Harju Elekter Group financial results, 1-9/2020

28.10.2020 Reports Market Announcements

Revenue, Expenses, and Profit

Q3 and the nine-month period were still successful for Harju Elekter Group despite the prevailing global recession – the Group continued with the targeted improvement of its profitability. The measures taken helped to keep people healthy and maintain the normal level of production in all factories.

 EUR’000   Q3 Q3 +/- 9m 9m +/-
    2020 2019 Q/Q 2020 2019 9m/9m
Revenue 37,360 42,262 -11.6% 111,372 112,150 -0.7%
Gross profit 5,234 5,375 -2.6% 15,625 14,249 9.7%
EBITDA 2,913 2,446 19.1% 7,939 5,679 39.8%
Operating profit (EBIT) 2,002 1,561 28.3% 5,211 3,064 70.1%
Profit for the period 1,694 1,319 28.4% 4,369 2,313 88.9%
Incl. attributable to owners of the parent company 1,691 1,359 24.4% 4,398 2,384 84.5%
Earnings per share (EPS) (euros) 0.10 0.08 24.4% 0.25 0.13 84.5%

The consolidated revenue of the Group in Q3 of 2020 remained somewhat lower compared to the record volumes of the year before, while over the years still being a good result. The consolidated unaudited revenue for the reporting quarter was 37.4 (Q3 2019: 42.3) million euros and the consolidated revenue for the nine months was 111.4 (9m 2019: 112.2) million euros.

Operating expenses for the reporting quarter have decreased in all expense groups – a total of 5.2 million euros. Compared to Q3 2019, distribution costs decreased by 24.1%, by 0.4 million to 1.2 million euros, because the coronavirus (COVID-19) is spreading around the world, most sales work was done virtually. The largest change compared to Q3 of 2019 was in cost of sales – a decrease of 4.8 million euros. Administrative expenses decreased by 3.1% to 2.2 million euros, compared to Q3 of 2019. Labour costs remained at the same level, being 6.6 million euros in year-on-year comparison.

The consolidated gross profit for the reporting quarter and for the nine months was 5,234 (Q3 2019: 5,375) and 15,625 (9m 2019: 14,249) thousand euros, respectively, and the gross margin for both periods was 14.0% (Q3 and 9m 2019: 12.7%). Consolidated operating profit (EBIT) was 2,002 (Q3 2019: 1,561) thousand euros and in the nine months 5,211 (9m 2019: 3,064) thousand euros. The operating margin increased by 1.7 percentage points to 5.4% in the reporting quarter and by 2.0 percentage points to 4.7% in nine months.

The consolidated net profit for the reporting quarter was 1,694 (Q3 2019: 1,319) thousand euros, and earnings per share were 0.10 (Q3 2019: 0.08) euros. Net profit for the nine months increased by 88.9% compared to the comparable period, reaching 4,369 (9m 2019: 2,313) thousand euros. Nine-month earnings per share were 0.25 (9m 2019: 0.13) euros.

Core Business and Markets

Harju Elekter’s core business, production, accounted for 86% of the Group’s consolidated revenue both in the reporting quarter and in nine months. The Group’s three largest target markets are Estonia, Finland, and Sweden. Quarterly sales to the Estonian market increased by 3.0 million euros to 7.7 million euros in a year-on-year comparison and by 3.8 million euros to 17.0 million euros in a nine-month comparison. The main reason behind the sales growth was that deliveries under the framework procurement of Elektrilevi OÜ mostly remained in the third quarter.

Quarterly sales to the Finnish market decreased by 2.2 million euros to 16.5 million euros in a year-on-year comparison and it was mostly affected by the decrease in orders. The decline in orders in the last quarter also affected the 9-month result, where revenue to the Finnish market decreased by 2.1 million euros to 54.9 million euros.

Quarterly sales to the Swedish market increased by 1.2 million euros to 6.6 million euros in the year-on-year comparison. The Swedish market’s revenue increased by 2.7 million euros to 17.5 million euros in a nine-month comparison, being the second largest market overall. The growth in the Swedish market was secured by an increase in the sale of substations, manufactured in Estonia, to the Swedish market as well as the general increase in orders.

Investments

In the reporting period, the Group invested a total of 4.1 (9m 2019: 4.4) million euros in non-current assets, incl. 2.1 (9m 2019: 0.7) million euros in investment properties, 1.8 (9m 2019: 3.4) million euros in property, plant and equipment and 0.2 (9m 2019: 0.3) million euros in intangible assets.

The largest development project in Q3 was the start of the construction of the fourth stage of the expansion of the production and office building in Lithuania. Investments aimed at the expansion of the plant will enable Harju Elekter UAB to double the plant’s revenues. In addition, investments were made in the construction of a production facility in the Allika Industrial Park, and plots of land were purchased.

Share

The company’s shares closed at 4.44 euros on the last trading day of the reporting quarter on the Nasdaq Tallinn stock exchange. As at 30 September 2020, AS Harju Elekter has 4,831 shareholders. The number of shareholders has increased by 261 over the reporting quarter.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
EUR’000

                        30September2020

                               31December2019

ASSETS
Currents assets
Cash and cash equivalents 3,367 4,878
Trade and other receivables 26,464 22,958
Prepayments 1,048 1,166
Inventories 21,213 19,010
Total current assets 52,092 48,012
Non-current assets
Deferred income tax assets 513 472
Non-current financial investments 8,146 10,494
Investment properties 22,758 21,259
Property, plant, and equipment 20,330 20,402
Intangible assets 7,200 7,260
Total non-current assets 58,947 59,887
TOTAL ASSETS 111,039 107,899
LIABILITIES AND EQUITY
Liabilities
Borrowings 8,871 11,305
Prepayments from customers 3,947 2,212
Trade and other payables 19,264 16,448
Tax liabilities 2,555 2,959
Current provisions 35 34
Total current liabilities 34,672 32,958
Borrowings 7,901 7,901
Other non-current liabilities 95 64
Total non-current liabilities 7,996 7,965
TOTAL LIABILITIES 42,668 40,923
Equity
Share capital 11,176 11,176
Share premium 804 804
Reserves 2,842 3,412
Retained earnings 53,693 51,699
Total equity attributable to the owners of the

parent company

68,515 67,091
Non-controlling interests -144 -115
Total equity 68,371 66,976
TOTAL LIABILITIES AND EQUITY 111,039 107,899

 

 

CONSOLIDATED STATEMENT OF PROFIT AND LOSS
Unaudited
EUR’000 Q3 Q3 9m 9m
2020 2019 2020 2019
Revenue 37,360 42,262 111,372 112,150
Cost of sales -32,126 -36,887 -95,747 -97,901
Gross profit 5,234 5,375 15,625 14,249
Distribution costs -1,150 -1,516 -3,639 -4,198
Administrative expenses -2,225 -2,296 -7,119 -6,929
Other income 167 39 494 171
Other expenses -24 -41 -150 -229
Operating profit 2,002 1,561 5,211 3,064
Finance income 8 25 116 147
Finance costs -122 -77 -269 -179
Profit before tax 1,888 1,509 5,058 3,032
Income tax -194 -190 -689 -719
Profit for the period 1,694 1,319 4,369 2,313
Profit attributable to:
Owners of the parent company 1,691 1,359 4,398 2,384
Non-controlling interests 3 -40 -29 -71
Earnings per share
Basic earnings per share (EUR) 0.10 0.08 0.25 0.13
Diluted earnings per share (EUR) 0.10 0.08 0.25 0.13

 

Tiit Atso
Chairman of the Management Board
+372 674 7400

Interim Report 1-9/2020

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