Harju Elekter Group financial results, 1-3/2019

02.05.2019 Reports Market Announcements

Commentary from Management

AS Harju Elekter finished the first quarter with 29.3 million euros of sales revenue and 0.3 million euros of operating profit. The low profitability was influenced by an increase in production input prices and wages and a lower than expected order volume of Finnish electricity networks. Usually, seasonality has a certain effect in the first quarter.

Change %

   January – March

Year

(thousand euros)

2019

2018

2018

Sales revenue

12.7%

29,283

25,986

120,804

Gross profit

13.3%

3,788

3,344

15,976

EBITDA

37.5%

1,167

849

5,001

EBIT

33.0%

307

231

2,413

Profit for the period

61.7%

165

102

1,514

incl attributed to Owners of the Company

37.2%

182

133

1,546

Revenue and profit

The Group manufactures and sells electrical, control and power automation devices and various metal products. In addition, sales revenue is also earnt on the rental of investment property and electricity works in the shipbuilding sector. The sales revenue of the Group in the reporting quarter was 29.3 (2018 Q1: 26.0) million euros, having increased by 12.7% in relation to the comparable period. The sale of electrical equipment grew by 5.7 million euros, to 25.6 million euros in the first quarter, which was also the main reason for the increased sales revenue of the reporting quarter.

The consolidated gross profit for the reporting quarter was 3.8 (Q1 2018: 3.3) million euros, the gross profit margin remained at the same level of the comparable period, i.e 12.9%. Consolidated operating profit (EBIT) for the first quarter was 0.3 (Q1 2018: 0.2) million euros. The consolidated net profit for the reporting quarter was 0.2 (Q1 2018: 0.1) million euros, of which the share of the owners of the Company was 0.2 (2018 Q1: 0.1) million euros. EPS was 0.01 (2018 Q1: 0.01) in the first quarter.

Markets

Sales to the Estonian market grew by 24.7%, to 3.5 million euros and made up 12.0% (Q1 2018: 10.9%) of the consolidated sales revenue of the reporting quarter. Competition on the home market is tight and winning a procurement is difficult. The Group’s Estonian companies make a significant contribution to increasing our market share in the Estonian market, both in potential procurements and in offering rental premises to corporate customers.

The share of the Group’s products and services sold to the Group’s largest market, Finland, comprised 55.1% in the reporting quarter (Q1 2018: 69.1%). The year-on-year decrease to the Finnish market was by 1.8 million euros, to 16.1 million euros. The decrease in sales revenue was influenced most by the postponed electricity and grid projects in Finland to the second half of the year, shifting the works planned for the beginning of the year to the second and third quarter.

Sales to the Swedish market increased the most, growing by 1.7 million euros, to 3.7 million euros in the first quarter, in relation to the comparable period. The share of the Swedish market in the consolidated sales revenue rose to 12.7% in the reporting quarter (Q1 2018: 7.7%). The growth was due to the added sales revenue of the Swedish subsidiaries, acquired in 2018, as well as the goal-orientated work of other subsidiaries towards Sweden. We expect Swedish sales volumes to increase further in the coming quarters, as indicated by the continued growth of orders from Sweden’s largest grid company E.ON Energidistribution AB, as well as several new major projects with orders starting from the second quarter. In early May, the Group’s subsidiaries will participate in the Scandinavian largest electricity fair Elfack, in Gothenburg.

The sales to Norwegian market doubled to 4 million euros in comparison to the reporting quarters, making up 13.7% (Q1 2018: 8.0%) of the consolidated sales revenue of the reporting quarter. Also continued deliveries and supplies to the Netherlands, where the Group has managed to retain a stable sales revenue for the third quarter in a row. The Netherlands made up 5.4% of the consolidated sales revenue in the reporting quarter.

Business segments

The sales revenue in the Production segment increased by 5.0 million euros, to 25.6 million euros, comprising 87.3% of the consolidated sales revenue in the reporting quarter (Q1 2018: 79.2%). Main share of the sales revenue (99%) in the Production segment comes from the sale of electrical equipment. The sales revenue of Real Estate segment grew by 0.2 million euros, to 0.9 million euros, remaining at the same level compared to the last quarter of the previous year. Rental income is earnt on new rental premises in the Allika Industrial Park and from the tenants in the territory of Keila and Haapsalu industrial parks. The sales revenue of Unallocated activities has declined by 1.9 million euros, to 2.8 million euros year-on-year and is mainly related to decreased volumes of electrical works in the Finnish shipbuilding sector.

