HARVIA.HEHARVIA.HEHEL
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Matias Jarnefelt: Hello, everyone, and welcome to Harvia's Quarter 4 '25 Earnings Webcast. My name is Matias Jarnefelt. I'm the CEO of the company. With me, I have Ari Vesterinen, our Chief Financial Officer.
Ari Vesterinen: Hello.
Matias Jarnefelt: We will run the session today as follows. I will start by going through the highlights of the business and financial performance during the quarter 4. I will also give you an update on how we're progressing with implementing our strategy. After that, Ari will be providing more details on our financial performance for the quarter and for the full-year, after which we will be happy to answer any of your questions, which, as usual, you can submit through the chat off this webcast. Let's summarize quarter 4. In terms of top line, our revenue increased by 5.3% to EUR 53.7 million, and we delivered positive growth in all regions. All of the growth was organic. The currency exchange rates, in particular, the U.S. dollar depreciation against euro had quite significant impact on our reported numbers. At comparable exchange rates, we grew by 10.2%. Growth in North America was impacted by the currencies. In addition to that, North America had a particularly strong comparison period from last year. In quarter 4 '24, we grew by over 60% and around half of it, so around 30% was organic growth. That was in the base. We had good sales performance in Europe, with Northern Europe delivering the second consecutive double-digit growth quarter and was the Harvia's fastest-growing region during this quarter. In Asia Pacific and Middle East, we posted only a small growth. This was in particularly impacted by project deliveries in our Middle East subregion. In terms of the bottom line, we delivered adjusted operating profit of EUR 10.5 million, and that represents 19.5% of our revenue. At comparable exchange rates, adjusted operating profit margin was 21%. We continued to strengthen our production capacity, capacity to grow, innovation pipeline and differentiation and also modernize our IT system landscape. That was visible in the investment level and also in indirect cost levels of the reported quarter. I'm happy to say that our gross margin developed positively, which was mainly driven by well-executed campaigns during the fourth quarter, in particular, in North America, Black Friday, Cyber Monday campaign was an excellent one for us with good order intake, growing order intake with clearly stronger gross margins than in the comparison period a year ago. Then summarizing the full-year '25. Full-year revenue growth was 13.5% and our adjusted operating profit margin was 19.6%. Growth at comparable exchange rates was 16%. The operating environment was challenging during the year. There was significant macroeconomic volatility including currency fluctuations, turbulent tariff policy landscape and also softer consumer confidence in certain markets such as the United States. The numbers that you can see here, I think, are strong testament to the resiliency of the sauna market demand and also Harvia as a quality company and the leader of this business. During this year, in addition to deliver the results and managing the ongoing business and changes in the business environment, we've been also taking significant steps forward in implementing our strategy and making Harvia stronger for the future. While market conditions most likely will remain volatile also this year, personally, I feel that Harvia is very well positioned to drive profitable organic growth and also pursue disciplined inorganic opportunities as they might emerge. Then summarizing quarter 4 key figures. Revenue, EUR 53.7 million, and that's growth of 5.3% in euros, and at comparable exchange rates, it's a growth of 10.2%. Adjusted operating profit at EUR 10.5 million, and that's growth of 20% compared to the comparison quarter a year ago. In terms of the margin, we delivered 19.5% adjusted operating profit margin. Operating cash flow was at good EUR 13.3 million level, which is over 100% cash conversion. The same figures for the full-year. Revenue at EUR 198.9 million, so very, very close to EUR 200 million mark, and that represents 13.5% growth. in terms of growth at comparable exchange rates, 16% growth and organic revenue growth at comparable exchange rates at 14.4%. Adjusted operating profit, EUR 39.1 million, and that's 19.6% of our revenue. Operating free cash flow at EUR 26.5 million, and that's cash conversion of 57%, which is a solid outcome given that the year has been quite significant in terms of investing and strengthening our capabilities, for example, in R&D, innovation and digital channels and also while we've been growing. Then looking at the waterfall of growth from our 4 reported regions. The leading region this time was Northern Europe at 11.6% growth. Continental Europe, second with 5.7% growth. North America in euro terms, 2.8% growth. As I said, there was a significant baseline from last year and U.S. dollar depreciated by over 8% against euro when we look at the comparisons between quarter 4, '24 and '25. The North America in local currencies grew double digit. APAC growing around 1%. There was significant impact from project deliveries in the baseline from a year ago. We had significant deliveries in Middle East, and the Middle East subregion reported minus 60% development due to the baseline effect, while our strategically important markets, like China and Japan continued to grow double digit. Then let's look at each of the region a little bit more in detail. Northern Europe, strong sales performance after already strong growth in quarter 3. The revenue increased by 11.6% to EUR 12.1 million. I'm happy to report that the growth in Northern Europe was broad-based geographically, where Scandinavia, Finland and Baltics all performed well. On a full-year level, Northern Europe returned to growth of 6.4% after 2 years of decline and second half was clearly double-digit growth half of the year. Continental Europe growth continued in -- actually across the markets in countries, like Germany, France and in particular, strong performance in the United Kingdom. As you can see on the chart, we've