The year began for Harju Elekter on an optimistic note with a record order book, the possible stabilisation of material prices, and price negotiations for framework agreements. Nevertheless, the quarter was a difficult one and successive global challenges caused an adverse effect on the first-quarter results of Harju Elekter. The war does not have a direct impact on the operations of Harju Elekter, as our target markets have always been the Nordic and the Western European countries. At the same time, we can see indirect effects. Rising energy prices, continuing increases in material and key component prices, supply chain disruptions and rising inflation as a result of the ongoing crises in the world, are all factors that are inevitably having an impact on the company’s profitability. Despite strong sales growth, the quarter ended with a loss. We could not fill orders with enough efficiency nor pass the increase in material prices fully to the customers. In order to keep the production units running steadily, to increase the lower-than-expected security of supply in the first quarter and to prepare for the fulfilment of record orders for the full year, the Group is committed to maintaining higher material stocks and entering into larger-scale agreements with suppliers in the coming periods.
Revenue, Expenses, and Profit
The consolidated revenue for the first quarter of 2022 was 37.3 (Q1 2021: 30.7) million euros, which increased by 21.5% compared to the comparable period. At the same time, revenue increased in all of the Group’s largest target markets: Estonia, Finland, Sweden and Norway. The growth was ensured by long-term and large-scale contracts concluded at the beginning of last year.
| EUR’000 | 3 months | 3 months | +/- | |
| 2022 | 2021 | |||
| Revenue | 37,321 | 30,717 | 21.5% | |
| Gross profit | 2,986 | 3,844 | -22.3% | |
| EBITDA | -68 | 1,485 | -104.6% | |
| Operating profit/loss (-) (EBIT) | -1,125 | 516 | -318.0% | |
| Profit/loss (-) for the period | -1,294 | 297 | -535.7% | |
| Incl. attributable to owners of the parent company | -1,308 | 310 | -521.9% | |
| Earnings per share (EPS) (euros) | -0.07 | 0.02 | -450.0% |
Core Business and Markets
The Group’s core business, production, accounted for 87.7% of the Group’s consolidated revenue. Thanks to the growth in sales volumes of companies manufacturing electrical equipment, the sales volume of the production segment increased by 20.3% to 32.7 million euros in the reporting quarter.
Sales to the Estonian market increased by 36.1% to 6.9 (Q1 2021: 5.1) million euros year-on-year. The increase was mainly due to the increase in sales of hermetic distribution transformers and distribution cabinets. The Estonian market accounted for 18.5% (Q1 2021: 16.5%) of the consolidated revenue in the reporting quarter.
The Finnish market generated revenue of 16.7 (Q1 2021: 14.6) million euros. The majority of the sales volume in the reporting quarter consisted of the sale of substations to Finnish electricity network companies. The planned sales volume of project sales in the reporting quarter was not achieved due to some component shortages and production stoppages caused by illness. During the reporting year, 44.7% (Q1 2021: 47,5%) of the Group’s products and services were sold to the Group’s largest market, Finland.
Sales to the Swedish market increased by 9% compared to the reporting quarters, amounting to 5.8 (Q1 2021: 5.3) million euros. Operating volumes have stabilised; targeted work continued. Sweden accounted for 15.6% (Q1 2021: 17.4%) of consolidated revenue in the reporting quarter, this time remaining the third largest market.
During the quarter, the Group’s products and services worth 4.5 (Q1 2021: 1.9) million euros were sold to the Norwegian market, which was 141.2% more than in the same period of the previous year. The change in revenue is due to the low order volume in the comparison period. Looking at the longer term, it can be stated that the order volumes of the shipping sector have returned to the average level. The Norwegian market accounted for 12.1% (Q1 2021: 6.1%) of quarterly sales.
Investments
During the first quarter, the Group invested a total of 1.5 (Q1 2021: 2.1) million euros in non-current assets, incl 1.0 million euros in investment properties, 0.4 (Q1 2021: 2.0) million euros in property, plant, and equipment and 0.1 (Q1 2021: 0.1) million euros in intangible assets. Most of the investments during the reporting period were directed to the construction of the Laohotell III production and warehouse complex, in the Allika Industrial Park, and to production technology equipment.
