Commentary from the management
2023 will remain in Harju Elekter’s history as a year of transformation. We managed to turn the deep loss of the previous year into a strong profit, while achieving the largest operating profit in the Group’s history and a satisfactory net profit despite increased interest rates.
The fourth quarter results were weaker than usual due to the seasonality of the business, but compared to the same period last year, the results have continued to improve. In particular, we can be content with the change in operating profit (EBIT), which remained at a satisfactory level even after the year-end revaluation of the profitability of the projects and assets. Instead of losses in 2022, the Group earned both operating and net profit in 2023.
The year was marked by a number of fundamental decisions and pivotal changes to be proud of. The merger of the Estonian subsidiaries was more successful than expected, as demonstrated by the strong financial results. We can also be proud of the Lithuanian manufacturing company, which by today has grown to become the largest unit in the Group, and which we can commend for the strongest financial performance among all companies of the Group. In
As a whole, the structural reforms launched at the end of 2022 and introduced last year, as well as the implementation of the Strategic Action Plan, have been successful. In the spring, we will start setting the strategic targets for the Group’s next growth period, driven by the need to increase the Group’s EBIT margin and, in line with the expectations of shareholders, by the continued desire to increase the dividend. The Group’s central strategic objective in the coming years will be profitable growth.
Revenue and financial results
The Group’s revenue in the fourth quarter was
EUR ’000 | Q4 | Q4 | +/- | 12M | 12M | +/- | |
2023 | 2022 | 2023 | 2022 | ||||
Revenue | 50,737 | 49,978 | 1.5% | 209,014 | 175,293 | 19.2% | |
Gross profit | 4,218 | 2,517 | 67.6% | 23,588 | 12,269 | 92.3% | |
EBITDA | 1,920 | -943 | 303.6% | 12,444 | 217 | 5634.6% | |
Operating profit/loss (-) (EBIT) | 758 | -2,063 | 136.7% | 8,078 | -4,546 | 277.7% | |
Profit/loss (-) for the period | 135 | -2,482 | 105.4% | 5,160 | -5,567 | 192.7% | |
Earnings per share (EPS) (euros) | 0.01 | -0.14 | 105.3% | 0.28 | -0.31 | 191.7% |
The Group’s operating expenses decreased by 2.9% comparing the fourth quarters, being a total of
Distribution costs were 1.3 (Q4 2022: 1.4) and administrative expenses 2.7 (Q4 2022: 3.0) million euros in the quarter. The total distribution costs of the year were 5.3 (2022: 5.6) million euros and administrative expenses 10.1 (2022: 11.2) million euros.
The gross profit for the quarter was 4,218 (Q4 2022: 2,517) thousand euros and the gross profit margin was 8.3% (Q4 2022: 5.0%). The fourth quarter operating profit (EBIT) was 758 (Q4 2022 operating loss: -2,063) thousand euros and the operating margin was 1.5% (Q4 2022: -4.1%). Net profit for the fourth quarter was 135 (2022: -2,520) thousand euros, which is
The gross profit for the year was 23,588 (2022: 12,269) thousand euros and the gross margin was 11.3% (2022: 7.0%). During the year, operating profit (EBIT) of 8,078 (2022: operating loss -4,546) and net profit of 5,160 (2022: net loss -5,544) thousand euros were earned. Net profit per share was 0.28 (2022: net loss per share -0.31) euros.
Core business and markets
The Group's core business, Production, accounted for 94.0% (Q4 2022: 92.5%) of the revenue of the quarter. The production segment’s revenue increased by 3.2% quarterly and by 25.6% annually, amounting to 47.7 and
The Group's largest target markets are
In the fourth quarter, 5.2 (Q4 2022: 7.6) million euros were earned from
Compared to the quarters, revenue in
The revenue of the Swedish market increased due to the rise in the sale of substations and the growth of project business, being 9.2 (Q4 2022: 7.1) in the quarter and 32.5 (2022: 22.8) million euros in the summary of the year.
Revenue from the Norwegian market was 5.7 (Q4 2022: 8.9) in the quarter, and 33.8 (2022: 21.8) million euros during the year. Revenue was mainly generated from the production of frequency converter systems and electrical and automation panels for the maritime and shipping sector. The Norwegian market accounted for 11.3% (Q4 2022: 17.8%) of the revenue of the reporting quarter.
