Harju Elekter Group financial results, 1-6/2024

24.07.2024 Reports

The Group’s results for the second quarter of 2024 were strong, as predicted. After a weak start to the year, we achieved historically high operating profit in the second quarter. The correct direction of the Group is also validated by the 7.8% operating profit margin, which gives us the opportunity to increase profitability to the desired level, promote business in a sustainable manner, and distribute profits to owners in the future.

The largest contributors to the financial results were once again the business units in Lithuania and Estonia, and, as could be expected during the high season, profitability was also restored in Finland. We will continue with the targeted strengthening of the team, completion of the delayed projects, and increasing the volume of new orders to improve the results in Sweden.

Despite the positive first half of the year, the orders volumes are showing signs of stabilisation, thus we don’t expect business volume growth in the second half of the year. The reduced orders from the Finnish distribution networks continue to affect us both this year and in the upcoming years, although we have been able to partially replace these orders with new customers and projects. The number of inquiries indicates strong investments in the electrification sector and an increase in workload regarding the orders for next year.

Revenue and financial results

The Group’s results for the second quarter and the first half of the year show that the company’s revenue has remained at the same level compared to the previous year, but there has been a significant increase in profit and efficiency. These are the company’s best second-quarter and six-month results over the  years, surpassing previous revenue records in both periods. The revenue for the reporting quarter was 56.8 (2023 Q2: 56.8) million euros, and for the first half of the year, it reached 103.6 (2023 6M: 102.0) million euros.

EUR’000   Q2 Q2 +/- 6M 6M +/-
    2024 2023   2024 2023  
Revenue   56,801 56,762 0.1% 103,577 102,030 1.5%
Gross profit   8,172 6,611 23.6% 13,008 11,996 8.4%
EBITDA   5,450 3,243 68.1% 7,389 5,625 31.3%
Operating profit/loss (-) (EBIT)   4,450 2,168 105.3% 5,425 3,477 -56.0%
Profit/loss (-) for the period   3,467 884 292.2% 3,827 1,633 -134.4%
 Incl. attributable to owners of the parent company   3,467 982 253,0% 3,827 1,763 117,1%
Earnings per share (EPS) (euros)   0.19 0.05 280.0% 0.21 0.10 -110.0%

Core business and markets

The Group’s core segment, production, did not contribute to revenue growth. In the second quarter, the production segment generated 54.3 (2023 Q2: 54.0) million euros, and for the first six months, it reached 98.7 (2023 6M: 96.6) million euros. The largest growth in sales was in the Lithuanian production unit, which focuses on developing electrical distribution and frequency inverter equipment and solutions for the maritime and industrial sectors. The production segment accounted for 95.3% of the Group’s revenue for the quarter and the half-year.

In the reporting quarter, revenue from Estonia was 6.9 (2023 Q2: 5.6) million euros, which was 24% higher than the previous year. For the first six months of the year, revenue grew more modestly by 8.1%, reaching 11.4 (2023 6M: 10.5) million euros. The increase in revenue in Estonia was mainly due to higher sales of compact substations to electrical distribution network customers.

Revenue from Finland was 20.6 (2023 Q2: 24.5) million euros in the second quarter and 37.5 (2023 6M: 43.1) million euros for the first six months, representing a decrease of 16% and 13%, respectively, compared to the previous year. The decline in revenue in Finland was due to lower demand for compact substations, resulting from changes in utility price control methods implemented at the beginning of 2024.

Revenue from Sweden was relatively stable, reaching 8.7 (2023 Q2: 9.1) million euros in the second quarter and 15.6 (2023 6M: 15.6) million euros for the first six months. The modest decrease in sales in Sweden was due to changes in the business model and the decision to stop selling EPC projects (turnkey solutions) and focus on factory products. The Swedish market accounted for 15% (2023 Q2: 16% and 2023 6M: 15%) of the Group’s consolidated revenue for the quarter and the half-year.

Revenue from Norway decreased to 8.0 (2023 Q2: 11.5) million euros compared to the second quarter of the previous year due to a reduction in sales of drive cabinets and MCC-s (Motor control centers) to maritime sector contractual clients. This decline was mainly due to a high comparison base, caused by overcapacity at the Lithuanian production unit in 2023 and a lower volume of orders this year. For the first six months, revenue from Norway was 17.3 (2023 6M: 15.5) million euros. The Norwegian market accounted for 14.0% (2023 Q2: 20.2%) of the Group’s revenue for the quarter and 16.7% (2023 6M: 15.2%) for the half-year.

Investments

During the reporting period, Harju Elekter invested a total of 1.5 (2023 6M: 2.6) million euros in non-current assets, including 0.7 (2023 6M: 2.1) million euros in real estate investments, 0.4 (2023 6M: 0.4) million euros in property, plant, and equipment, and 0.4 (2023 6M: 0.1) million euros in intangible assets. The investments included large-scale renovation and reconstruction work at the Keila industrial park, aimed at meeting the needs of the long-term tenant, Prysmian Group Baltics. Additionally, production technology equipment was acquired, and production and process management systems were developed.