been delivering steady growth now already a number of years in the region. Revenue totaled EUR 15.8 million, and that's 5.7% growth. The growth for the quarter is also very close to the growth for the full-year, which was 5.5%. Then here is the North America region, I know that most of you are very interested in. As I said, the reported growth slowed down to around 3%, but you can also see in the graph that we had a significant jump in the comparison period when we grew by 63% and around half of that was organic growth. Last year or '24, significant part of the growth was coming from very aggressively priced campaign products. I'm happy to say that we grew in dollar terms, double digit, while we improved significantly gross margin in the region. That gross margin improvement in North America is also visible in the 3 percentage point improvement in the gross margin of the whole group, which I'm very pleased about. In terms of full-year growth, North America region delivered 22% growth in euros, and that's around 26% growth in U.S. dollars, so a solid year. APAC and Middle East and Africa, only modest growth this time, but you can also see that we practically grew or nearly doubled the business, so over 90% business in the comparison period in '24. As I said, significant impact from deliveries in the baseline in Middle East, and China, Japan, key countries for us, both continue to grow double digit also during quarter 4 of '25. On the full-year level, APAC and Middle East and Africa was our fastest-growing region as it was also the year before. This year, our revenue growth in the region was 25.4%. Then looking at the product categories, we continue to derive most of our business by selling technical equipment for sauna. Heating equipment share increased somewhat to 54%, Saunas and Scandinavian hot tubs is the second largest product category for us, slight decline to 24%. This is mainly driven by the fact that a significant part of this sauna cabin business is in United States, and that was impacted by the dollar, and also, we had very high baseline in the quarter a year ago. Steam products, accessories and heater stones and spare parts and services remaining roughly on the same level in relative terms as year before. Then looking at the waterfall for the product categories, heating equipment delivering a majority of the growth by adding 13% or growing by 13% and adding EUR 3.4 million to our top line. Saunas and Scandinavian hot tubs declining by around EUR 600,000, as said, mainly due to dollar impact and high baseline. Steam products, minus EUR 600,000, and this is very much driven by actually Middle East project that was significant in size in the comparison period. Also, another area where we have a sizable steam business is United States, where we had over 8% headwind in the currencies during the quarter. Accessories heater stones and spare parts and services reported slight growth. That's about the numbers. Then a few words about the strategy. Harvia is operating in a very interesting market business that is supported by strong, sustainable long-term growth drivers. We are a leader of this business globally, and we intend to remain so. The strategic role that we see for ourselves is that we want to be an aggressive offensive market leader that shapes the global sauna market so that more and more people, everyone has a reason to experience sauna. We drive this strategy through our 4 focus areas that answer the question is what, so the products and portfolio we deliver, where, which answers the question that which geographies and countries are in our focus, to whom, which touches our channel landscapes and customers, and how, which is about our operations and capability development. We have been executing systematically our strategy throughout the year, and that work continued also in the quarter 4 of this year or '25. As an example, what comes to enhancing and making our portfolio even stronger and even more exciting, we've introduced innovations such as the Harvia Phoenix control panel that you saw in the introduction video before we started the presentation. The sales started in third quarter, and it's showing really great performance during the quarter 4, and I'm very, very happy to see that. We also continue to strengthen our portfolio by launching a really exciting new product, even a totally new category, Harvia Smart sauna sensor, which I'll be talking a bit about in the next slide. In terms of winning in the strategically important markets, North America delivered double-digit growth in U.S. dollars also during the quarter 4 despite the baseline. For the full-year, around 26% growth in dollars. That's, I think, a testament that we continue to perform well there. APAC, it was a slower quarter in terms of reported figures, but there was that impact from Middle East. For the full-year, APAC and Middle East was the fastest-growing region, where we continue to drive systematic and steady growth in markets, like China and Japan. Continental Europe continued to develop positively. It's gradual development, but it's also very systematic and steady, which we are happy about. Northern Europe, after 2 years of decline, turned back to strong growth during the second half of the year, where both quarter 3 and quarter 4 recorded double-digit growth. We've also been upgrading our direct-to-consumer digital touch points, which already are a significant part of our business in the United States, but we've also introduced a new direct-to-consumer web store for the German-speaking Continental Europe, in particular, focusing on Germany and Austria, and that is now open and operational. We also have been developing our relationships with our global key accounts such as in the United States, which is also visible in strong performance during the Black Friday, Cyber Monday campaigns with a clearly healthier margin than we had a year ago, again, something I'm very, very happy to see. We have conducted our annual customer survey with our B2B customers, and I'm happy to report that the Net Promoter Score is strong and even improving from the good levels we had in the past year. In terms of building the capacity and capabilities to grow, we have been continuing our systematic