Non-current financial investments increased by 0.8 million euros to 24.4 million euros during the reporting period. The main changes were the partial sale of securities and the decrease in the fair value of 0.5 million euros in the first quarter. A total of 665 thousand euros was received from the partial sale of listed securities in the reporting quarter, of which the realized profit was 0.2 million euros. In the comparable period, 0.2 million euros were received from the sale of listed securities, of which the realized profit was 43 thousand euros. In the reporting quarter, Harju Elekter Oy increased its holding in technology company IGL-Technologies Oy from 5,5% to 10%.
Share
The company’s share price on the last trading day of the reporting quarter on the Nasdaq Tallinn Stock Exchange closed at 6.92 euros. As of 31 March 2021, AS Harju Elekter had 9,745 shareholders. The number of shareholders increased during the reporting quarter by 358.
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||
| Unaudited | ||||
| EUR’000 | 31 March 2022 | 31 December 2021 | ||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | 286 | 574 | ||
| Trade and other receivables | 35,663 | 33,689 | ||
| Prepayments | 3,119 | 1,844 | ||
| Inventories | 37,692 | 27,437 | ||
| Total current assets | 76,760 | 63,544 | ||
| Non-current assets | ||||
| Deferred income tax assets | 776 | 690 | ||
| Non-current financial investments | 24,410 | 25,222 | ||
| Investment properties | 24,603 | 23,903 | ||
| Property, plant and equipment | 26,303 | 26,654 | ||
| Intangible assets | 7,659 | 7,544 | ||
| Total non-current assets | 83,751 | 84,013 | ||
| TOTAL ASSETS | 160,511 | 147,557 | ||
| LIABILITIES AND EQUITY | ||||
| Liabilities | ||||
| Borrowings | 21,354 | 16,912 | ||
| Prepayments from customers | 6,681 | 4,659 | ||
| Trade and other payables | 31,063 | 24,490 | ||
| Tax liabilities | 3,663 | 3,156 | ||
| Current provisions | 51 | 35 | ||
| Total current liabilities | 62,812 | 49,252 | ||
| Borrowings | 12,401 | 11,426 | ||
| Other non-current liabilities | 33 | 33 | ||
| Total non-current liabilities | 12,434 | 11,459 | ||
| TOTAL LIABILITIES | 75,246 | 60,711 | ||
| Equity | ||||
| Share capital | 11,352 | 11,352 | ||
| Share premium | 1,601 | 1,601 | ||
| Reserves | 18,278 | 18,716 | ||
| Retained earnings | 54 158 | 55 315 | ||
| Total equity attributable to the owners of the parent company | 85,389 | 86,984 | ||
| Non-controlling interests | -124 | -138 | ||
| Total equity | 85,265 | 86,846 | ||
| TOTAL LIABILITIES AND EQUITY | 160,511 | 147,557 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||
| Unaudited | ||||||
| EUR’000 | 3 kuud | 3 kuud | ||||
| 2022 | 2021 | |||||
| Profit/loss (-) for the period | -1,294 | 297 | ||||
| Other comprehensive income | ||||||
| Items that may be reclassified to profit or loss | ||||||
| Impact of exchange rate changes of a foreign subsidiaries | 20 | -23 | ||||
| Items that will not be reclassified to profit or loss | ||||||
| Gain on sales of financial assets | 151 | 43 | ||||
| Net gain/loss (-) on revaluation of financial assets | -521 | 365 | ||||
| Total comprehensive income for the period | -350 | 385 | ||||
| Other comprehensive income | -1,644 | 682 | ||||
| Total comprehensive income attributable to: | ||||||
| Owners of the Company | -1,658 | 695 | ||||
| Non-controlling interests | 14 | -13 | ||||
Tiit Atso
Chairman of the Board
+372 674 7400
