharju called “exceptionally stormy and challenging” market conditions: a double hit of post-pandemic demand normalization and a European consumer retrenchment driven by the Russian invasion of Ukraine, energy costs, and inflation. Adjusted operating margin finished the year at 21.1%, down from 26.4% in 2021. (Next year: FY 2023 turnaround. All earnings in context: Harvia News hub.)

The pandemic overhang

Harvia’s 2020 and 2021 results had been unusually strong. The company had ridden the wellness-at-home wave: EOS consolidated in spring 2020, revenue jumped 47.3% in 2020 to EUR 109.1 million, and then another 64.2% in 2021 to EUR 179.1 million, with Kirami contributing a partial year. Management had been explicit with investors that some of that demand was pulled forward from future periods, and in July 2022 the company pre-announced that Q2 demand had materially softened.

The 2022 print confirmed the pre-announcement and added Central European detail. Germany and adjacent markets carried the heaviest destocking as dealers worked down high inventory. Russia had accounted for EUR 11.5 million of 2021 sales; it fell 35.5% to EUR 7.5 million in 2022 after Harvia suspended its Harvia-branded Russian operations in March and agreed in November to sell its 80% stake in EOS Russia. North America, Scandinavia and Harvia’s other markets outside Europe, mainly in Asia and the Arab countries, continued to grow.

“Sauna sales were extremely strong in the United States but were affected by the low consumer confidence in Central Europe.” Tapio Pajuharju, CEO, Harvia financial statements bulletin, 9 February 2023

Regional composition

North America, already the largest non-European region, grew 24.0% to EUR 36.1 million, and Harvia said sauna room sales kept growing there in particular. Harvia’s other countries outside Europe, mainly Asia and the Arab countries, grew 45.0% to EUR 10.4 million off a small base. Finland (down 1.3%) and Scandinavia (up 1.9%) were broadly flat. Continental Europe was where the pain landed: Germany fell 26.1%, and Harvia’s other European countries fell 6.6%.

Margin walk

The margin step-down from 26.4% to 21.1% adjusted came as revenue fell against a partly fixed cost base and the sales mix shifted: electric heaters took the heaviest hit from Europe’s energy crisis, and sauna heater and hot tub sales fell in Germany and the rest of Europe. Harvia responded by rightsizing operations in several countries and units. Management said the market conditions did not affect its long-term financial targets, including the 20%+ margin target.

Capital return

Harvia’s board proposed a total dividend of EUR 0.64 per share for 2022, to be paid in two instalments, up from EUR 0.60 for 2021. The increase kept to Harvia’s policy of a regularly increasing dividend: the company’s balance sheet was in good shape, and leverage of 1.3x was below the 1.5x to 2.5x target range.