Operating expenses

Operating expenses of the reporting quarter were 28.9 (Q1 2018: 25.7) million euros in total. The operating expenses grew by 12.3%, i.e 3.2 million euros, year-on-year, the principal part of which comprised the increase in the cost of sales in the amount of 2.9 million euros. The cost of sales increased at the same pace as sales revenue, leaving the gross margin at the same level as the comparable period (12.9%). The Group’s distribution costs comprised 1.2 million euros in the reporting quarter and the distribution cost rate decreased by 0.4 percentage points, to 4.1% year-on-year. The share of administrative expenses in the sales revenues of the reporting quarter comprised 7.5% (Q1 2018: 7.4%).

Demand for local labour and the relating salary pressure, but also the increased share of employees in Finland and Sweden where the salary level is notably higher than in other Group companies, has raised the labour costs of the reporting period. Labour costs increased by 12.9%, to 6.4 million euros year-on-year. The labour cost rate accounted for 21.8% of the sales revenue in the reporting quarter (Q1 2018: 21.7%).

Employees and remuneration

As at the end of the reporting period, the Group had 744 employees, being 45 employees more than a year ago. In the first quarter of 2019, the Group employed an average of 733 people, which is an average of 54 employees more than in the comparable period. In the reporting quarter, 5.1 (Q1 2018: 4.4) million euros were paid to the employees in salaries and remuneration. Average wages per Group employee was 2,368 euros, an increase of 10.3% to the comparable period. The cost of wages was affected by the hiring of new workers in Sweden, but also by the decision of the Republic of Lithuania to calculate part of the social tax as the gross salary of the employee. The last amendment did not have a significant impact on the labour costs of the Group.

Investments

In the accounting quarter, several important developments of the Group were completed, incl. the completion of the expansion of the production facility of the Lithuanian subsidiary RIFAS UAB and start of production in new premises, and the opening of a new sales office and the central warehouse of the Estonian subsidiary Energo Veritas OÜ at 19 Tuisu Str, Tallinn. In Q1, the Group invested a total of 1.9 million euros in non-current assets, incl. 0.1 million euros in investment properties, 1.7 million euros in property, plant and equipment and 0.1 million euros in intangible assets. The vast majority of the investments, i.e 1.4 million euros, was aimed at the expansion of the production facilities of the Lithuanian subsidiary. In the comparable period, a total of 2.3 million euros were invested in non-current assets, of which 1.0 million was acquired through business combinations.

Main events

  • The expansion works of the production facility of the Lithuanian subsidiary, RIFAS UAB, in Panevežys are nearing the end and new production premises are being taken into use phase by phase. The expansion work will end in the second quarter, whereupon the subsidiary will have 9,000 sq.m of office and production space, instead of the former 3,500 sq.m. Investments in the expansion of the production facility and upgrade of technology enable to add notable production capacity to secure supplies for the customers of the subsidiary in the segments of ship-building and industry. The total volume of investments is 3.5 million euros. In addition, 1.9 ha of land adjacent to existing properties was acquired in the first quarter to ensure the possibility of new extensions in the future.
  • The subsidiary AS Harju Elekter Elektrotehnika received an order for 54 special-purpose prefabricated substations to be supplied to Konecranes during a period of one year. Supplies are sent to the United Arab Emirates.
  • On 1 April, the subsidiary Energo Veritas OÜ opened a new sales office and central warehouse at 19 Tuisu Str, Tallinn. The good location and larger premises create better possibilities for customer service and quicker issuing of goods. Also, the assortment of products in the area of electricity and weak current materials, construction of telecom and power grid will expand notably, and the sales capability of products in Estonia will increase.
  • In connection with the restructuring of the activities of Harju Elekter Group in Finland and consolidation of Satmatic Oy and Finnkumu Oy under one common management, the Group appointed Jan Osa, the former manager of AS Harju Elekter Elektrotehnika, as the new CEO of Satmatic Oy and Finnkumu Oy, who started in this position at Satmatic Oy from 1 April 2019 and at Finnkumu Oy from 1 July 2019. The former head of the sales department Indrek Ulmas was appointed as the managing director of AS Harju Elekter Elektrotehnika starting from 1 April 2019.

The share

The company’s share price on the last trading day of the reporting quarter on the Nasdaq Tallinn Stock Exchange closed at 4.90 euros.

