Harvia Q1 2024: Revenue Up 2.3%, Margin Holds at 23.8%

Harvia Plc published its Q1 2024 interim report on 3 May 2024, reporting revenue of EUR 42.4 million, up 2.3% year over year, with adjusted operating profit of EUR 10.1 million representing 23.8% of revenue. The print extended the margin strength that emerged in Q4 2023, though revenue growth fell short of the 5% that Inderes had forecast. (Next: H1 2024 results. Full investor coverage: Harvia News hub.)

The Finnish strike complication

Management spent time on the call explaining why Q1 revenue growth was only 2.3%. Part of the answer was Finnish industrial action. Political strikes in Finland during the quarter, including at the ports, forced Harvia to postpone some deliveries from March to April, and those sales rolled into Q2. CFO Ari Vesterinen estimated the shift at EUR 1 million to EUR 2 million, said it was an estimate rather than an accounting figure, and put part of it down to the timing of the Easter holidays.

“Our key priority is to accelerate growth while maintaining strong profitability and operative performance.” Matias Järnefelt, CEO, Harvia Q1 2024 interim report, 3 May 2024

North America up 23.7%, Northern Europe down 17.0%

North America grew 23.7%, driven by sauna rooms, which make up the majority of Harvia’s sales there; Järnefelt said the US business was four times its 2019 size by 2023. APAC & MEA grew 22.7%, and Järnefelt said on the call that most of that growth came from Japan, where Harvia works through a joint venture. Continental Europe was flat at +0.7%, with demand stabilizing but still below its long-term potential. Northern Europe was the laggard, down 17.0%: Finland’s construction and property markets were at very low levels, and in Sweden a key customer was restructuring its retail network.

Margin walk

The 23.8% adjusted operating margin was up from 22.4% a year earlier. Vesterinen said the gain came mainly from material and service costs: inflation had eased, and Harvia kept good pricing power. Management said it was also hiring in sales, innovation and product development to support future growth.

Analyst Q&A themes

Questions on the webcast, submitted through the chat, covered the strike, US production and capacity, Sweden, Japan, and M&A. On the strike, Järnefelt said the sales were delayed rather than lost and should show up in Q2 figures. On North America, he said Harvia would need to add capacity in the coming years as demand keeps growing. On M&A, he declined to say whether Harvia was on anyone’s target list, but said Harvia has its own and is looking actively at the acquisition market. That commentary would become relevant about 11 weeks later when the ThermaSol announcement landed.

Stock reaction

Harvia shares fell about 4% on the day of the report, closing at EUR 38.60 against EUR 40.05 the day before. Inderes kept its rating unchanged and made no substantial forecast changes for the coming years, saying the revenue shortfall came mainly from small delivery delays caused by the strikes.