Harvia Q1 on Friday: Clear growth expected

Translation: Original comment published in Finnish on 4/29/2024 at 7:15 am EEST

Harvia will report its Q1 results on Friday at around 9 am EEST. We expect the company's revenue to have grown by 5% and both earnings and EBIT % to have improved from the comparison period. We expect revenue growth from all markets except Finland, although the port strikes may have slightly shifted sales in Central Europe to Q2.  

Revenue is expected to continue growing clearly

Harvia’s revenue turned upward compared to the comparison period in Q4’23 and we expect the upward trend to strengthen in Q1. This is supported by relatively weak comparison figures, where the impact from Russia has also been fully removed. On the other hand, we suspect that demand in North America is still strong and continues as the the main growth driver for Harvia. We believe the port strikes in March had a relatively small impact on Harvia, even though Finland is an important production country for the company. However, in connection with this comment, we transferred 0.5 MEUR of revenue from Q1 to Q2 due to shifts in deliveries.

We can also outline revenue based on seasonality, where Q1 and Q4 are typically the strongest, Q2 slightly below them and Q3 the weakest. Our forecasts expect 4 MEUR, or over 10% growth in revenue compared to Q4’23, which we believe is a slightly higher change than normal seasonal fluctuations and therefore assumes an improvement in undelaying demand. 

We estimate that the margin level will improve as revenue grows

Harvia has been able to maintain an EBIT margin of over 20% for the past 1.5 years, despite a sharp decline in revenue and volumes. When revenue turns to growth again, we expect to see a small operational lever that supports the margin improving from the comparison period. We expect adjusted EBIT to rise to 10.3 MEUR vs. 9.3 MEUR in the comparison period.

Harvia provides no guidance, first CMD at the end of May

Harvia has not issued any guidance during its stock market history and only refers to its financial targets, which are a 5% revenue growth and an adjusted EBIT margin of over 20%. We predict that Harvia will meet these targets this year as European revenue stabilizes/turns upward and growth outside Europe continues.

At the end of May, Harvia will organize its first ever CMD. We do not expect any significant changes to the company’s strategy. The financial targets have been the same since the listing in 2018 and it would be natural to update them. Harvia has been able to achieve the targeted margin even in weaker times, so a small raise to the margin target is possible. On the other hand, the company is strongly growth-oriented and can aim to accelerate growth with the current good profitability. For the coming years, we expect a 5-10% growth in revenue and a EBIT margin of 22-23%.