Harvia Q3'25 preview: We expect US growth to continue, but earnings to fall

Translation: Original published in Finnish on 11/04/2025 at 08:10 am EET

Source: Inderes &  Modular Finance, 6 analysts (consensus)

Harvia will report its Q3 results on Thursday at around 9 am EET. We expect the company's organic revenue growth to have accelerated from Q2 levels, but earnings to remain below the comparison period in the seasonally weakest quarter. This is explained by the exceptionally high material margin in the comparison period and the company's continuous growth investments, which raise fixed costs.

We expect the US to return to clear organic growth 

We expect 8% revenue growth in Q3, excluding the impact of acquisitions The ThermaSol acquisition will support the figures for one more month by around 1 MEUR or 3%, bringing our total growth estimate to 11%. On the other hand, the USD, which is around 5% weaker than in the comparison period, weighs on the figures reported in euros. Organic growth in the US remained around zero in Q2 due to both market weakening and sales timing. We believe US revenue will return to clear organic growth in Q3 (around 10% or around 15% in local currencies). We expect the APAC&MEA region to continue its strong growth (20%) and Europe to also turn to slight growth. We believe that the development of US revenue and comments on the market situation are again the most interesting aspects of the report. 

We estimate earnings and margins to weaken year-on-year

Q3 is typically Harvia's weakest earnings quarter seasonally. Although we expect revenue growth to have picked up, we estimate adjusted EBIT to be 7.3 MEUR compared to 8.9 MEUR in the comparison period. The material margin in the comparison period was exceptionally high, over 69%, whereas in other quarters, Harvia has reached a maximum level of around 66%. In the last quarter, the company implied that a normal material margin is 65-67%. We still estimate a fairly good material margin of 66.5% for Q3'25, which, however, is significantly lower than in the comparison period. In addition, as Harvia has increased and communicated that it will continue to increase fixed costs to support growth, we believe that fixed costs as a proportion of revenue will also increase slightly. Thus, we expect the Q3 adjusted EBIT margin to decrease to around 17%, compared to 21% in the comparison period. The consensus estimate for adjusted EBIT is somewhat higher than our estimate (8.1 MEUR), even though the revenue estimates are practically at the same level. 

No guidance from Harvia, outlook likely to remain positive 

Harvia has not issued any guidance during its stock market history and does not make concrete comments on the future but only refers to its financial targets, which are a 10% revenue growth and an adjusted EBIT margin of over 20%. We expect Harvia’s growth outlook to remain good this year as well. This is supported by continued strong organic growth outside Europe, in addition to which growth is supported by the acquisition made in the US last summer. We also forecast European revenue to return to growth after three years of decline, helped by easier comparison figures and a gradual recovery in consumer demand. We estimate the company's margin to remain strong, but to fall slightly short of the 20% target for the full year, mainly due to a weak Q2.