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 what management would later call the company's most complicated year as a public entity: a double hit of post-pandemic demand normalization and a European consumer retrenchment driven by the Russian invasion of Ukraine, energy costs, and rising rates. Adjusted operating margin finished the year at 19.7%, down from 22.4% 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 43.7% in 2020 to EUR 104 million, and then another 72% 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 elevated inventory. Russia had accounted for a small but non-trivial sliver of 2021 sales; it went to zero in 2022 after Harvia suspended Russian operations. North America, Asia-Pacific, and the UK continued to grow.

Advance demand during the pandemic has ended. We see the sauna and spa market returning to more normal growth patterns, but the adjustment year has been uneven across regions.

Regional Composition

North America, already the largest non-European region, kept growing through the year on the back of Almost Heaven momentum and specialty dealer expansion. APAC & MEA continued its multi-year trajectory, with Japan and China growing off small bases. Northern Europe (Finland, Sweden, Norway) was broadly flat. Continental Europe was where the pain landed, with Germany down sharply year over year.

FY 2022 key figures: Revenue EUR 172.4M (-3.7% YoY). Operating profit EUR 33.1M (19.2% margin). Adjusted operating profit EUR 33.9M (19.7% margin). Russia revenue in 2022: approximately zero (vs approximately EUR 5M in 2021). Net debt/adjusted EBITDA: ~0.9x. Proposed dividend: EUR 0.65 per share.

Margin Walk

The margin step-down from 22.4% to 19.7% adjusted had three drivers: (1) Revenue decline against a partly fixed cost base; (2) elevated inventory at year-end, which would have to be managed down through 2023; (3) sales and marketing investment to stimulate demand in softening markets. Management was clear that none of these were structural, and that the 20%+ long-term margin target remained intact.

Analyst Questions and Tone

On the Q4 earnings call, Helsinki-based Inderes and the Danske Bank Markets analyst pressed on three themes: how long European destocking would last, whether North America growth could sustain into 2023, and whether the dividend was safe. Management declined to quantify the destocking tail but said they expected Q1 2023 to remain soft with gradual improvement through the year. On North America, CEO Matias Järnefelt was direct: the dealer channel was healthy, the product mix was improving, and US consumer demand was not tracking European weakness. The dividend was reaffirmed.

Capital Return

Harvia's board proposed a total dividend of EUR 0.65 per share for 2022, down modestly from EUR 0.70 paid for 2021. The cut was cosmetic rather than financial: the company's balance sheet was in good shape, leverage was well below target, and the reduction signaled conservatism during an unsettled period rather than distress.

Management set expectations for 2023 to be a year of destocking completion, margin recovery, and continued North American investment. The 2023 Q1 interim report was scheduled for 3 May 2023. Inderes maintained coverage and raised the question of whether M&A would resume once the European environment stabilized, a theme that would play out in 2024 with ThermaSol.

FY 2022 was the reset nobody on the Nasdaq Helsinki sauna bull case wanted to see, but it was survived well. Margins held near long-term target, the balance sheet absorbed the demand shock without strain, and management narrated the situation clearly enough that analysts stayed constructive. In hindsight, 2022 set up the 2024 and 2025 reacceleration by forcing discipline on working capital and cost structure during a weak year.