Harvia Oyj — Earnings Release 2018

Aug 16, 2018

Harvia Plc: Harvia's Half-year financial review 1 January-30 June 2018

Harvia Plc: Harvia's Half-year financial review 1 January-30 June 2018

Harvia Plc, Half-year financial review, 16 August 2018 at 9.00 a.m. EET

Harvia's half-year financial review 1 January-30 June 2018:

Steady growth during the second quarter

This release is a summary of Harvia Plc's January-June 2018 Half-year financial
review. The complete report is attached to this release as a pdf-file. It is
also available on Harvia's website at www.harvia.fi.

Highlights of the review period

April-June 2018

* Revenue grew by 6.3% to EUR 15.3 million (14.4)
* Adjusted operating profit was EUR 2.4 million (2.3) making up 16.0% (16.2)
of the revenue
* Operating free cash flow amounted to EUR 0.4 million (1.7)

January-June 2018

* Revenue grew by 3.1% to EUR 31.8 million (30.8)
* Adjusted operating profit was EUR 5.7 million (5.5) making up 17.8% (17.9)
of the revenue
* Operating free cash flow amounted to EUR 2.3 million (2.0)
* Net debt decreased by 58% to EUR 31.0 million (73.7) and leverage was 2.4
(6.0)
* Due to the share issue, equity ratio increased to 54.9% (16.5)

Key figures

EUR million 4-6/2018 4-6/2017 Change % 1-6/2018 1-6/2017 Change % 2017

Revenue 15.3 14.4 6.3% 31.8 30.8 3.1% 60.1

EBITDA 3.0 2.7 10.8% 5.4 6.2 -12.9% 11.2

% of revenue 19.4% 18.6%   16.9% 20.0%   18.6%

Items affecting
comparability * 0.0 0.1 -74.0% 1.3 0.3 349.8% 1.4

Adjusted EBITDA
** 3.0 2.8 6.4% 6.7 6.5 3.6% 12.6

% of revenue 19.6% 19.6%   21.1% 21.0%   21.0%

Operating profit 2.4 2.2 10.0% 4.3 5.2 -16.9% 9.3

% of revenue 15.7% 15.2%   13.6% 16.9%   15.4%

Adjusted
operating profit
** 2.4 2.3 4.7% 5.7 5.5 2.6% 10.7

% of revenue 16.0% 16.2%   17.8% 17.9%   17.8%

Basic EPS (EUR) 0.08 0.07 28.0% 0.22 0.22 1.2% 0.30

Operating free
cash flow 0.4 1.7 -78.9% 2.3 2.0 18.8% 9.0

Cash conversion 11.8% 59.4%   34.9% 30.5%   71.6%

Investments in
tangible and
intangible assets -0.2 -0.3 -32.0% -0.8 -0.5 63.8% -1.2

Net debt 31.0 73.7 -58.0% 31.0 73.7 -58.0% 73.0

Leverage 2.4 6.0   2.4 6.0   5.8

Net working
capital 20.4 17.6 16.2% 20.4 17.6 16.2% 17.3

Adjusted return
on capital
employed (ROCE) 30.8% 34.6%   30.8% 34.6%   32.7%

Equity ratio 54.9% 16.5%   54.9% 16.5%   16.9%

Number of
employees at end
of period 381 384 -0.8% 381 384 -0.8% 365

* Consists of items outside the ordinary course of business that are related to
Group's strategic development projects, the listing, acquisitions and loss on
sale of fixed assets and affect comparability.

** Adjusted by items affecting comparability.

Financial targets and outlook

Harvia does not publish its short-term outlook. However, the company has set
targets related to growth, profitability and leverage. The company targets an
average annual revenue growth of more than 5%, adjusted operating profit margin
of 20% and a net debt/adjusted EBITDA between 1.5x-2.5x. The future impacts of
changes in IFRS reporting standards have excluded in the net debt/adjusted
EBITDA ratio target.

Harvia targets a regularly increasing dividend with a bi-annual dividend payout
of at least 60 percent of net income, in total. The shareholders of the company
unanimously resolved on 2 March 2018 to authorise the Board of Directors of the
company to decide on distribution of dividend in the maximum amount of EUR 3.5
million paid from distributable funds of the year 2017. The Board of Directors
of the company intends to decide the dividend payout based on the authorisation
in autumn 2018.

Tapio Pajuharju, CEO:

Harvia's steady performance continued during January-June 2018. I'm very
satisfied with the 6.3% year-on-year growth in the sales of Harvia's
comprehensive Sauna and Spa offering during the second quarter, despite the
exceptionally warm summer. We reached a revenue of EUR 31.8 million during the
review period, which represents 3.1% growth year on year. During the review
period, our revenue grew especially in Finland and in other EU countries.