investments in increasing our capacity to produce more products to meet the demand in the market, make our product portfolio even more exciting and differentiated. We have upgraded also our group IT system to support continued growth. I'm also happy to report that in the annual employee survey, which we also conducted during quarter 4, in addition to the customer satisfaction survey, we saw great results in the employee responses, and that confirms that Harvia is a great place to work. Then just one of the highlights of the fourth quarter related to innovation and our portfolio. This is a completely new category, never seen in the sauna market before. This is a smart sauna sensor. It includes 3 precision sensors: one, temperature; second, humidity, and also there's movement detection. Basically, it can sense human presence in sauna. It's connected via WiFi to Harvia Cloud. In the Harvia Cloud, there's application programmers interface. Harvia can innovate, but also external partners can innovate on the sensors data that it can provide. It can, for example, notify when the sauna is ready. It can provide you heating curves, humidity curves. It can, for example, tell you that now the heating curve of your sauna is deteriorating. Most likely reason is that you need to replace your sauna stones. For example, for commercial customers, it could report that it seems that the door has been left open because the temperature curve is now dropping significantly. Then the commercial operator can go and check that everything is okay with the sauna. What is really cool about this is that it works in any sauna. It really turns any sauna into a smart sauna, whether it's a wood-burning sauna without electricity or also saunas where we don't have other Harvia equipment. Really, really cool new innovation showcasing our ability to innovate in the digital space. With that, I hand over to Ari.
Ari Vesterinen: Okay. Thank you. First, a technical note. These full-year figures, what we have now collected and reporting, they have been already audited. Our financial statements for '25 have been audited, and they will be published together with the annual report at the end of the week 11. That's the second week of March with a couple of administrative reports, too. The full-year figures are final and then the KPIs and different other measures, they have been collected by the management, financial management. Here, you see the development of the different quarters during '24 and '25. I'm really glad to announce that the quarter 4 '25 was the strongest sales quarter really in the history of the company. The relative profitability improved compared to last year's Q4 substantially. We have been doing their good things to improve the profitability. Unfortunately, we didn't quite reach the financial targeted 20% adjusted EBIT level, but there are different explanations of that, for instance, the currency rates and then additional investments also in development projects and so forth, which will bring growth and improvement of the business in future. Here we see once more the comparison of the key figures for the full-year and for the quarter. Here, we see that actually, the adjusted EBIT, for instance, was improving clearly during Q4, it reached almost an average level of 25%. The investments, they have been now quite heavy for this year. This is not necessarily the normal level compared to the net sales of Harvia for the years to come, but we will have also quite high investments in the next, let's say, 12 months or so since we want to really improve the scalability of the business and improve the capacity of our production places, and we have also a few markable ESG-related investments, which we have done. This was a good year and also a good improving quarter even if somebody was probably expecting something better, but we are rather satisfied with this quarter. Here, we see also how typically the Harvia cash flow, free cash flow evolves over the year. Typically, we have the lowest cash flow in Q3 when we built goods in the stock, especially in Finland in the heater manufacturing, but also in sauna manufacturing in U.S. Then we sell them out typically during the Q4 campaigns, and that was really the case also in '25. This time, we had just a bit higher investments and certain projects, which were expensed. That's reduced the profitability and the cash flow a little during Q4 compared to last year. The leverage remains still on a very low level, 1.2, and we have set the long-term target to 2.5. We have actually quite much space there, for instance, to take more financing if we happen to make acquisition or so. This 2.5 is also just the level for long term. Temporarily, we could be also over that if we make interesting acquisitions. Harvia has a very strong cash position. End of last year, we had cash or cash equivalents, EUR 45 million on our accounts. The financing costs, they were quite much based on different valuation of the swap agreements and also the currency rates. Here, we see the blue dotted line, it really shows the outflow of the finance costs. It has been quite on a steady level. We mentioned already the investments. We have been really improving our IT landscape, making the group more scalable, better for the future growth in that area. Then in product development, we have a very nice interesting projects in pipeline, and we have been improving the production capacity, especially in Germany, but also expanding the factory in U.S. This U.S. expansion still will continue beginning of this year for a while. Yes, these investments secure the future growth. The Harvia's long-term financial targets, they are still the same growth at least 10% on average on an annual level, profitability over 20% adjusted operating profit margin and leverage, as said, under 2.5 on a long term. The dividend policy has been to pay the dividends regularly increasing dividends in 2 installments during the year. This will be the Harvia's Board of Directors proposal for the Annual General Meeting on the 15th of April to pay EUR 0.77 dividends for the result of EUR 0.25. Last year, we paid EUR 0.75. Now it's time for questions-and-answers. I have here quite many interesting questions already, and let's start.
