Harju Elekter Group financial results, 1-3/2023

During the reporting quarter, Harju Elekter Group's revenue growth and profitability were significantly impacted by the review of the business processes, increased production efficiency, and reduced problems with material and component supply. Furthermore, the positive result can be attributed to important decisions made to optimize business operations and achieve cost savings, as well as successful price negotiations in framework procurements. The Group remains committed to improving efficiency in order to increase profitability.

Revenue and financial results

Harju Elekter Group’s revenue in the reporting quarter was 45.3 (2022 Q1: 37.3) million euros, which is 21,3% more than a year before and historically the best first quarterly result. More low-voltage switchgears and frequency converter switchboards were sold, and larger projects were realised.

EUR ’000   3M 3M +/-
    2023 2022  
Revenue   45,269 37,321 21.3%
Gross profit   5,386 2,986 80.3%
EBITDA   2,382 -68 3601.5%
Operating profit/loss (-) (EBIT)   1,309 -1,125 216.3%
Profit/loss (-) for the period   749 -1,294 157.9%
Incl. attributable to owners of the parent company   781 -1,308 159.7%
Earnings per share (EPS) (euros)   0.04 -0.07 157.1%

The Group's operating expenses totalled 43.8 (2022 Q1: 38.4) million euros in the reporting quarter. Most of the increase in operating expenses was due to the 16.2 % increase in the cost of sales. At the same time, the growth of costs of sales was lower than the growth rate of revenue in the first quarters by 5.1 percentage points.

Distribution costs remained at the same level, being 1.4 million euros and making up 3.1% of the Group's operating expenses and 3.0% of revenue. Administrative expenses decreased by 0.1 million euros to 2.6 million euros, when comparing the first quarters, making up 5.9% of the Group's operating expenses and 5.7% of the revenue of the reporting quarter.

In a quarterly comparison, labour costs increased by 9.2%, amounting to 9.5 million euros. The majority of the increase in labour costs originates from staff growth, and the growth in average wages was influenced by wage pressure from the overall economy.

The gross profit for the first quarter was 5,386 (2022 Q1: 2,986) thousand euros and the gross profit margin was 11.9% (2022 Q1: 8.0%). Operating profit (EBIT) was 1,309 (2022 Q1: operating loss 1,125) thousand euros. The operating margin of the reporting quarter was 2.9% (2022 Q1: -3.0%). The net profit for the reporting quarter was 749 (2022 Q1: net loss 1,294) thousand euros, of which the share of the owners of the parent company was 781 (2022 Q1: net loss 1,308) thousand euros. Net profit per share in the first quarter was 0.04 euros, a year earlier the net loss per share was -0.07 euros.

Core business and markets

During the reporting quarter, the Group's core activity - production - accounted for 94.1% of its revenue. The revenue of the production segment increased by 30.1% in the reporting quarter, being 42.6 million euros.

In the reporting quarter, 5.0 (2022 Q1: 6.9) million euros were earned from Estonia, making up 10.9% (2022 Q1: 18.5%) of the revenue. The revenue to the Estonian market decreased by 1.9 million euros, and this is mainly related to the termination of the retail and project-based sale of electrical products in Estonia.

In the reporting quarter, the revenue earned from the Finnish market was 11.6% more than a year before, totalling 18.6 (2022 Q1: 16.7) million euros. The majority of the increase in revenue came from the sale of automation equipment and low-voltage switchgears to key customers and from the growth of orders for car heating and charging equipment and solar panel systems. In addition, the volume of electrical works in the Finnish shipbuilding sector increased. During the reporting quarter, 41.2% (2022 Q1: 44.7%) of Harju Elekter products and services were sold to the Group's largest market.

The revenue of the Swedish market increased by 11.1% in the comparison of first quarters due to the increase in sale of substations and the growth of project business, being 6.5 (2022 Q1: 5.8) million euros. Sweden accounted for 14.3% (2022 Q1: 15.6%) of the revenue of the reporting quarter.

Revenue from the Norwegian market decreased compared to the previous year, being 4.0 (2022 Q1: 4.5) million euros. The Norwegian market accounted for 8.9% (2022 Q1: 12.1%) of the revenue of the reporting quarter.

