Revenue, Expenses, and Profit

Q3 and the nine-month period were still successful for Harju Elekter Group despite the prevailing global recession - the Group continued with the targeted improvement of its profitability. The measures taken helped to keep people healthy and maintain the normal level of production in all factories.

EUR'000

Q3

Q3

+/-

9m

9m

+/-

2020

2019

Q/Q

2020

2019

9m/9m

Revenue

37,360

42,262

-11.6%

111,372

112,150

-0.7%

Gross profit

5,234

5,375

-2.6%

15,625

14,249

9.7%

EBITDA

2,913

2,446

19.1%

7,939

5,679

39.8%

Operating profit (EBIT)

2,002

1,561

28.3%

5,211

3,064

70.1%

Profit for the period

1,694

1,319

28.4%

4,369

2,313

88.9%

Incl. attributable to owners of the parent company

1,691

1,359

24.4%

4,398

2,384

84.5%

Earnings per share (EPS) (euros)

0.10

0.08

24.4%

0.25

0.13

84.5%

The consolidated revenue of the Group in Q3 of 2020 remained somewhat lower compared to the record volumes of the year before, while over the years still being a good result. The consolidated unaudited revenue for the reporting quarter was 37.4 (Q3 2019: 42.3) million euros and the consolidated revenue for the nine months was 111.4 (9m 2019: 112.2) million euros.

Operating expenses for the reporting quarter have decreased in all expense groups - a total of 5.2 million euros. Compared to Q3 2019, distribution costs decreased by 24.1%, by 0.4 million to 1.2 million euros, because the coronavirus (COVID-19) is spreading around the world, most sales work was done virtually. The largest change compared to Q3 of 2019 was in cost of sales - a decrease of 4.8 million euros. Administrative expenses decreased by 3.1% to 2.2 million euros, compared to Q3 of 2019. Labour costs remained at the same level, being 6.6 million euros in year-on-year comparison.

The consolidated gross profit for the reporting quarter and for the nine months was 5,234 (Q3 2019: 5,375) and 15,625 (9m 2019: 14,249) thousand euros, respectively, and the gross margin for both periods was 14.0% (Q3 and 9m 2019: 12.7%). Consolidated operating profit (EBIT) was 2,002 (Q3 2019: 1,561) thousand euros and in the nine months 5,211 (9m 2019: 3,064) thousand euros. The operating margin increased by 1.7 percentage points to 5.4% in the reporting quarter and by 2.0 percentage points to 4.7% in nine months.

The consolidated net profit for the reporting quarter was 1,694 (Q3 2019: 1,319) thousand euros, and earnings per share were 0.10 (Q3 2019: 0.08) euros. Net profit for the nine months increased by 88.9% compared to the comparable period, reaching 4,369 (9m 2019: 2,313) thousand euros. Nine-month earnings per share were 0.25 (9m 2019: 0.13) euros.

Core Business and Markets

Harju Elekter's core business, production, accounted for 86% of the Group's consolidated revenue both in the reporting quarter and in nine months. The Group's three largest target markets are Estonia, Finland, and Sweden. Quarterly sales to the Estonian market increased by 3.0 million euros to 7.7 million euros in a year-on-year comparison and by 3.8 million euros to 17.0 million euros in a nine-month comparison. The main reason behind the sales growth was that deliveries under the framework procurement of Elektrilevi OÜ mostly remained in the third quarter.

Quarterly sales to the Finnish market decreased by 2.2 million euros to 16.5 million euros in a year-on-year comparison and it was mostly affected by the decrease in orders. The decline in orders in the last quarter also affected the 9-month result, where revenue to the Finnish market decreased by 2.1 million euros to 54.9 million euros.

Quarterly sales to the Swedish market increased by 1.2 million euros to 6.6 million euros in the year-on-year comparison. The Swedish market's revenue increased by 2.7 million euros to 17.5 million euros in a nine-month comparison, being the second largest market overall. The growth in the Swedish market was secured by an increase in the sale of substations, manufactured in Estonia, to the Swedish market as well as the general increase in orders.

Investments

In the reporting period, the Group invested a total of 4.1 (9m 2019: 4.4) million euros in non-current assets, incl. 2.1 (9m 2019: 0.7) million euros in investment properties, 1.8 (9m 2019: 3.4) million euros in property, plant and equipment and 0.2 (9m 2019: 0.3) million euros in intangible assets.

The largest development project in Q3 was the start of the construction of the fourth stage of the expansion of the production and office building in Lithuania. Investments aimed at the expansion of the plant will enable Harju Elekter UAB to double the plant's revenues. In addition, investments were made in the construction of a production facility in the Allika Industrial Park, and plots of land were purchased.

Share

The company's shares closed at 4.44 euros on the last trading day of the reporting quarter on the Nasdaq Tallinn stock exchange. As at 30 September 2020, AS Harju Elekter has 4,831 shareholders. The number of shareholders has increased by 261 over the reporting quarter.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited

EUR'000

30

September 2020

31

December

2019

ASSETS

Currents assets

Cash and cash equivalents

3,367

4,878

Trade and other receivables

26,464

22,958

Prepayments

1,048

1,166

Inventories

21,213

19,010

Total current assets

52,092

48,012

Non-current assets

Deferred income tax assets

513

472

Non-current financial investments

8,146

10,494

Investment properties

22,758

21,259

Property, plant, and equipment

20,330

20,402

Intangible assets

7,200

7,260

Total non-current assets

58,947

59,887

TOTAL ASSETS

111,039

107,899

LIABILITIES AND EQUITY

Liabilities

Borrowings

8,871

11,305

Prepayments from customers

3,947

2,212

Trade and other payables

19,264

16,448

Tax liabilities

2,555

2,959

Current provisions

35

34

Total current liabilities

34,672

32,958

Borrowings

7,901

7,901

Other non-current liabilities

95

64

Total non-current liabilities

7,996

7,965

TOTAL LIABILITIES

42,668

40,923

Equity

Share capital

11,176

11,176

Share premium

804

804

Reserves

2,842

3,412

Retained earnings

53,693

51,699

Total equity attributable to the owners of the parent company

68,515

67,091

Non-controlling interests

-144

-115

Total equity

68,371

66,976

TOTAL LIABILITIES AND EQUITY

111,039

107,899

CONSOLIDATED STATEMENT OF PROFIT AND LOSS

Unaudited

EUR'000

Q3

Q3

9m

9m

2020

2019

2020

2019

Revenue

37,360

42,262

111,372

112,150

Cost of sales

-32,126

-36,887

-95,747

-97,901

Gross profit

5,234

5,375

15,625

14,249

Distribution costs

-1,150

-1,516

-3,639

-4,198

Administrative expenses

-2,225

-2,296

-7,119

-6,929

Other income

167

39

494

171

Other expenses

-24

-41

-150

-229

Operating profit

2,002

1,561

5,211

3,064

Finance income

8

25

116

147

Finance costs

-122

-77

-269

-179

Profit before tax

1,888

1,509

5,058

3,032

Income tax

-194

-190

-689

-719

Profit for the period

1,694

1,319

4,369

2,313

Profit attributable to:

Owners of the parent company

1,691

1,359

4,398

2,384

Non-controlling interests

3

-40

-29

-71

Earnings per share

Basic earnings per share (EUR)

0.10

0.08

0.25

0.13

Diluted earnings per share (EUR)

0.10

0.08

0.25

0.13

Tiit Atso
Chairman of the Management Board
+372 674 7400

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Harju Electrics Ltd. published this content on 28 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2020 07:59:00 UTC