The adjusted operating profit for the second quarter grew year on year,
totalling EUR 2.4 million or 16.0% (16.2) of the revenue. Growth in Sauna sales
combined with an increase in the price of timber reduced the operating profit
margin slightly year on year. The adjusted operating profit for January-June was
EUR 5.7 million or 17.8% of revenue.

The public listing of Harvia's shares that took place in March strengthened our
capital structure, which supports Harvia's leading position as an international
provider of sauna and spa products. The strengthened financing structure is
reflected in reduced finance costs.

During the review period, we launched a hybrid sauna, which were presented at
the Pori Housing Fair. The hybrid sauna combines the features and benefits of an
infrared sauna with a traditional electric sauna. The hybrid sauna is a good
indication of how new technology can renew and diversify the sauna experience.
At the Housing Fair, we also introduced some of the premium range Sentio by
Harvia products, which will become available in the second half of this year.

During the first half-year, we launched new premium sauna heater products, such
as the advanced wall-mounted Harvia The Wall heaters and the stylish Harvia Glow
design heaters. In the steam generator category, we launched a new Harvia HGD
generator for the consumer market with new innovations to further increase
functionality and reliability. These new products are good examples of Harvia's
strong expertise in product development and the seamless and productive
cooperation between production, marketing and development.

The implementation of Harvia's "one-stop shop" strategy in the sauna and spa
business continued as planned during the review period. We made progress on our
strategic goal of increasing the value of the average purchase and saw
favourable development in, for example, infrared saunas, steam generators and
the sales of spare parts. At the same time, the sales of traditional and steam
saunas continued favourably. The sales of electric heaters experienced good
growth in the second quarter. The sales of wood burning heaters started to
develop favourably in Finland and in the neighbouring markets during the second
quarter. Due to tight local competition in the Russian market combined with the
delay of the renewed local Harvia Russia offering from the best sales season,
the sales of wood burning heaters dropped slightly year-on-year in the first
half of 2018. During the review period, the sales of control units were impacted
negatively by the discontinuation of private label deliveries to two large
clients in Germany, and the delay of delivery of more affordable control units
closer towards the autumn sales season in Russia.

Geographical expansion progressed as planned during the review period.
Distribution in the EU countries has been expanded according to plan. In Russia,
the expansion of distribution in regional cities continued. The upgrading of our
retailers' shops in Sweden has proceeded as planned and the Harvia shop-in-shop
concept has been implemented in six stores.

Improving productivity progressed as planned at all factories. Renewing and
expanding the product offering of our factory in China is proceeding and will
create further sales opportunities for heaters as well as steam generators.

We will continue to carry out our strategy in second half of 2018 with a focus
on increasing the value of the average purchase, continuing our geographical
expansion and improving our productivity.

Press conference
Harvia will hold a press conference for analysts, investors and media today,
Thursday, 16 August 2018, at 11:00 a.m. Finnish time, at Harvia's headquarters
and factory premises in Muurame (address Teollisuustie 1-7, Muurame). The
conference will be held in Finnish.

A live audiocast of the conference will also be held today, Thursday, 16 August
2018, at 1:00 p.m. Finnish time. You can follow the audiocast at
https://harvia.videosync.fi/2018-q2-result.

You can also participate by calling:

* Finland: +358 9 817 104 95
* UK: +44 203 194 055 2
* Sweden: +46 856 642 702
* US: +1 855 716 159 7

A recording of the audiocast will be available later at the company's website.

HARVIA PLC

For further information, please contact:
CEO Tapio Pajuharju, tapio.pajuharju@harvia.fi, tel. +358 50 577 4200
CFO Ari Vesterinen, ari.vesterinen@harvia.fi, tel. +358 40 5050 440

Harvia is one of the leading companies operating in the sauna and spa market
globally, as measured by revenue.([1]) Harvia's brands and product offering are
well-known in the market([2]) and the Company's comprehensive product offering
strives to meet the needs of the international sauna and spa market, of both
private and professional customers.

Harvia's revenue amounted to EUR 60.1 million in 2017, its operating profit was
EUR 9.3 million and adjusted operating profit EUR 10.7 million during the same
period. The Company employs some 365 professionals in Finland, China and Hong
Kong, Romania, Austria, Germany and Estonia. The company's headquarters in
Muurame, Finland are adjacent to its largest sauna and sauna component
manufacturing facility.

[1] International Management Consultant Analysis conducted in autumn 2017 and
commissioned by Harvia.

[2] The Harvia brand was the most recognised sauna brand in a survey of Finnish,
Swedish, German, Russian and American consumers (altogether 810 consumers)
conducted by an international management consultant company in autumn 2017 and
commissioned by Harvia.

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