Andres Allikmäe
Chairman of the Management Board
+372 674 7400

For more information: Tiit Atso, CFO, +372 674 7400 or Interim report 1-3/2019

AS HARJU ELEKTER
CONSOLIDATED BALANCE SHEET,31.03.2019
Unaudited
EUR’000
ASSETS 31.03.19 31.12.18
Cash and cash equivalents 4,168 3,142
Short-term financial investments 0 0
Trade receivables and other receivables 24,355 22,218
Prepayments 1,654 1,173
Inventories 21,752 17,468
TOTAL CURRENT ASSETS 51,929 44,001
Deferred income tax asset 97 98
Other long-term financial investments 10,026 9,587
Investment property 19,762 19,804
Property, plant and equipment 20,620 17,403
Intangible assets 7,245 7,260
TOTAL NON-CURRENT ASSETS 57,750 54,152
TOTAL ASSETS 109,679 98,153
LIABILITIES AND OWNERS’ EQUITY
Interest-bearing loans and borrowings 9,022 6,470
Advances from customers 1,324 1,740
Trade payables and other payables 21,416 14,911
Tax liabilities 2,551 2,409
Short-term provision 17 14
TOTAL CURRENT LIABILITIES 34,330 25,544
Interest-bearing loans and borrowings 7,762 5,635
Other long-term liabilities 34 35
NON-CURRENT LIABILITIES 7,796 5,670
TOTAL LIABILITIES 42,126 31,214
Share capital 11,176 11,176
Share premium 804 804
Reserves 3,114 2,568
Retained earnings 52,498 52,412
TOTAL OWNERS’ EQUITY 67,592 66,960
Non-controlling interests -39 -21
TOTAL EQUITY 67,553 66,939
TOTAL LIABILITIES AND OWNERS’ EQUITY 109,679 98,153
CONSOLIDATED INCOME STATEMENT,  1-3/2019
Unaudited
EUR’000 Q1 2019 Q1 2018
Revenue 29,283 25,986
Cost of sales -25,495 -22,642
Gross profit 3,788 3,344
Distribution costs -1,208 -1,161
Administrative expenses -2,183 -1,930
Other income 48 14
Other expenses -138 -36
Operating profit 307 231
Finance income 101 102
Finance costs -43 -104
Profit before tax 365 229
Income tax expense -200 -127
Profit for the period, attributable to 165 102
   owners of the Company 182 133
   non-controlling interests -17 -31
Basic earnings per share  (EUR) 0.01 0.01
Diluted earnings per share  (EUR) 0.01 0.01