Investments

During the reporting period, the Group invested a total of 0.6 (2022 Q1: 1.5) million euros in non-current assets, incl 0.3 (2022 Q1: 1.0) million euros in investment properties, 0.2 (2022 Q1: 0.4) million euros in property, plant, and equipment and 0.1 (2022 Q1: 0.1) million euros in intangible assets. Investments were mostly made in production technology equipment, production, and process management systems.

The value of the Group's non-current financial investments totalled 23.8 (31.12.22: 23.7) million euros as of the reporting date.

Share

The company's share price on the last trading day of the reporting quarter on the Nasdaq Tallinn Stock Exchange closed at 5.0 euros. As of 31 March 2023, AS Harju Elekter had 11,232 shareholders. The number of shareholders increased during the reporting quarter by 648 members.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION        
Unaudited        
EUR '000 31.03.2023 31.12.2022 31.03.2022  
ASSETS        
Current assets        
Cash and cash equivalents 1,028 9,152 286  
Trade and other receivables 37,627 31,612 35,663  
Prepayments 1,945 1,126 3,119  
Inventories 44,704 37,068 37,692  
Total current assets 85,304 79,958 76,760  
Non-current assets        
Deferred income tax assets 1,002 1,008 776  
Non-current financial investments 23,767 23,731 24,410  
Investment properties 24,766 24,756 24,603  
Property, plant, and equipment 35 042 35 740 26,303  
Intangible assets 7,284 7,244 7,659  
Total non-current assets 91,861 92,479 83,751  
TOTAL ASSETS 177,165 171,437 160,511  
         
LIABILITIES AND EQUITY        
Liabilities        
Borrowings 18,366 24,385 21,354  
Prepayments from customers 21,310 16,827 6,681  
Trade and other payables 31,888 24,502 31,063  
Tax liabilities 3,033 3,478 3,663  
Current provisions 1,950 2,103 51  
Total current liabilities 76,547 71,295 62,812  
Borrowings 20,412 20,732 12,401  
Other non-current liabilities 0 0 33  
Total non-current liabilities 20,412 20,732 12,434  
TOTAL LIABILITIES 96,959 92,027 75,246  
Equity        
Share capital 11,523 11,523 11,352  
Share premium 2,509 2,509 1,601  
Reserves 17,815 17,768 18,278  
Retained earnings 48,552 47,771 54,158  
Total equity attributable to the owners of the parent company 80,399 79,571 85,389  
Non-controlling interests -193 -161 -124  
Total equity 80,206 79,410 85,265  
TOTAL LIABILITIES AND EQUITY 177,165 171,437 160,511  
CONSOLIDATED STATEMENT OF PROFIT AND LOSS            
Unaudited            
             
EUR '000 3M 3M        
  2023 2022        
Revenue 45,269 37,321        
Cost of sales -39,883 -34,335        
Gross profit 5,386 2,986        
Distribution costs - 1,356 - 1,350        
Administrative expenses -2,580 -2,655        
Other income 18 56        
Other expenses -159 -152        
Operating profit/loss (-) 1,309 -1,125        
Finance income    75 39        
Finance costs -549 -119        
Profit/loss (-) before tax 835 -1,205        
Income tax -86 -89        
Profit/loss (-) for the period 749 -1,294        
Profit /loss (-) attributable to:            
     Owners of the parent company 781 -1,308        
     Non-controlling interests -32 14        
Earnings per share            
    Basic earnings per share (euros) 0.04 -0.07        
    Diluted earnings per share (euros) 0.04 -0.07        
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME    
Unaudited        
         
EUR '000 3M 3M    
  2023 2022    
Profit/loss (-) for the period 749 -1,294    
Other comprehensive income (loss)        
Items that may be reclassified to profit or loss        
    Impact of exchange rate changes of a foreign subsidiaries -41 20    
Items that will not be reclassified to profit or loss        
    Gain on sales of financial assets 0 151    
    Net gain/loss (-) on revaluation of financial assets 36 -521    
Total comprehensive income (loss) for the period -5 -350    
Other comprehensive income (loss) 744 -1,644    
Total comprehensive income (loss) attributable to:        
     Owners of the Company 776 -1,658    
     Non-controlling interests -32 14    
         

Priit TreialCFO and Member of the Management Board+372 674 7400

Attachment

  • HE Interim Report Q1 2023
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