Ari Vesterinen: Well, first financial question. Harvia has never bought protection against currency changes. Should you do so in the future given the drastic effect of USD weakening? Well, we have been following our treasury policy, and we have been protecting us against the -- actively against the interest rate fluctuations. In the field of currency, we haven't been so much protecting. We have to really consider that in future. Currently, for instance, U.S. dollar is already quite on a low level, and we have to think that level also over and the protection typically gives protection only about 6 to 12 months on decent terms. It's also a cost factor. We adapt, as you see our pricing also in terms of dollars, we have now been able to improve the dollar-based profitability in U.S., through price increases. This topic is on the desk all the time, and we will review it once more. Can you clarify, why you say that no growth in the segment other was related to the timing effects? Will these deliveries take place in Q1 '26? I think it's related to APAC, EMEA.
Matias Jarnefelt: Segment or geographical segment of APAC and Middle East. It's basically due to timing for the reason that we had a year ago, fourth quarter '24, significant project-related deliveries in Middle East, which were not repeated in the fourth quarter this year. I mentioned during my presentation, in fact, in the subregion, Middle East, we reported actually internally a 60% decline year-on-year. That is the reason why I referred to timing of deliveries as a key reason for the slow growth that you see for the APAC region as a whole. At the same time, I did also mention that the strategic countries, the big countries that we are developing for sustainable long-term growth, China and Japan both grew by healthy double-digit rate also during the fourth quarter of '25.
Ari Vesterinen: How do you operate? How do you see marketing spend in 2026 versus 2025?
Matias Jarnefelt: I see that marketing is really playing a significant role in our business. It's a branded consumer goods business, mainly it's consumer wellness business in another perspective. In that business, power of brands and power of marketing are important. In terms of the cost of marketing or spend for marketing, I don't expect that in terms of marketing spend per revenue, we would see significant changes as we go into next year, but we're really thinking of how can we do marketing effectively in an interesting inspiring way that captures the attention of the audience and could even go viral. This is more like the preferred way we would to see for Harvia this year and going forward.
Ari Vesterinen: What do you consider are the main variables with the biggest swing risks, positive or negative for 2026? Here are the examples mentioned, volume, mix, price, input costs, ForEx?
Matias Jarnefelt: Well, all of those are, of course, relevant. If we think about what we have been seeing in the reported figures, I think the most important thing is that is the demand towards our category, sauna and sauna wellness going to stay robust also going forward and also increasing. We have all the reasons to believe that, yes, it will. If we look at the full-year performance of Harvia a 13.5% growth in euro terms and 16% in comparable currencies, I think it's a good result given that the macro environment, as I mentioned in the beginning of our presentation, was challenging. A lot of confusion, in particular in the beginning of the year with tariffs, currency depreciation, lower consumer confidence. Despite all of that, we delivered the numbers that we delivered. I think that should be a comforting signal that there is strong longevity and the macro trends that support the growth of this business also come through even during the more difficult macroeconomic year as we saw in '25. Demand, of course, is one key thing, but in addition to that, we have to recognize that the world has become a more volatile place when it comes to the tariff regimes, the currencies, etc. That means that also as a company, we need to adjust and make sure that we are agile and can react as quickly as it's needed for those changes. During the year '25, I think it was quite difficult to fully compensate increase in the cost of doing business, for example, due to the tariffs or currencies because there were so quick changes in such a short period of time, and that did have a bit of an impact on our reported full-year figures. I hope that the environment is a bit more stable, but I also I'm confident that our ability to react and manage even in a more real-time manner is improved for the year '26.
