Harvia Oyj · OMXHEX:HARVIA
Harvia Oyj — Investor Day (May 2024)
80 slides from Harvia Oyj's investor day presentation, May 29, 2024
Slide 1: Welcome to Harvia's Capital Markets Day
WELCOME TO HARVIA’S CAPITAL MARKETS DAY! 29 May 2024 Copyright © 2024 Harvia Plc
Slide 2: Our targets for today
Our targets for today Share our view on the market, 1 key trends and opportunities Present our updated strategy and long-term 2 financial targets Provide a deeper view on selected high-priority 3 business topics We want to support investors in assessing Harvia as an investment case Copyright © 2024
Slide 3: Our program today
Our program today 10:30 Welcome! 13:30 Event ends HARVIA’S STRATEGY UPDATE Lunch Matias Järnefelt, CEO 14:15 Factory tour FINANCIAL OVERVIEW AND UPDATED TARGETS Ari Vesterinen, CFO Q&A 11:45 Break 12:00 FUELING GROWTH IN NORTH AMERICA Jennifer Thayer, Head of Region North America INSPIRING THE MARKE
Slide 4: Harvia's Management Team
Harvia’s Management Team Matias Järnefelt Ari Vesterinen Jennifer Thayer Markus Wörmanseder Mika Suoja CEO CFO Head of Region Head of Products and Solutions, Head of Operations North America Head of Region Continental Europe Päivi Juolahti Timo Harvia Anssi Pelkonen David Ahonen Rainer Kunz Head of
Slide 5: Disclaimer
Disclaimer This material contains, or may be deemed to contain, “forward-looking statements”. These statements relate to future events or Harvia Plc’s future financial performance, for example, market growth and developments, Harvia Plc’s strategic plans, potential growth, planned operational develo
Slide 6: Harvia's strategy update
Harvia’s strategy update Matias Järnefelt, CEO Copyright © 2024 Harvia Plc 6
Slide 7: Harvia today
Harvia today Copyright © 2024 Harvia Plc 7
Slide 8: Harvia is the leading global player in the sauna market
Harvia is the leading global player in the sauna market Embracing local sauna cultures in ∼90 countries with several production facilities across the world. €150.5M 22.4% REVENUE 2023 ADJ. OPERATING PROFIT MARGIN 2023 2 GLOBAL MASTER 600+ BRANDS EMPLOYEES Harvia factories Copyright © 2024 Harvia Plc
Slide 9: Improving health, wellbeing and appearance with the full sauna experience
Today, we improve health, wellbeing and appearance with the full sauna experience SAUNA ROOMS SAUNA EQUIPMENT & HOT TUBS & ACCESSORIES (traditional, infrared, steam) TECHNOLOGY COLD PLUNGES & SERVICES (e.g., heaters, control units and digital) Copyright © 2024 Harvia Plc 9
Slide 10: The sauna experience ambassadors since 1950
The sauna experience ambassadors since 1950 1950 The company was led by Harvia family 2014 2018 Harvia’s story began in 1950 when a After four years of development under Finnish sauna enthusiast, Tapani Harvia, for over six decades, forming CapMan acquired 80% of Harvia private equity ownership, sou
Slide 11: Since the IPO in 2018, Harvia has over doubled its size
Since the IPO in 2018, Harvia has over doubled its size while delivering consistently strong profitability Harvia revenue and adjusted EBIT-% 2018–2023 • Harvia has grown strongly in the past years, both M€ organically and through 200 30% M&A 179.1 180 172.4 25% • In 2020–2022, the sauna 160 26.4% 2
Slide 12: Harvia has executed its current strategy successfully after being listed
Harvia has executed its current strategy successfully after being listed Increasing the average Geographical Productivity purchase value expansion improvement Copyright © 2024 Harvia Plc 12
Slide 13: Overview of the sauna market
Overview of the sauna market 13 Copyright © 2024 Harvia Plc 13
Slide 14: The global sauna market is ~3.5 billion euros in value
Our core business: The global sauna market is ~3.5 billion euros in value ∼3.5 billion euros in value1 >18 million saunas1 Global sauna market Split between 3 sauna types: Traditional, Infrared and Steam. Traditional over half of the market value. Historical average growth ∼5% p.a. Due to increasing
Slide 15: Key industry drivers shaping the market
