Published: 2021-02-23 07:00:00 CET
Harju Elekter
Quarterly report

Harju Elekter Group financial results, 1-12/2020

Estonia, 2021-02-23 07:00 CET -- Revenue, Expenses, and Profit

Despite the challenges provided over the past year, Q4 and the year 2020 both were full of changes and successful for Harju Elekter. The Group’s large-scale investments in recent years and active sales work to increase its market share in the Scandinavian and in native market have come to bear fruits. Sales orders carried over from previous periods and additional orders in the reporting year resulted in record revenue and profit in the reporting quarter and in the reporting year.

 EUR'000   Q4 Q4 +/- 12m 12m +/-
    2020 2019 Q/Q 2020 2019 12m/12m
Revenue   35,243 31,246 12.8% 146,614 143,397 2.2%
Gross profit   5,585 3,995 39.8% 21,209 18,244 16.3%
EBITDA   2,400 1,112 115.8% 10,340 6,791 52.3%
Operating profit (EBIT)   1,335 210 535.7% 6,546 3,273 100.0%
Profit for the period   1,159 55 2007.3% 5,528 2,367 133.5%
Incl. attributable to owners of the parent   1,165 77 1413.0% 5,563 2,460 126.1%
Earnings per share (EPS) (euros)   0.07 0.00 1413.0% 0.31 0.14 126.1%

The consolidated unaudited revenue of the Group was 35.2 (Q4 2019: 31.2) million euros in the reporting quarter and a total of 146.6 (2019: 143.4) million euros in the reporting year.

The total operating expenses for the reporting quarter were 34.0 (Q4 2019: 31.1) million euros. The majority of the increase in expenses was due to an increase in the cost of sales: 2.4 million euros year-on-year. The Group’s companies were actively seeking opportunities to increase business volumes for upcoming periods by participating in several procurements, as a result of which distribution costs have increased to 2.2 million euros, this being an 0.7 million increase from the comparable quarter. Compared to the comparable quarter and year, labor costs increased, amounting to 7.3 (Q4 2019: 7.2) and 27.3 (2019: 26.7) million euros, respectively. The reason for the increase in labour costs primarily lies in the good financial results of the Group’s companies. In 2020 while extraordinary production shifts have also been made during this difficult year, being accompanied by an increase in working hours and higher bonuses.

The consolidated gross profit for the reporting quarter was 5,585 (Q4 2019: 3,995) thousand euros and the gross profit margin was 15.8% (Q4 2019: 12.8%). The consolidated gross profit for the reporting year was 21,209 (2019: 18,244) thousand euros and the gross profit margin was 14.5% (2019: 12.7%). Quarterly consolidated operating profit (EBIT) was six times higher than in the same period of last year and doubled on a yearly basis, amounting to 1,335 (Q4 2019: 210) and 6,546 (2019: 3,273) thousand euros, respectively. The operating margin increased by 3.1 percentage points to 3.8% in the reporting quarter and by 2.2 percentage points to 4.5% in twelve months.

The consolidated net profit for the reporting quarter was 1,159 (Q4 2019: 55) thousand euros, and earnings per share were 0.07 (Q4 2019: 0.00) euros. Net profit for the year 2020 increased by 133.5% compared to the comparable period, reaching 5,528 (2019: 2,367) thousand euros. Earnings per share for the reporting year were 0.31 (2019: 0.14) euros.

Core Business and Markets

The Group's core business, Production, accounted for 86% of the Group's consolidated revenue. The largest target markets of the Group are Estonia, Finland, Sweden, and Norway. Quarterly sales to the Estonian market increased by 2.9 million to 6.5 million euros in a year-on-year comparison and 6.7 million to 23.5 million euros within twelve-month comparison. Most of the deliveries of the prefabricated substations for Elektrilevi OÜ, whose tender was won in 2019, were postponed to the second half of the reporting year due to difficulties in the availability of individual materials and components.

Sales to the Finnish market decreased by 1.0 million euros to 13.8 million euros in a quarterly comparison, from Q2 onwards, mostly being affected by a decrease in orders in the industrial automation sector. The decrease in orders in the three quarters also affected the result of the financial year with the revenue from the Finnish market decreasing by 3.0 million euros to 68.7 million in a yearly comparison. The majority of the sales volume was generated by sales to Finnish electricity network companies, whose orders were declining due to the renewal of procurement contracts. Harju Elekter proved to be successful in most of the new procurements.

