Harvia H1 2024: Q2 Revenue Jumps 20.7% as Strike Catch-up Lands

Harvia Plc published its H1 2024 half-year financial review on 8 August 2024. Q2 2024 revenue hit EUR 43.2 million, up 20.7% year-over-year (20.1% organic). H1 revenue of EUR 85.5 million was up 10.9%, with adjusted operating profit of EUR 19.5 million at a 22.8% margin. The print landed eight days after Harvia closed the USD 30.4 million ThermaSol acquisition, which was announced on 23 July 2024. (Prior: Q1 2024. Next: Q3 2024. All quarters in one place: Harvia News hub.)

The bounce investors wanted

Q1 2024 had printed modest 2.3% revenue growth (1.4% organic), muted by Finnish strike-delayed shipments and weak Northern European demand. Q2 showed that part of the Q1 weakness was timing: on the results webcast, management estimated that the strikes shifted roughly EUR 1 million to EUR 2 million of deliveries from Q1 into Q2. Organic revenue growth reached 20.1% in Q2. The combination of strike catch-up, strong demand in North America and Asia-Pacific, and the first year-over-year Northern European growth in two years drove the result.

“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.” Matias Järnefelt, CEO, Harvia H1 2024 half-year review, 8 August 2024

Regional rebalance

The Northern Europe reacceleration was the single most important regional data point. Harvia’s Northern European revenue had declined for two years. Q2 2024 broke that pattern: sales in the region rose about 4% year over year, management said on the webcast, after falling 17% in Q1. Management did not declare the recovery complete. It called Q2 “very early days” and said Finnish new-build activity was still very slow and the Finnish consumer was under strain from the cost of living.

In North America, Harvia said market demand was high across channels and product groups, with excellent sales of both full sauna solutions and heaters. APAC & MEA continued its rapid growth, also supported by the timing of some major deliveries. Continental Europe continued the gradual improvement that began in the last quarter of 2023.

The ThermaSol wrapper

Harvia announced the ThermaSol acquisition on 23 July, closed it on 31 July, and reported H1 results on 8 August. The three events occurred within 16 days of each other. ThermaSol’s financials would begin consolidating in Q3 2024, and the H1 figures did not include any ThermaSol contribution. That meant ThermaSol played no part in the 20.7% Q2 growth, 20.1% of which was organic, adding further evidence that underlying Harvia demand was accelerating independent of any inorganic help.

On the webcast, Järnefelt said the deal fit Harvia’s aim to win in the markets that matter most, and that steam is hard to enter organically because professionals drive buying decisions. Harvia expects annual synergies of about EUR 1.7 million by the end of 2027, from sourcing and logistics, marketing, cross-selling, distribution and shared management. The deal, financed with a EUR 20 million bullet loan and cash, lifted leverage to 1.4x by the end of September, still well below the 2.5x long-term ceiling, preserving optionality for further deals if opportunities arose.

Margin discussion

H1 adjusted operating margin of 22.8% was above the 20% long-term target and up from 22.4% a year earlier, though Q2 alone slipped to 21.8% from 22.3%. Management said it had kept profitability strong while adding resources, especially in sales and portfolio development. On the webcast, it described gross margin as very healthy, helped by higher sales in higher-priced markets such as the US and Asia and by scale benefits in operations.

Analyst Q&A

Questions on the webcast focused on three things: profitability (management said it was deliberately investing in commercial execution rather than letting all of the growth fall to the bottom line), the ThermaSol deal (management called the two companies’ commercial capabilities “very complementary,” with ThermaSol strong among specialty dealers and luxury plumbing professionals and Harvia strong in big-box retail and direct-to-consumer sales), and the shape of the Northern European recovery (management declined to extrapolate Q2 into a trend).