Key drivers seen in the industry are shaping the market and offer growth opportunities for Harvia INDUSTRY DRIVERS Wellness Experience Growing Technology Sustainability Market and health economy awareness consolidation People are willing to Consumers across Awareness of sauna and Innovations merging
Slide 16: Sauna market characteristics in each of Harvia's sales regions
The sauna market has unique characteristics and opportunities in each of Harvia’s sales regions North America Northern Europe Russia 20–25% ∼15% ∼15% 1–1.5 million ∼4 million ∼6 million Market growing faster than global Highest number of saunas per capita in Harvia exited Russia average especially i
Slide 17: Our strategy
Our strategy Copyright © 2024 Harvia Plc 17
Slide 18: We are healing with heat
OUR PURPOSE We are healing with heat Copyright © 2024 Harvia Plc 18
Slide 19: Shaping the global sauna market
OUR STRATEGIC ROLE Shaping the global sauna market so that everyone has a reason to experience sauna Copyright © 2024 Harvia Plc 19
Slide 20: Shaping the global sauna market
SHAPING GLOBAL SAUNA MARKET • Active market maker to grow the sauna market • We operate and want to lead globally with focus on countries that matter the most • Lead and inspire through exciting innovation • We offer a complete portfolio covering various sauna types • Drive M&As as a market consolid
Slide 21: Harvia's updated strategic focus areas
Harvia’s updated strategic focus areas Delivering Winning Leading in strategically important the full sauna experience in key channels markets Best-in-class operations & great people Copyright © 2024 Harvia Plc 21
Slide 22: Harvia's updated strategic focus areas
Harvia’s updated strategic focus areas Delivering Winning Leading the full sauna experience in strategically important markets in key channels • Increasing the sales of comprehensive • North America: Drive strong growth across • Mastering the “Right product through systems and solutions price points
Slide 23: Harvia focuses on scalable business opportunities
Harvia focuses on scalable business opportunities with appropriate profit potential and fit with our competences Our core: Solutions, products, accessories Not our core: and digital services for a great sauna experience Construction, real estate, service operator Equipment business Solutions busines
Slide 24: Large adjacent industries Harvia can leverage
Next to the Harvia’s core, there are elements from large industries that Harvia can leverage in its business in the future DIGITAL SERVICES WELLNESS AND HEALTH MARKET AND ENTERTAINMENT Market size: ∼EUR 6 trillion1 Market size: > EUR 2 trillion3 SAUNA MARKET IS OUR CORE BATHROOM MARKET LIFESTYLE BRA
Slide 25: Updated long-term financial targets
Harvia’s updated long-term financial targets reflect our growth ambition GROW TH P R O F I TA B I L I T Y LEVERAGE 10% >20% <2.5x Average annual Adjusted operating Net debt/adjusted revenue growth profit margin1 EBITDA2 1) Adjusted operating profit is operating profit before items affecting comparab
Slide 26: Harvia's organization structure supports the strategy
Harvia’s organization structure supports the implementation of our strategy Harvia Group high-level organization structure, Key targets of the updated effective from 1 January 2024 organization structure • Increase customer and market CEO orientation • Strengthen innovation and 4 SALES Northern Cont
Slide 27: Giving everyone a reason to experience sauna – responsibly
Harvia is committed to giving everyone a reason to experience sauna – responsibly FOR GOOD AND FOR SUSTAINABLE FOR CARBON FOR SAFE AND HEALTHY LIVING EXPERIENCES & ENJOYMENT NEUTRALITY WARM COMMUNITY We create a positive impact on the We actively guide our end-users in Our goal is to be carbon neutr
Slide 28: Key takeaways
Key takeaways The global sauna market is attractive 1 with solid growth drivers Harvia has a strong track record 2 and is well-positioned for the future Harvia plans to take a bold, strategic role in shaping the sauna 3 market and giving everyone a reason to experience sauna Harvia has updated its l