Tiit Atso
CFO
+372 674 7400

Recent news

23.02.2021 Harju Elekter Group financial results, 1-12/2020 Read more... 11.02.2021 Harju Elekter to conclude an important agreement in Sweden Read more... 08.02.2021 AS Harju Elekter comments on trading activity of its stock Read more... 20.01.2021 Harju Elekter Group concluded an agreement with Finland’s largest distribution network company Read more... 15.01.2021 Harju Elekter Group’s Finnish subsidiary’s name was changed Read more... 05.01.2021 Merger and division of the Group’s Finnish subsidiaries Read more... 01.01.2020 Archive Read more... 17.12.2020 Publication of Financial Reports in 2021 Read more... 16.12.2020 Changes in the Swedish subsidiaries of Harju Elekter Group Read more... 02.11.2020 The merger of Swedish subsidiaries of Harju Elekter Group was entered into the commercial register Read more... 28.10.2020 Harju Elekter Group financial results, 1-9/2020 Read more... 22.09.2020 Harju Elekter Group concluded an agreement with Finland’s second largest electricity distribution system operator Read more... 21.09.2020 Harju Elekter’s Swedish subsidiary signed a contract related to the upgrading of the Slussen metro station’s electrical substation in Stockholm Read more... 01.09.2020 Harju Elekter Group won an important tender in Finland Read more... 29.07.2020 Harju Elekter Group financial results, 1-6/2020 Read more... 22.07.2020 Harju Elekter invests up to 6 million euros in factory expansion of the Lithuanian subsidiary Read more... 09.07.2020 Dividend payment ex-date of Harju Elekter Read more... 30.06.2020 AGM decisions Read more... 03.06.2020 Harju Elekter notice of the AGM Read more... 30.04.2020 Harju Elekter will merge its Swedish subsidiaries Read more... 29.04.2020 Harju Elekter Group financial results, 1-3/2020 Read more... 27.03.2020 Audited annual report 2019 Read more... 17.03.2020 Appointment of the Chairman of the Management Board Read more... 21.02.2020 Harju Elekter Group financial results, 1-12/2019 Read more... 29.01.2020 Harju Elekter merges Finnish subsidiaries Read more... 20.12.2019 Publication of financial reports in 2020 Read more... 10.12.2019 Regarding changes in the management of Harju Elekter Read more... 09.12.2019 Harju Elekter won Elektrilevi tender Read more... 05.11.2019 Large order received by Harju Elekter’s subsidiary Read more... 31.10.2019 Harju Elekter Group financial results, 1-9/2019 Read more... 30.10.2019 Extension of the powers of Members of the Management Board of Harju Elekter Read more... 19.09.2019 Harju Elekter Lithuanian subsidiary opened new production facilities Read more... 03.09.2019 Changes to the governing bodies of Swedish subsidiaries of Harju Elekter Read more... 03.09.2019 Changes to the governing body of Harju Elekter’s Finnish subsidiary Read more... 02.09.2019 The subsidiary of Harju Elekter bought a real estate company in Finland Read more... 31.07.2019 Harju Elekter Group financial results, 1-6/2019 Read more... 04.07.2019 Harju Elekter brings subsidiaries under a joint trademark Read more... 13.05.2019 Dividend payment ex-date of Harju Elekter Read more... 02.05.2019 AGM decisions Read more... 04.04.2019 Change in AS Harju Elekter subsidiary’s Management Board Read more... 03.04.2019 Harju Elekter notice of the AGM Read more... 02.04.2019 Audited annual report 2018 Read more... 27.02.2019 Harju Elekter Group financial results, 1-12/2018 Read more... 10.01.2019 Changes to the management boards of Harju Elekter’s subsidiaries Read more... 02.01.2019 Large order received by Harju Elekter’s subsidiary Read more... 21.12.2018 Publication of financial reports in 2019 Read more... 27.11.2018 Extension of delivery contract until 2020 Read more... 24.10.2018 Harju Elekter Group financial results, 1-9/2018 Read more... 06.09.2018 Harju Elekter raises its technology capacity Read more... 30.08.2018 Harju Elekter expands production capacity in Lithuania Read more... 25.07.2018 Harju Elekter Group financial results, 1-6/2018 Read more... 11.05.2018 Dividend payment ex-date of Harju Elekter Read more... 03.05.2018 AGM decisions Read more... 25.04.2018 Harju Elekter Group financial results, 1-3/2018 Read more... 04.04.2018 Audited annual report 2017 Read more... 20.03.2018 Harju Elekter Group won Elektrilevi tender Read more... 28.02.2018 Harju Elekter Group financial results, 1-12/2017 Read more... 09.02.2018 Harju Elekter Group won an important tender in Sweden Read more... 25.01.2018 Harju Elekter’s subsidiary won an important tender in Finland Read more... 05.01.2018 Changes to the management boards of Harju Elekter’s Finnish subsidiaries Read more... 21.12.2017 Publication of financial reports in 2018 Read more... 13.12.2017 Harju Elekter purchases SEBAB AB Read more... 13.12.2017 Correction: Harju Elekter purchases SEBAB AB Read more... 06.11.2017 Harju Elekter signed a Letter of Intent for the acquisition of all shares of SEBAB AB Read more... 27.10.2017 Changes in AS Harju Elekter subsidiary’s management board Read more... 25.10.2017 Harju Elekter Group financial results, 1-9/2017 Read more... 25.09.2017 