Harju Elekter Group financial results, 1-3/2025

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Harju Elekter’s revenue for the first quarter was 37.4 million euros, which is 20% less than in the same period last year. At the same time, operating profit was 2.8 million euros, which is 186% more than in the comparable period. The improvement in operating profit was driven by a number of targeted actions to improve low season profitability, including lower than usual labour costs in the first quarter. At the same time, net profit was 2.6 million euros, which is 630% more than in the comparable period. The result was impacted significantly by the notable change in the EUR/SEK exchange rate towards the stronger Swedish krona and the resulting revaluation of receivables and liabilities. Although the Group’s financial results showed signs of improvement, the economic environment is once again full of challenges. This will be influenced by internal political developments in the countries in which we operate, as well as by the overall transformation of world politics. Controversial news from the United States and frequent changes of direction increase customer uncertainty, resulting in many orders being delayed or temporarily put on hold. The Baltic and Scandinavian economies have not yet returned to stable growth, while the tax burden is increasing, and wages are rising. Despite the turbulent times, we are going into the peak season with a strong order book. Restructuring and organisational changes in recent years have helped to set the cost base, both in terms of overhead and labour costs, in line with expected volumes, while at the same time striving to maintain competence in low seasons. 2025 has the potential to be a strong financial year, which in turn will enable the continuation of the development strategy and support sustainable growth in the coming periods.   Revenue and financial results Although the decline in first quarter revenue compared to last year's record sales volumes is noticeable, seasonality in turnover remained at a similar level to before the period of exceptional results. The revenue from the sale of electrical equipment amounted to 34.1 million euros in the quarter, or 91.1% of total revenue, decreasing by 21.6% compared to the same period last year. The main product and service groups continued to be substations, low-voltage distribution equipment, technical buildings, and subcontracting and engineering services. Key indicators         3M 3M +/-     (EUR´000)     2025 2024 Revenue       37,427 46,775 -20.0% Gross profit       5,667 4,836 17.2% EBITDA       3,866 1,941 99.2% Operating profit (EBIT)       2,795 976 186.4% Profit for the period       2,636 361 630.2% Earnings per share (EPS) (euros)       0.14 0.02 600.0% Operating expenses for the reporting quarter totaled 35.6 (Q1 2024: 45.7) million euros, which is 22% less than the previous year. The decrease in expenses was mainly due to the cost of sales, which fell to 31.8 (Q1 2024: 41.9) million euros, a reduction of 24.3%. This was achieved through adjustments in production volumes and better cost management regarding input prices and supply solutions. Distribution costs were 1.3 (Q1 2024: 1.2) million euros, accounting for 3.6% (Q1 2024: 2.6%) of the Group's operating expenses and 3.4% (Q1 2024: 2.6%) of revenue. The increase in costs has been necessary to maintain revenue, strengthen customer relationships, and secure new contracts. Administrative expenses were 2.6 (Q1 2024: 2.5) million euros, accounting for 7.2% (Q1 2024: 5.5%) of the Group's operating expenses for the reporting quarter and 6.9% (Q1 2024: 5.4%) of revenue. Depreciation expenses for fixed assets amounted to 1.1 (Q1 2024: 1.0) million euros in the quarter. A slight increase in costs was expected, reflecting the continued impact of previous investments. Labour costs for the quarter were 9.5 (Q1 2024: 10.1) million euros, which is 5.2% less than a year earlier. The cost savings resulted from adjustments in the number of employees in production units in Estonia, Finland, and Lithuania. However, the share of labour costs in revenue increased to 25.5% (Q1 2024: 21.5%). The gross profit for the first quarter was 5.7 (Q1 2024: 4.8) million euros, with a gross profit margin of 15.1% (Q1 2024: 10.3%). Operating profit (EBIT) was 2.8 (Q1 2024: 1.0) million euros, and the operating margin was 7.5% (Q1 2024: 2.1%). Net profit for the first quarter was 2.6 (Q1 2024: 0.4) million euros. Earnings per share for the first quarter were 0.14 (Q1 2024: 0.02) euros. Core business and markets The Group's revenue for the first quarter of 2025 by markets reflected the overall downward trend in most key markets compared to the same period in 2024. The Group's four largest target markets – Estonia, Finland, Sweden, and Norway – accounted for a total of 79% of the total quarterly revenue, which is 2 percentage points less than a year earlier. In Estonia, revenue reached 4.8 (Q1 2024: 4.5) million euros, growing by 7.4% and accounting