Slide 29: Financial overview and updated targets
Financial overview and updated targets Ari Vesterinen, CFO Copyright © 2024 Harvia Plc
Slide 30: Development of Harvia's financial performance
Development of Harvia’s financial performance Copyright © 2024 Harvia Plc 30
Slide 31: Solid track record in growing profitably
Harvia has a solid track record in growing profitably, both organically and inorganically Revenue and Adjusted operating profit-% M€ 200 30% 179.1 180 172.4 25% 160 26.4% 150.5 140 22.4% 22.4% 20% 21.1% 120 109.1 18.7% 100 17.5% 15% 80 74.1 61.9 CAGR 19% 10% 60 of which 10 pp organic growth 40 5% 20
Slide 32: Business has become more global; North America share up
Harvia’s business has become more global as especially North America’s share of Harvia’s total revenue has increased Revenue by sales region M€ • Since 2018, the share of Northern 200 Europe of Harvia’s revenue has 180 declined from 49% to 30%. 18.9 18.1 160 • Continental Europe represents a third 1
Slide 33: Revenue by product group
Heating equipment still comprise over half of Harvia’s revenue, but especially the share of saunas has been growing Revenue by product group M€ 200 • The share of heating equipment 180 has decreased 160 from 68% (2018) to 55% (2023). 140 • Saunas and Scandinavian hot 120 tubs represent 29% of the 10
Slide 34: Strong operating free cash flow and low leverage
Harvia’s operating free cash flow has been strong and leverage low Operating free cash flow and cash conversion Net debt and leverage M€ % M€ 45 120 60 2.5 40 100 50 35 2 30 80 40 1.5 25 60 30 20 1 15 40 20 10 0.5 20 10 5 0 0 0 0 2018 2019 2020 2021 2022 2023 Q1 Q1 2018 2019 2020 2021 2022 2023 Q1 Q
Slide 35: Moderate investment pace
Apart from the investment-heavy year 2021, Harvia has maintained a moderate investment pace Investments • Harvia’s annual investments have typically M€ varied between EUR 1.5 and 3.5 million. 14 • In 2021, Harvia’s total investments were 12 EUR 11.8 million, as the company opened a new sauna factory
Slide 36: Updated long-term financial targets
Updated long-term financial targets Copyright © 2024 Harvia Plc 36
Slide 37: Value creation through profitable growth
Value creation through profitable growth has a key role in Harvia’s strategy and long-term value creation The operating environment supports Growing the size of our business setting a more ambitious growth target benefits us in several ways Growth of the sauna market is expected • Utilizing the comp
Slide 38: Financially positioned to perform significant M&As
In addition to organic growth, Harvia is and wants to be financially well positioned to perform significant-sized M&As Harvia has the financial capacity to make …which supports the important role significant investments and M&As… of inorganic growth in Harvia’s strategy >150 • Harvia wants to take a
Slide 39: Updated long-term financial targets reflect growth ambition
Our updated long-term financial targets reflect our growth ambition GROW TH P R O F I TA B I L I T Y LEVERAGE 10% >20% <2.5x FINANCIAL TARGET Average annual Adjusted operating Net debt/adjusted revenue growth profit margin1) EBITDA 2) • Before: average annual revenue • Before: >20% (no changes) • Be
Slide 40: Dividend policy is to pay a growing dividend
Harvia’s dividend policy is to pay a growing dividend Dividends EUR • Since February 2022, Harvia’s % dividend policy has been to pay 2 100 1.80 regularly increasing dividends with 1.8 90 a bi-annual payout 1.6 80 1.45 • Dividend for the financial year 2023 1.4 1.25 70 was EUR 0.68 per share – payou
Slide 41: Key takeaways
Key takeaways Over the past years, Harvia’s business has become 1 increasingly global and less heater-centered Harvia has kept and wants to keep a strong financial position 2 to also enable significant inorganic growth Harvia has updated its financial targets to better reflect 3 the company’s growth
