** Adjusted by items affecting comparability.
*** Includes the personnel of ThermaSol Steam Bath LLC, totaling 39 employees on 31 December 2024.
Financial targets and outlook
The company has set long-term targets related to growth, profitability and leverage. In May 2024, Harvia’s long-term financial targets were adjusted to reflect the company’s growth ambitions. Harvia targets an average annual revenue growth of 10%, an adjusted operating profit margin exceeding 20%, and a net debt/adjusted EBITDA below 2.5x. The future impacts of changes in IFRS accounting standards have been excluded from the net debt/adjusted EBITDA ratio target.
Harvia does not publish a short-term outlook.
Harvia’s dividend policy is to pay a regularly increasing dividend with a bi-annual payout.
Matias Järnefelt, CEO:
In the final quarter of 2024, Harvia achieved significant acceleration in growth while driving strategic initiatives aimed at supporting future expansion. Costs related to the growth initiatives as well as strong demand triggered by our winter campaigns with lower gross margin had an impact on the EBIT margin which was below our long-term target level.
Harvia’s revenue in the fourth quarter increased by 29.3% from the comparison period and amounted to EUR 51.0 million, an all-time quarterly sales record for Harvia. Geographically, our sales growth was especially strong in North America as well as in Asia-Pacific and the Middle East. In addition, the acquisition of ThermaSol in July contributed to Harvia’s overall growth. Organic revenue growth was 21.7%.
The market conditions in the fourth quarter remained largely unchanged from the first nine months of the year, with the most positive momentum in North America and APAC & MEA, where we also managed to grow strongly across product groups. In North America, we continued to see large interest towards sauna products and increased awareness of sauna’s health benefits as the high-demand winter season kicked off. During the quarter, Harvia achieved excellent order volumes from campaigns, such as Black Friday and Cyber Monday special offers. In APAC & MEA, we delivered strong sales growth in several strategically important markets. The favorable timing of certain large project deliveries further supported Harvia’s fourth quarter sales in the region.
In Europe, the market conditions remained rather challenging despite positive development especially in the professional and more high-end segments, where we continued to achieve solid sales growth with EOS-branded products especially in Continental Europe. In Northern Europe, the market has been challenging for a long time. This is true particularly for Finland, where low activity in the construction and housing market as well as weak consumer confidence have put significant pressure on our sales throughout the year. Despite the challenges, the region of Northern Europe managed to deliver slight growth in the fourth quarter, driven by Scandinavia and the Baltics, while sales in Finland continued to decline.
The fourth quarter’s adjusted operating profit was EUR 8.7 million, a decrease of 8.6% year-on-year. The adjusted operating profit margin was 17.1%. Harvia’s profitability was weakened by the large share of lower-margin campaign sales especially in North America as well as significant, partially one-off sales and marketing actions, such as several large trade fairs. Consistent with our efforts throughout the year, we continued to strengthen our organization and drive portfolio development alongside with innovation efforts. While these initiatives are important to drive long-term growth and competitiveness, they increase operating expenses in the short term. The integration of ThermaSol progressed well during the quarter. However, the acquisition had a small negative effect on our fourth quarter profitability as the company has lower profit margin than the group average and delivering full synergies takes some time, as expected.
Harvia’s operating free cash flow in the fourth quarter amounted to EUR 15.0 million, and cash conversion was 140.4%. The high cash flow was supported especially by the favorable development in accounts payable and accounts receivable. Our strong sales performance in North America had a positive impact on our cash flow, as a significant part of our orders in the region were paid when ordering. To meet market demand, we deliberately increased our inventories ahead of the high-demand winter season especially in North America and continued to build up the inventory until November. The inventory levels started decreasing in December as the high-selling season started, but at the year end, they were still higher than at the end of Q3. During the quarter, we also continued to make some investments into our production facilities to further improve our operational efficiency and production capacity.
Going forward, we are fully focused on driving profitable growth and strengthening our position as the global sauna market leader. Reaching our long-term profitability target of over 20% adjusted EBIT is very important for us. North America and APAC & MEA continue to be our largest growth drivers and will be the key priority of our growth efforts also in the future. In Europe, we are working hard to achieve higher levels of sales, even if the market conditions have not provided us with any tailwind. Strengthening our portfolio and digital capabilities has a key role in building more innovative and sustainable offering and securing our future success. During the quarter, we launched several new products to the market, and I am glad to see that our innovation pipeline keeps developing well.
2024 was a strong year for Harvia. We succeeded in turning our revenue back to growth after two years of decline and we met our updated long-term financial target level also in terms of profitability and balance sheet. During the year, North America continued to fortify its position as our largest reported market region. In addition to delivering strong organic growth, we also took an important step in actively driving market consolidation when acquiring the Texas-based high-end steam solutions manufacturer ThermaSol in July. The acquisition further strengthens Harvia’s foothold in North America as well as our capabilities in steam and digital. I want to thank the entire team Harvia and our partners for their good work through 2024. Year 2025 is the 75th anniversary year for Harvia. We are proud of our rich heritage as a pioneer in the sauna business and are looking forward to the next chapter of Harvia’s development. Harvia starts the new year from an excellent position.
Press conference on financial results
Harvia will hold a webcast for analysts, investors and media on 13 February 2025 at 11:00 a.m. EET. The conference will be held in English. Harvia’s CEO Matias Järnefelt and CFO Ari Vesterinen will host the event. The webcast can be followed at https://harvia.events.inderes.com/q4-2024.
A recording of the webcast will be available after the event on the company’s website https://harviagroup.com/investor-relations/.
For more information, please contact:
Matias Järnefelt, CEO, tel. +358 40 5056 080
Ari Vesterinen, CFO, tel. +358 40 5050 440
Harvia is one of the leading companies operating in the sauna market globally, as measured by revenue. Harvia’s brands and product portfolio are well known in the market, and the company’s comprehensive product portfolio strives to meet the needs of the international sauna market of both private and professional customers.
Harvia’s revenue totaled EUR 175.2 million in 2024. Harvia Group employs approximately 700 professionals in Finland, United States, Germany, Romania, China and Hong Kong, Austria, Italy, Estonia, and Sweden. The company is headquartered in Muurame, Finland, adjacent to its largest sauna and sauna component manufacturing facility.
Read more: https://harviagroup.com
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