for 12.8% (Q1 2024: 9.6%) of the Group's total quarterly revenue. Sales were supported by an increase in orders for compact substations from electricity distribution network customers. Rental income in the real estate segment remained at the same level as the previous year. The Finnish market continued to be the largest for the Group in the quarter, despite revenues decreasing by 24.1% to 12.9 (Q1 2024: 17.0) million euros. The main reason for the decline was the decrease in the sale of compact substations and the decline in contractual manufacturing volumes. Revenue in the Norwegian market fell to 6.9 (Q1 2024: 9.3) million euros, decreasing by 26.2% compared to the previous year. The decline was mainly due to the high comparison base from the previous year, when Norwegian revenue was significantly higher. The market downturn also contributed to the decline, resulting in smaller contractual manufacturing new order volumes in 2024 for 2025. Revenue in the Swedish market decreased by 28.5%, reaching 4.9 (Q1 2024: 6.9) million euros, which was similar to the level of the fourth quarter of 2024. The decline was influenced by a business model change, where the offering of EPC (Turnkey solutions) projects was discontinued. Now focusing on factory-made solutions, sales volume is temporarily smaller, but the company's risk profile is more stable. As a significant positive change, the Germany market grew, with revenue tripling due to increased project-based orders in the substation product group, reaching 6.5 (Q1 2024: 2.2) million euros. Investments The Group invested a total of 0.8 (Q1 2024: 0.7) million euros in non-current assets during the reporting period, including 0.1 (Q1 2024: 0.4) million euros in investment properties, 0.3 (Q1 2024: 0.1) million euros in property, plant, and equipment, and 0.4 (Q1 2024: 0.2) million euros in intangible fixed assets. Investments included the acquisition of production technology assets and the development of production and process management systems. Investments also included product development. The value of the Group's long-term financial investments was 27.7 (31.12.24: 27.7) million euros as of the reporting date. During the reporting quarter, the fair value of remaining securities decreased by 5 thousand euros and proceeds from the sale of listed securities amounted to 17 thousand euros. Share The company's share price on the last trading day of the reporting quarter on the Nasdaq Tallinn Stock Exchange closed at 4.67 euros. CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited   (EUR´000)   31.03. 2025 31.12.2024 ASSETS       Current assets       Cash and cash equivalents   1,556 3,773 Trade and other receivables   38,351 29,606 Prepayments   2,270 2,096 Inventories   27,308 19,845 Total current assets   69,485 55,320 Non-current assets       Deferred income tax assets   597 687 Non-current financial investments   27,708 27,717 Investment properties   29,198 29,432 Property, plant, and equipment   32,706 32,420 Intangible assets   8,429 8,121 Total non-current assets   98,638 98,377         TOTAL ASSETS   168,123 153,697         LIABILITIES AND EQUITY       Liabilities       Borrowings   10,500 9,839 Prepayments from customers   13,181 11,600 Trade and other payables   26,657 17,472 Tax liabilities   3,887 3,260 Current provisions   588 270 Total current liabilities   54,813 42,441 Borrowings   20,183 20,184 Other non-current liabilities   40 39 Total non-current liabilities   20,223 20,223 Total liabilities   75,036 62,664         Equity       Share capital   11,655 11,655 Share premium   3,306 3,306 Reserves   22,734 23,135 Retained earnings   55,392 52,937 Total equity attributable to the owners of the parent company   93,087 91,033         TOTAL LIABILITIES AND EQUITY   168,123 153,697   CONSOLIDATED STATEMENT OF PROFIT AND LOSS  (EUR´000)           3M 2025 3M 2024 Revenue   37,427 46,775 Cost of sales   -31,760 -41,939 Gross profit   5,667 4,836 Distribution costs   -1,285 -1,195 Administrative expenses   -2,580 -2,517 Other income   1,024 19 Other expenses   -31 -167 Operating profit   2,795 976 Finance income       633 92 Finance costs   -284 -590 Profit before tax   3,144 478 Income tax   -508 -117 Profit for the period   2,636 361 Earnings per share       Basic earnings per share (euros)   0.14 0.02 Diluted earnings per share (euros)   0.14 0.02 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME            (EUR´000)   3M 2025 3M 2024 Profit for the period   2,636 361 Other comprehensive income       Items that may be reclassified to profit or loss           Impact of exchange rate changes of a foreign subsidiaries   -588 106 Items that will not be reclassified to profit or loss       Revaluation of financial assets   -5 70 Total comprehensive income (-loss) for the period   -593 176 Other comprehensive income   2,043 537 Priit Treial CFO and Member of the Management Board +372 674 7400 [email protected] Attachment HEG interim report Q1 2025

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