Slide 42: Our program today
Our program today 10:30 Welcome! 13:30 Event ends HARVIA’S STRATEGY UPDATE Lunch Matias Järnefelt, CEO 14:15 Factory tour FINANCIAL OVERVIEW AND UPDATED TARGETS Ari Vesterinen, CFO Q&A 11:45 Break 12:00 FUELING GROWTH IN NORTH AMERICA Jennifer Thayer, Head of Region North America INSPIRING THE MARKE
Slide 43: Fueling growth in North America
Fueling growth in North America Jennifer Thayer, Head of Region North America Copyright © 2024 Harvia Plc
Slide 44: Harvia is a leading player in North America
Harvia is a leading player in North America • Heating equipment • Control units IN NORTH AMERICA, BRAND FOR • Selected solutions €43.4M 28.9% HEATERS AND COMPONENTS AND SELECTED SOLUTIONS REVENUE 2023 OF GROUP REVENUE IN 2023 • Full sauna room solutions – outdoor, indoor MAIN BRAND FOR HARVIA’S SAUN
Slide 45: Strong growth in North America after Almost Heaven acquisition
Harvia has grown strongly in North America after acquiring Almost Heaven Saunas in December 2018 Development of revenue in North America and share of Harvia’s revenue in 2018–2023, M€ 43.4 • Step change in the scale of North Acquisition: American business in late 2018 when Almost Heaven Saunas was a
Slide 46: Overview of the North American sauna market
Where we grow: Overview of the North American sauna market North American sauna market Key observations by application and type (2023) • Market size estimated to be USD ∼800M, CAGR ∼15% in 2019−23, all 100 sauna types relevant Steam ∼20% • Installed base 1−1.5M saunas, Commercial Harvia’s business 8
Slide 47: Experienced in the North American market
Experienced in the North American market Market characteristics Implications for Harvia Market growth above global average especially in residential Great growth potential and a focus market saunas, increasing awareness and interest for driving the company’s overall growth Low sauna penetration, but
Slide 48: Strengthening Harvia's position in North America
Our objective is to strengthen Harvia’s position as the leading player in the North American market 1 2 3 Being the leading sauna Winning especially in Strong operational experience provider the consumer market and people capabilities • Growing in infrared and steam, • Sharpening our channel strateg
Slide 49: Happened recently in North America
Happened recently in North America Strengthening our organization Introducing new products and solutions Developing the Lewisburg facility Copyright © 2024 Harvia Plc 51
Slide 50: Harvia is well positioned to win in North America
Harvia is well positioned to win in North America • Almost Heaven Saunas has been in the North American market since 1977 Long history in the market • Long relationships especially with key B2B customers • Very efficient local operations, supported by several recent investments Excellent operations
Slide 51: Key takeaways
Key takeaways North America has major potential to continue 1 to grow at a rapid pace in all three sauna types We have processes and structure in place 2 to be able to grow the business and provide significant value to Harvia Group Harvia US will continue to lead and excite the 3 North American mark
Slide 52: Inspiring the market with full sauna experience
Inspiring the market with full sauna experience Markus Wörmanseder Head of Products & Solutions, Head of Region Continental Europe Copyright © 2024 Harvia Plc
Slide 53: An industry with a long and rich history
We are operating in an industry with a long and rich history BCE 0000 1100 1800 1900 2020 2030 First “sweat Old romans The traditional The concept of Electric Global demand for sauna Sauna experience in all lodges” found enjoyed steam sauna was the third sauna heater experience is growing, its forms
Slide 54: From different sauna types to the full sauna experience
From different sauna types to the full sauna experience TRADITIONAL INFRARED STEAM SAUNA SHOWERS SCANDINAVIAN COLD SAUNA ROOMS SAUNA ROOMS AND ROOMS STILL WATER HOT TUBS TUBS DESCRIPTOR Wood-lined rooms utilizing either Utilizes radiant heat (no water) Either a shower or room where A traditional woo