As of the reporting date, the value of the Group’s long-term financial investments was 27.7 (31.12.23: 29.2) million euros. During the reporting quarter,  most of the listed securities were sold, generating a total of 1.6 million euros from their sale, with a realized profit of 0.2 million euros.

Share

The company’s share price on the last trading day of the reporting quarter on the Nasdaq Tallinn Stock Exchange closed at 4.74 euros. As of 30 June 2024, AS Harju Elekter Group had 11,025 shareholders.

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION    
Unaudited        
EUR ‘000 30.06.2024 31.12.2023 30.06.2023  
ASSETS        
Current assets        
Cash and cash equivalents             1,632             1,381              2,339  
Trade and other receivables 48,655 38,837 38,447  
Prepayments 1,173 1,071 2,143  
Inventories 28,745 36,834 46,747  
Total current assets 80,205 78,123 89,676  
Non-current assets        
Deferred income tax assets 722 731 985  
Non-current financial investments 27,715 29,244 32,593  
Investment properties 28,901 28,856 26,314  
Property, plant, and equipment 33,275 34,067 33,919  
Intangible assets 7,576 7,354 7,267  
Total non-current assets 98,189 100,252 101,078  
TOTAL ASSETS 178,394 178,375 190,754  
LIABILITIES AND EQUITY        
Liabilities        
Borrowings 17,272 19,387 20,768  
Prepayments from customers 13,495 18,870 18,769  
Trade and other payables 27,970 23,159 32,034  
Tax liabilities 4,598 3,308 4,219  
Current provisions 185 140 1,980  
Total current liabilities 63,520 64,864 77,770  
Borrowings 23,207 23,481 23,780  
Other non-current liabilities 54 32 0  
Total non-current liabilities 23,261 23,513 23,780  
TOTAL LIABILITIES 86,781 88,377 101,550  
Equity        
Share capital 11,655 11,655 11,523  
Share premium 3,306 3,306 2,509  
Reserves 23,063 23,055 26,843  
Retained earnings 53,589 51,982 48,620  
Total equity attributable to the owners of the parent company 91,613 89,998 89,495  
Non-controlling interests 0 0 -291  
Total equity 91,613 89,998 89,204  
TOTAL LIABILITIES AND EQUITY 178,394 178,375 190,754  

 

 

 

CONSOLIDATED STATEMENT OF PROFIT AND LOSS        
Unaudited        
       
EUR ‘000 Q2 Q2 6M 6M  
2024 2023 2024 2023  
Revenue 56,801 56,762 103,577 102,030  
Cost of sales -48,629 -50,151 -90,569 -90,034  
Gross profit 8,172 6,611 13,008 11,996  
Distribution costs -1,328 -1,313 -2,524 -2,668  
Administrative expenses -2,227 -2,711 -4,744 -5,291  
Other income 75 181 94 199  
Other expenses -242 -600 -409 -759  
Operating profit/loss (-) 4,450 2,168 5,425 3,477  
Finance income   11 -7 104 68  
Finance costs -540 -1,021 -1,131 -1,570  
Profit/loss (-) before tax 3,921 1,140 4,398 1,975  
Income tax -454 -256 -571 -342  
Profit/loss (-) for the period 3,467 884 3,827 1,633  
Profit /loss (-) attributable to:          
    Owners of the parent company 3,467 982 3,827 1,763  
    Non-controlling interests 0 -98 0 -130  
Earnings per share          
   Basic earnings per share (euros) 0.19 0.05 0.21 0.10  
   Diluted earnings per share (euros) 0.19 0.05 0.21 0.10  

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME        
Unaudited        
       
EUR ‘000 Q2 Q2 6M 6M  
2024 2023 2024 2023  
Profit/loss (-) for the period 3,467 884 3,827 1,633  
Other comprehensive income (loss)          
Items that may be reclassified to profit or loss          
   Impact of exchange rate changes of a foreign subsidi­aries -46 164 60 123  
Items that will not be reclassified to profit or loss          
   Gain on sales of financial assets 185 0 185 0  
   Net gain/loss (-) on revaluation of financial assets -141 8,830 -72 8,866  
Total comprehensive income (loss) for the period -2 8,994 173 8,989  
Other comprehensive income (loss) 3,465 9,878 4,000 10,622  
Total comprehensive income (loss) attributable to:          
    Owners of the Company 3,465 9,976 4,000 10,752  
    Non-controlling interests 0 -98 0 -130  
           

HEG Interim Report Q2 2024

Priit Treial
CFO and Member of the Management Board
+372 674 7400