Correction: Harju Elekter Group financial results, 1-6/2024
Correction: Harju Elekter Group financial results,
1-6/2024
In today's stock exchange announcement and
financial report (page 7), in the table reflecting the
main indicators, there was an error in the column of the change in
operating profit and net profit.
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% |
The Group’s operating expenses decreased by 3.7%
compared to the previous quarters, reaching 52.2 (2023 Q2: 54.2)
million euros. The most significant reduction was due to a decrease
in the cost of sales by 1.5 million, totaling 48.6 million euros,
and a reduction in administrative expenses by 0.5 million euros,
amounting to 2.2 million euros. In the first half of the year,
operating expenses totaled 97.8 (2023 6M: 98.0) million euros. The
cost of sales increased by 0.5 million over the six months,
reaching 90.6 million euros, with the increase primarily occurring
in the first quarter.
Distribution costs, labour costs, and
depreciation of non-current assets remained at the same level as
the previous year, totaling 1.3 million, 1.0 million, and 10.6
million euros, respectively, in the second
quarter. Distribution costs and administrative expenses
decreased by a combined 0.7 million euros over the six months,
totaling 2.5 million and 4.7 million euros, respectively. Labour
costs increased by 0.4 million compared to the first six months,
totaling 20.6 million euros. The increase in labour costs was
largely influenced by a significant reduction in the number of
employees at the Estonian and Lithuanian production units, which
included severance payments and compensations.
Gross profit reached 8.2 (2023 Q2: 6.6) million
euros, with a gross profit margin of 14.4% (2023 Q2: 11.6%).
Operating profit (EBIT) doubled to 4.5 (2023 Q2: 2.2) million
euros, resulting in an operating margin of 7.8% (2023 Q2: 3.8%).
Net profit for the second quarter was 3.5 (2023 Q2: 0.9) million
euros, and the net profit margin was 6.1% (2023 Q2: 1.6%).
The reason for the increase in profitability is the resolution of
supply chain difficulties we experienced last year and the
optimisation of the number of employees, which has enabled us to
increase production efficiency. Also, the factories were operating
at near maximum capacity and production was more efficient than
last year.
During the first half of the year, the Group
earned revenue of 103.6 (2023 6M: 102.0) million euros, which
remained quite similar to the results from the same period last
year, increasing by 1.5%. The six-month gross profit was 13.0 (2023
6M: 12.0) million euros.
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 |
|
|
|
|
|
|
|
|
|
|
Priit Treial
CFO and Member of the Management Board
+372 674 7400
- HEG Interim Report Q2 2024 (2)
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