Slide 55: A full spectrum of reasons for experiencing sauna
A full spectrum of reasons for experiencing sauna PERSONAL SOCIAL PURE AND NATURAL Hot and cold Multisensory treatment sauna experience HEALTH- EXPERIENCE- DRIVEN ORIENTED Health monitoring Extended as part of the reality and sauna experience entertainment TECHNOLOGY ADVANCED Copyright © 2024 Harvia
Slide 56: Sauna cultures and markets vary significantly
Sauna cultures and markets vary significantly EXAMPLES OF KEY COUNTRIES Key market features Sauna penetration Extremely high: High: Low: Low: Over 1 sauna per 2 people 1 sauna per ∼35 people 1 sauna per ∼300 people Under 1 sauna per 1,000 people Sauna types Almost entirely Traditional sauna largest,
Slide 57: Different sauna cultures offer business opportunities
Different sauna cultures and markets offer business opportunities Versatile sauna markets Harvia’s response From mature (Northern and Central Europe) to more Strong understanding of consumer and market demand emerging markets in North America and APAC on global and local level Different market struc
Slide 58: Key priorities for Products & Solutions
Key priorities for Products & Solutions 1 2 3 4 Optimizing existing Driving solutions- Strengthening growth Building new offering based offering in all sauna types exiting innovations • Covering key segments in • Continuing to strengthen • Further expanding our • Inspiring the market and both profes
Slide 59: Focus on solution sales to accelerate growth
We focus on solution sales to accelerate growth Two key reasons why to focus on solutions 1) Customers increasingly prefer ready solutions, especially outside the most mature markets (esp. Finland) 2) More revenue when covering the full sauna spend and not only the 10–15% heater part Showcase – a cu
Slide 60: Key takeaways
Key takeaways Different sauna markets and cultures have unique characteristics 1 that Harvia responds to with its comprehensive portfolio Harvia wants to inspire the market and drive organic growth 2 with leading solutions offering for all sauna types and the extended sauna experience Harvia has exc
Slide 61: Exciting the consumers and leading the sauna movement
Exciting the consumers and leading the sauna movement Päivi Juolahti, Head of Marketing & Brands Copyright © 2024 Harvia Plc
Slide 62: Current Group brand portfolio
Current Group brand portfolio: Two global master brands backed with independent regional and tactical brands GLOBAL MASTER BRANDS REGIONAL & TACTICAL BRANDS Top 1 sauna brand in Globally leading brand the U.S., selling direct providing sauna & wellness and via partners experiences for everyone – fro
Slide 63: Refining our Group brand strategy
Future direction: Refining our Group brand strategy to achieve our growth targets From To • Two strong global master brands: • Stronger & more Portfolio of Harvia and EOS engaging master • Harvia serving as an umbrella brand independent for tactical & regional brands – brands driving brands enhancin
Slide 64: Key priorities for Marketing & Brands
Key priorities for Marketing & Brands 1 2 3 Building the most Giving everyone Being exciting & inspiring brands a reason the best partner in the industry to experience sauna for our resellers • Group brand strategy refinement • Promoting sauna experiences and • Great sales and marketing tools and im
Slide 65: The sauna movement in action
The sauna movement in action @jun_esune @shhhiyo @ashrcrawford @joey_hryk INTERNATIONAL SAUNA MOVEMENT EOS RE-DEFINING INFLUENCERS PROMOTING IN JAPAN THE SAUNA EXPERIENCE SAUNA & HARVIA Copyright © 2024 Harvia Plc 67
Slide 66: Key takeaways
Key takeaways Harvia invests in its two global master brands to support 1 the company’s growth and productivity development We are building more lifestyle-oriented brands and 2 promoting exciting sauna experiences Developing first-class customer experience for our 3 partners and end consumers is our