Sales to the Swedish market increased the most. The revenue earned on the Swedish market almost doubled in the comparison of the reporting quarters, totalling 9.1 million euros. In a year comparison, Sweden's revenue increased by 7.0 million euros to 26.5 million euros, being the second largest market overall. The growth was supported by an increase in the sale of substations, manufactured in Estonia, to the Swedish market as well as the overall growth in orders in Sweden.

Norway ranks fourth in the Group's markets, accounting for 7.8% of the Group's fourth quarter revenue, being 2.8 million euros. During the reporting year, the Norwegian market earned 16.7 million euros, which is 4.9 million euros less than in the previous year. The decrease in the revenue in Norway was caused by record-high orders in Q3 and Q4 of the previous year.

Investments

During the year, the Group invested a total of 8.1 (2019: 5.5) million euros in non-current assets, incl. 3.1 (2019: 0.9) million euros in investment properties, 4.6 (2019: 4.2) million euros in property, plant, and equipment and 0.3 (2019: 0.4) million euros in intangible assets. This year, the construction of the fourth stage of the expansion of the production and office building in Lithuania began. In addition, investments were made in the production technology, information technology developments, construction of the production building in Allika Industrial Park and plots of land were purchased.

Share

The company's share price on the last trading day of the reporting quarter on the Nasdaq Tallinn Stock Exchange closed at 5.18 euros. As of 31 December 2020, AS Harju Elekter had 5,084 shareholders. The number of shareholders increased during the reporting quarter by 253 persons.

Dividend Proposal

The Group’s dividend policy mandates that at least one third of the net profit from ordinary economic activities is paid out as dividends. Proposing the payment of dividends, the Management Board has considered the significantly improved financial results, as well as the making of increased investments and the betterment of the financial position. In coordination with the Supervisory Board, the Group's Management Board will propose to pay dividends to the shareholders 0.16 euros per share, totalling 2.8 million euros and representing 51% of consolidated net profit in 2020.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION        
Unaudited        
EUR'000 31
December 2020
31
December
2019
   
ASSETS        
Current assets        
Cash and cash equivalents 2,843 4,878    
Trade and other receivables 27,226 22,958    
Prepayments 820 1,166    
Inventories 18,856 19,010    
Total current assets 49,745 48,012    
Non-current assets        
Deferred income tax assets 514 472    
Non-current financial investments 11,918 10,494    
Investment properties 23,605 21,259    
Property, plant, and equipment 22,494 20,402    
Intangible assets 7,199 7,260    
Total non-current assets 65,730 59,887    
TOTAL ASSETS 115,475 107,899    
         
LIABILITIES AND EQUITY        
Liabilities        
Borrowings 12,056 11,305    
Prepayments from customers 4,182 2,212    
Trade and other payables 15,837 16,448    
Tax liabilities 2,871 2,959    
Current provisions 34 34    
Total current liabilities 34,980 32,958    
Borrowings 7,032 7,901    
Other non-current liabilities 66 64    
Total non-current liabilities 7,098 7,965    
TOTAL LIABILITIES 42,078 40,923    
Equity        
Share capital 11,176 11,176    
Share premium 804 804    
Reserves 6,709 3,412    
Retained earnings 54,858 51,699    
Total equity attributable to the owners of the parent company 73,547 67,091    
Non-controlling interests -150 -115    
Total equity 73,397 66,976    
TOTAL LIABILITIES AND EQUITY 115,475 107,899    
         
 
 
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
       
Unaudited        
EUR'000 Q4 Q4 12m 12m
  2020 2019 2020 2019
Revenue 35,243 31,246 146,614 143,397
Cost of sales -29,658 -27,251 -125,405 -125,153
Gross profit 5,585 3,995 21,209 18,244
Distribution costs -2,208 -1,508 -5,847 -5,706
Administrative expenses -2,140 -2,300 -9,259 -9,229
Other income 213 85 707 255
Other expenses -115 -62 -264 -291
Operating profit 1,335 210 6,546 3,273
Finance income 21 4 137 139
Finance costs -110 -58 -379 -225
Profit before tax 1,246 156 6,304 3,187
Income tax -87 -101 -776 -820
Profit for the period 1,159 55 5,528 2,367
Profit attributable to:        
    Owners of the parent company 1,165 77 5,563 2,460
    Non-controlling interests -6 -22 -35 -93
Earnings per share        
   Basic earnings per share (EUR) 0.07 0 0.31 0.14
   Diluted earnings per share (EUR) 0.07 0 0.31 0.14
         

 

Tiit Atso
Chairman of the Management Board
+372 674 7400

 


Interim Report Q4_2020.pdf