Translation: Original published in Finnish on 07/05/2026  at 07:10 pm EEST

Source: Inderes & Modular Finance, 7 analysts (consensus)

Harvia's Q1 earnings exceeded our estimates, but the estimate changes for the full year remained small. Q2 earnings will be weighed down by the shift of revenue to Q3. We expect Harvia to continue its strong earnings growth and value creation in the coming years, which offers a good expected return. Due to the share price increase, we lower our recommendation to Accumulate (was Buy) and reiterate our EUR 44 target price.

Q1 earnings were strong due to rapid revenue growth

Harvia's Q1 revenue grew by 13% to 58.6 MEUR, exceeding our estimate (54.6 MEUR). Growth was entirely organic and as much as 18% at comparable exchange rates. North America grew by 12%, or 21% in local currencies, on top of a strong comparison period, while we only expected euro-denominated growth of around 3%. Northern Europe and the company's fastest-growing region, APAC & MEA, also grew faster than we estimated, while growth in Continental Europe was in line with our estimate.

Adjusted EBIT was 12.9 MEUR (margin 22.0%), while we expected 11.4 MEUR (20.9%), with the comparison period being 11.9 MEUR. The material margin normalized to a lower level than the strong comparison period, as we expected, and fixed costs were roughly in line with our estimates. Thanks to higher-than-expected revenue growth, both absolute and relative profitability exceeded our expectations. There were no significant deviations from our estimates in the lower income lines, and EPS improved to EUR 0.50 vs. our estimate of EUR 0.43.

Q2 saw temporary weakness due to revisions at the Muurame factory

Harvia commented that IT and process modernizations at the Muurame factory would temporarily extend delivery times, resulting in an estimated 3–5 MEUR of deliveries shifting from Q2 to Q3. We revised our estimates accordingly and slightly raised our Q2 cost estimates. As a result, Q2 adjusted EBIT remains at just over 7 MEUR in our estimate. However, the company does not expect the revisions to impact full-year revenue. Full-year estimates increased slightly due to the strong Q1 result, while estimates for the coming years remained largely unchanged.

In coming years, we expect progress to be in line with 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 the company's increased expansion in steam and infrared products. We believe this will allow Harvia to gain further market share in the US. We also believe that the growth of the APAC&MEA region will increasingly support the Group's overall growth as the region's share of revenue increases (11% in 2025). We also expect Harvia to maintain profitability at the target level of 20-22%. However, we estimate that continuous growth investments will be reflected in the margin, which, despite strong growth, will not scale up significantly in our forecasts.

Earnings growth as the main driver of expected return

Harvia's 2026  multiples (EV/EBIT 18x, P/E 24x) appear neutral in our view, considering the company's quality and growth profile. We consider the company's return on capital and cash flow generation capabilities excellent, and multiples will moderate further in the coming years. We believe that Harvia’s capital allocation will continue to be value-creating, and thus channeling cash either to acquisitions or larger dividends would support the investor's expected return. We also see Harvia as a viable acquisition target. The expected return of the share is driven primarily by annual earnings growth of around 15%, with the role of dividends and multiple revisions being less significant.