Revenue from other markets increased by 5.8 to
Investments
During the reporting period, the Group invested a total of 6.9 (2022: 15.2) million euros in non-current assets, incl 5.2 (2022: 1.8) in investment properties, 1.4 (2022: 12.9) in property, plant, and equipment and 0.4 (2022: 0.5) million euros in intangible assets. Most of the investments during the reporting period were made in the construction of the production building to be rented out to Reimax Electronics OÜ in the
The value of the Group's non-current financial investments totalled 29.2 (31.12.22: 23.7) million euros as of the reporting date. The main part of the revaluation of financial assets in 2023 came from the estimated fair value change of OÜ
Share
The company's share price on the last trading day of the reporting quarter on the
Dividend Proposal
In coordination with the Supervisory Board, the Group's Management Board will propose to pay dividends to the shareholders 0.13 euros per share, totalling
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||
Unaudited | ||||
EUR '000 | ||||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | 1,381 | 9,152 | ||
Trade and other receivables | 38,837 | 31,612 | ||
Prepayments | 1,071 | 1,126 | ||
Inventories | 36,834 | 37,068 | ||
Total current assets | 78,123 | 78,958 | ||
Non-current assets | ||||
Deferred income tax assets | 731 | 1,008 | ||
Non-current financial investments | 29,244 | 23,731 | ||
Investment properties | 28,856 | 24,756 | ||
Property, plant, and equipment | 34,067 | 35,740 | ||
Intangible assets | 7,354 | 7,244 | ||
Total non-current assets | 100,252 | 92,479 | ||
TOTAL ASSETS | 178,375 | 171,437 | ||
LIABILITIES AND EQUITY | ||||
Liabilities | ||||
Borrowings | 19,387 | 24,385 | ||
Prepayments from customers | 18,870 | 16,827 | ||
Trade and other payables | 23,159 | 24,502 | ||
Tax liabilities | 3,308 | 3,478 | ||
Current provisions | 140 | 2,103 | ||
Total current liabilities | 64,864 | 71,295 | ||
Borrowings | 23,481 | 20,732 | ||
Other non-current liabilities | 32 | 0 | ||
Total non-current liabilities | 23,513 | 20,732 | ||
TOTAL LIABILITIES | 88 377 | 92 027 | ||
Equity | ||||
Share capital | 11,655 | 11,523 | ||
Share premium | 3,306 | 2,509 | ||
Reserves | 23,055 | 17,768 | ||
Retained earnings | 51,982 | 47,771 | ||
Total equity attributable to the owners of the parent company | 89,998 | 79,571 | ||
Non-controlling interests | 0 | -161 | ||
Total equity | 89,998 | 79,410 | ||
TOTAL LIABILITIES AND EQUITY | 178,375 | 171,437 |
CONSOLIDATED STATEMENT OF PROFIT AND LOSS | |||||||||
Unaudited | |||||||||
EUR '000 | Q4 | Q4 | 12M | 12M | |||||
2023 | 2022 | 2023 | 2022 | ||||||
Revenue | 50,737 | 49,978 | 209,014 | 175,293 | |||||
Cost of sales | -46,519 | -47,461 | -185,426 | -163,024 | |||||
Gross profit | 4,218 | 2,517 | 23,588 | 12,269 | |||||
Distribution costs | -1,260 | -1,449 | -5,320 | -5,578 | |||||
Administrative expenses | -2,657 | -3,037 | -10,112 | -11,194 | |||||
Other income | 495 | 2 | 314 | 308 | |||||
Other expenses | -38 | -96 | -392 | -351 | |||||
Operating profit/loss (-) | 758 | -2,063 | 8,078 | -4,546 | |||||
Finance income | 456 | 5 | 97 | 78 | |||||
Finance costs | -624 | -433 | -2,103 | -809 | |||||
Profit/loss (-) before tax | 590 | -2,491 | 6,072 | -5,277 | |||||
Income tax | -455 | 9 | -912 | -290 | |||||
Profit/loss (-) for the period | 135 | -2,482 | 5,160 | -5,567 | |||||
Profit /loss (-) attributable to: | |||||||||
Owners of the parent company | 135 | -2,520 | 5,160 | -5,544 | |||||
Non-controlling interests | 0 | 38 | 0 | -23 | |||||
Earnings per share | |||||||||
Basic earnings per share (euros) | 0.01 | -0.14 | 0.28 | -0.31 | |||||
Diluted earnings per share (euros) | 0.01 | -0.14 | 0.28 | -0.30 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||||
Unaudited | ||||||||
EUR '000 | Q4 | Q4 | 12M | 12M | ||||
2023 | 2022 | 2023 | 2022 | |||||
Profit/loss (-) for the period | 135 | -2,482 | 5,160 | -5,567 | ||||
Other comprehensive income (loss) | ||||||||
Items that may be reclassified to profit or loss | ||||||||
Impact of exchange rate changes of a foreign subsidiaries | -212 | -47 | -139 | -208 | ||||
Items that will not be reclassified to profit or loss | ||||||||
Gain on sales of financial assets | 0 | 0 | 0 | 320 | ||||
Net gain/loss (-) on revaluation of financial assets | -3,266 | 20 | 5,516 | -726 | ||||
Total comprehensive income (loss) for the period | -3,478 | -27 | 5,377 | -614 | ||||
Other comprehensive income (loss) | -3,343 | -2,509 | 10,537 | -6,181 | ||||
Total comprehensive income (loss) attributable to: | ||||||||
Owners of the Company | -3,343 | -2,547 | 10,537 | -6,158 | ||||
Non-controlling interests | 0 | 38 | 0 | -23 | ||||
Priit Treial
CFO and Member of the Management Board
+372 674 7400
Attachment
- HEG Interim Report Q4 2023
© OMX, source