Termination of the contract of service of the managing director of a subsidiary Read more... 11.09.2017 Commencement of negotiations Read more... 02.08.2017 Termination of the contract of service of the managing director of a subsidiary Read more... 26.07.2017 Harju Elekter Group financial results, 1-6/2017 Read more... 05.06.2017 Harju Elekter purchased Telesilta Oy Read more... 10.05.2017 Commencement of negotiations Read more... 04.05.2017 Extension of the authorisations of the Chairman of the Management Board Read more... 27.04.2017 AGM resolutions Read more... 26.04.2017 Harju Elekter Group financial results, 1-3/2017 Read more... 30.03.2017 Harju Elekter purchased a majority holding in Energo Veritas Read more... 28.03.2017 AS Harju Elekter notice of AGM Read more... 28.03.2017 Audited annual report 2016 Read more... 16.03.2017 AS Harju Elekter accepted a takeover bid for shares of PKC Group Plc Read more... 27.02.2017 Harju Elekter Group financial results, 1-12/2016 Read more... 20.01.2017 Motherson Sumi Systems made a takeover bid for shares of PKC Group Read more... 16.01.2017 The payment related to reduction of the share capital Read more... 13.01.2017 ADJUSTMENT: Large order received by Harju Elekter’s subsidiary Read more... 11.01.2017 Large order received by Harju Elekter’s subsidiary Read more... 28.12.2016 Publication of financial reports in 2017 Read more... 20.12.2016 Harju Elekter Group signed a large volume contract Read more... 27.10.2016 Harju Elekter Group financial results, 1-9/2016 Read more... 26.10.2016 Changes in the Management Board of AS Harju Elekter Read more... 21.10.2016 Harju Elekter laid the cornerstone for two new buildings in Allika Industrial Park Read more... 18.10.2016 Reduction of share capital was entered in the Commercial Register Read more... 14.10.2016 Harju Elekter acquired Finnish real estate company Kiinteistö Oy Uutvallinkulma Read more... 27.07.2016 Harju Elekter Group financial results, 1-6/2016 Read more... 28.04.2016 Harju Elekter Group financial results, 1-3/2016 Read more... 28.04.2016 Resolution of AGM Read more... 07.04.2016 CORRECTION: Notice of the AGM Read more... 06.04.2016 Audited annual report 2015 Read more... 06.04.2016 Notice of the AGM Read more... 05.04.2016 Restructuring of AS Harju Elekter subsidiaries in Estonia Read more... 26.02.2016 Harju Elekter – 50 years of experience in offering solutions for electricity distribution! Harju Elekter Group financial results, 1-12/2015 Read more... 22.12.2015 Publication of financial reports in 2016 Read more... 04.11.2015 Harju Elekter Group financial results, 1-9/2015 Read more... 08.08.2015 Harju Elekter Group financial results, 1-6/2015 Read more... 22.07.2015 Registration of the share capital increase in the Commercial Register Read more... 03.06.2015 AS Harju Elekter acquired a 10% holding in the ultracapacitors’ manufacturer Skeleton Technologies Group OÜ. Read more... 01.06.2015 Termination of the contract of service of the managing director of a subsidiary Read more... 14.05.2015 Resolutions of AGM Read more... 29.04.2015 Financial results, 1-3/2015 Read more... 24.04.2015 AS Harju Elekter acquired all of the shares of their Lithuanian subsidiary UAB Rifas Read more... 15.04.2015 AS Harju Elekter Supervisory Board approved audited annual report 2014 Read more... 14.04.2015 AS Harju Elekter notice of the annual general meeting Read more... 25.02.2015 Financial results, 1-12/2014 Read more... 29.12.2014 Publication of financial reports in 2015 Read more... 05.11.2014 Financial results, 1-9/2014 Read more... 06.08.2014 Financial results, 1-6/2014 Read more... 09.07.2014 AS Harju Elekter sold its holding in AS Draka Keila Cables Read more... 17.06.2014 Group’s Finnish subsidiary purchases Finnkumu Oy Read more... 10.06.2014 Purchase of Finnkumu Oy approved by Supervisory Board Read more... 08.05.2014 Notice on the decrease of an important holding Read more... 08.05.2014 Resolutions of AGM Read more... 06.05.2014 Financial results, 1-3/2014 Read more... 30.04.2014 Commencement of negotiations Read more... 17.04.2014 Audited annual report 2013 Read more... 16.04.2014 Resignation Application from a Member of the Supervisory Board Read more... 16.04.2014 Invitation, agenda and proposals to the AGM of shareholders Read more... 28.02.2014 AS Harju Elekter consolidated unaudited results for Q4 and 12 months 2013 Read more... 28.02.2014 Suspension of the activities of Swedish subsidiary Harju Elekter AB Read more... 02.01.2014 Publication of financial reports in 2014 Read more... 02.01.2014 Publication of financial reports in 2014 Read more... 06.11.2013 Financial results, 1-9/2013 Read more... 22.10.2013 The subsidiary of AS Harju Elekter signed a large volume contract Read more... 07.08.2013 Financial results, 1-6/2013 Read more... 09.05.2013 Resolutions of AGM Read more... 07.05.2013 Financial results, 1-3/2013 Read more... 10.04.2013 Invitation, agenda and proposals to the AGM of shareholders Read more... 27.02.2013 Financial results, 1-12/2012 Read more... 11.01.2013 Publication of financial reports in 2013 Read more...