Harvia Q3'25: Broad-based growth

Translation: Original published in Finnish on 11/07/2025 at 07:00 am EET

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

Harvia's Q3 earnings were clearly better than our expectations, as revenue grew broadly faster than estimates. However, the estimates changes for the coming years remained moderate, and with the price rally, we again consider the valuation high (e.g., 2026 P/E 25x). We raise the target price to EUR 43 (was EUR 40) with increased medium-term forecasts, but we lower the recommendation to Reduce (was Accumulate).

Strong growth pushed Q3 earnings above expectations

Harvia's revenue growth (19%) in Q3 was broad-based, with all four segments growing by over 10% and exceeding our estimate. In our view, strong revenue growth also means continued market share gains, even though there is no precise information available. North America returned to a robust 24% growth after a weaker Q2. We estimate that organic growth in local currencies was over 20%, while in Q2 it was close to zero. The growth trend of the sauna market and Harvia in the US, thus, appears to be firmly on track, as we expected. The APAC&MEA area grew by 36% and there was broad-based growth within the area. Harvia also grew over 10% in Europe, and European demand appears to have turned to a growth trend, although we do not expect as strong growth figures in the future.

The only negative point in the report was the weakening of the material margin from an exceptionally high over 69% in the comparison period to under 63%. Harvia explained this with currency changes and tariffs, both of which affect heaters shipped from Finland to the USA. Harvia compensates for these effects with price increases at the end of the year and early next year. Fixed costs continued to grow as the company continues its investments to support growth. With strong revenue growth, the company's adjusted EBIT was 8.8 MEUR, practically at the comparison period's level (8.9 MEUR), clearly exceeding both our (7.3 MEUR) and consensus estimates (8.1 MEUR).

Estimates raised, especially regarding growth

With Harvia's strong growth figures and good Q3 earnings, our earnings estimates for this year naturally rose by 4%, even though there were no significant revisions to our Q4 estimates. We believe strong growth will continue in the coming years, and we raised our revenue estimates throughout our forecast period. The earnings estimates for the next few years changed by only 0-2%.

We believe Harvia will continue to gain market share and achieve its targets

Harvia's targets include annual sales growth of 10% (incl. acquisitions) and an EBIT margin of over 20%. We believe it will reach these targets in the coming years through organic growth alone. As in recent years, growth in our estimates is driven by non-European regions, with growth in the US, in particular, supported by increased expansion in steam and infrared products. We believe this will allow Harvia to gain further market share in the US. Growth of the APAC&MEA region also increasingly supports the Group's overall growth as the region's share of revenue increases (now around 12%). We also expect Harvia to maintain profitability at the target level of 20-23%. However, growth investments are reflected in the margin, which is not scaled up significantly in our forecasts despite the growth.

Valuation jumped high again

Following the post-earnings price rally, Harvia's valuation level for next year remains clearly above our accepted multiples (EV/EBIT 19x, P/E 25x). We consider the company's return on capital and cash flow generation capabilities excellent, and multiples will moderate in the coming years. We believe that Harvia’s capital allocation will continue to be value-creating, and thus channeling cash either to acquisitions and/or larger dividends would support the investor's expected return. We also see Harvia as a potential acquisition target, but with the current valuation, we find it quite expensive for the buyer.