Slide 67: Efficient operations support profitability and growth
Efficient operations support Harvia’s profitability and growth Mika Suoja, Head of Operations Copyright © 2024 Harvia Plc
Slide 68: Harvia's operations consist of four elements
Harvia’s operations consist of four elements Production Sourcing Quality and Environment Supply chain • Own heater, sauna & spa, and • Group level strategic purchasing, • New unit to support new • Bridge between sales, component manufacturing unit level operative purchasing – operating model, contin
Slide 69: Harvia operates a global operations network
Harvia operates a global operations network Muurame factory The world’s largest heater and sauna component factory: over 150,000 heaters per year Lewisburg factory Our largest sauna factory serving esp. North America: over 10,000 saunas per year Driedorf heater & component factory Specialized in hig
Slide 70: Happened recently in our operating environment
Happened recently in our operating environment Supply chain challenges and price fluctuations in key materials and freight costs in recent years due to, e.g., COVID, the war in Ukraine Harvia has been able to scale its operations both up and Red Sea conflict and down and respond quickly to changing
Slide 71: Large fluctuations in steel prices
Example: Large fluctuations in steel prices over the years Development of steel price in EU, 2020−2024 EUR / metric ton • Rapid price increase in carbon steel 2 000 in the beginning of 2021, in practice 1 900 1 800 Forecast (by MEPS) we saw prices go double. Starting 1 700 from 2023, prices have sta
Slide 72: Key elements in our efficient operations
Key elements in our efficient operations Element Advantage for Harvia Advanced sales & operations planning (S&OP) process Enables proactive inventory management; Centralized demand planning consisting of day-level order intake together with Harvia’s multisite operation model analysis, history data,
Slide 73: Strategic priorities for Operations
Strategic priorities for Operations 1 2 3 Scaling up and Strengthening Developing automating operations Group integration sustainability • Further increasing automation, • Harmonizing processes and systems • Not a separate function but integrated especially in heater manufacturing that support the n
Slide 74: Key takeaways
Key takeaways Customer and user experience (internal and external customers and users) 1 present in all decision-making processes in Harvia Group operations Harvia operations in North America function very well and are scalable. 2 In addition, other Group units can support the growth in North Americ
Slide 75: Closing words
Closing words Matias Järnefelt, CEO Copyright © 2024 Harvia Plc 78
Slide 76: Recap: Our targets for today
Recap: Our targets for today Share our view on the market, 1 key trends and opportunities Present our updated strategy and long-term 2 financial targets Provide a deeper view on selected high-priority 3 business topics We want to support investors in assessing Harvia as an investment case Copyright
Slide 77: Shaping the global sauna market
OUR STRATEGIC ROLE Shaping the global sauna market so that everyone has a reason to experience sauna Copyright © 2024 Harvia Plc 80
Slide 78: Harvia's updated strategic focus areas
Harvia’s updated strategic focus areas Delivering Winning Leading in strategically important the full sauna experience in key channels markets Best-in-class operations & great people Copyright © 2024 Harvia Plc 81
Slide 79: Updated long-term financial targets
Harvia’s updated long-term financial targets reflect our growth ambition GROW TH P R O F I TA B I L I T Y LEVERAGE 10% >20% <2.5x Average annual Adjusted operating Net debt/adjusted revenue growth profit margin1 EBITDA2 1) Adjusted operating profit is operating profit before items affecting comparab
Slide 80: Thank you
Thank you for participating in Harvia’s Capital Markets Day! Copyright © 2024 Harvia Plc