Ari Vesterinen: We more or less almost answered already this one question, but I ask it once more if you have something to add. Timing of deliveries in APAC and EMEA, is it right to assume that this phasing was between Q4 and Q1, do you have anything to add to that?
Matias Jarnefelt: It's mainly related to literally project timings in the Middle East subregion. That is clearly the driving reason. Overall, as I said, APAC was the fastest-growing region for us. In '24, it grew by 50% in euro terms. In '25, it grew by 25% in euro terms. I think you should put things in context that it is 1 quarter with extremely strong baseline. As you can see, baseline, we had increased growth of 94% in the fourth quarter of '24. That then you should be putting the numbers that you see now reported in that more long-term perspective. One important factor, which I already shared a couple of times is that the big markets, China, Japan continue to perform really well.
Ari Vesterinen: Is M&A back on the table for '26. How are the valuation levels looking like at the moment?
Matias Jarnefelt: It's a great question. Harvia is in a very interesting position. We are in a growing market, which continues to be quite underdeveloped in terms of the structure of the competitive landscape. Several, rather small regional local players. Harvia, I think, has the right to play and right to win as a consolidator of this industry. Now, we didn't do acquisitions during the year '25. The main reason for that was twofold. On one hand, we closed an acquisition of steam company ThermaSol in the United States in the second half of '24, and we wanted to make sure that we integrate that properly. We get the synergies in terms of top line and cost efficiencies as we planned. At the same time, the company management was very busy managing the volatility, as said, tariffs, the currencies impacting our biggest region, North America. I think in combination, the fact that we had completed a reasonable sized acquisition in the second half of '24-plus, year '25 was a very busy year for management that had an impact. At the same time, of course, we are disciplined in the M&A. We want to make sure that it's value accretive. We are continuously in discussions. I hope that in not so distant future, we would have something to report also on this front.
Ari Vesterinen: The dividend raise was quite lower than expected. For instance, expected EUR 0.85. Are you being cautious with the dividend growth at the moment because of the possible ramification of tariffs? Or will this slower dividend growth -- or will this lower dividend growth become the norm?
Matias Jarnefelt: Maybe I can take that. Basically, we have, first of all, a dividend policy that we want to pay increasing dividends. We have now a very, very good track record of growing dividends since we have been public since 2018. There has been a rather steady pace for us to increase our dividends with the exception of '25. In '25, we paid -- we increased the dividends more than we have done in the past for the reason that we wanted to deliver at EUR 0.75 to celebrate our 75th anniversary. Now this increase from EUR 0.75 to EUR 0.77, we return to the, I would say, systematic path that we have been on for a longer period of time. We hope to continue increase dividends also for many years to come. Now, this is one of the reasons. There was this extraordinary added dividend in a sense in '25. The second is that we want to reserve firepower as the market is growing, and we have plenty of opportunities. We are increasing organically our capacity to grow. We are enhancing the competitiveness and differentiation and excitement in our portfolio, but also, we are reserving firepower for the consolidation game. It's a combination of many factors, why then the Board of Directors decided to propose this EUR 0.77 for the Annual General Meeting.
Ari Vesterinen: Then there is a question about the breakdown of the CapEx. It was directed more to me. We don't publish so exactly the breakdown of the CapEx, but there is a question about tangible versus intangible CapEx. We can say that it's almost half and half. We have been substantially really investing in intangible things like this digital, what you see on the screen, that's just beginning of the area. At the same time, we really invest also in intangible, like buildings and machinery and so forth. As said, we don't disclose it so exactly.
Matias Jarnefelt: The goal is we allow capacity to grow and improve the scalability of the business. This is basically what we are driving with the investments. For example, one of the key areas for investment has been modernizing and simplifying our IT landscape. We have grown through acquisitions in the past years where different units had different IT systems, legacy systems, some of them are very old ones. Now we have taken significant steps to modernize and have the IT capability to grow as we have been also making other investments such as investments in physical ability, facilities, plus machinery to keep growing.
Ari Vesterinen: Then the question is indicating a signal about our dividend policy. He or she has looked back to our dividend history, and there is a note that small dividend increases indicate that there is something cooking on the M&A front, a bit similar to 2019, when you raised the dividend by EUR 0.01 and then announced the EOS acquisition. It's not necessarily a direct signal.
Matias Jarnefelt: Yes. I would say that it's a bit like in the old times, there were the [Crumlin] analysts trying to find meanings between the lines. It's pretty much, I guess, what it is when looking at the dividends that we cannot, of course, comment specifically on potential M&As in the pipeline, but it is clear that we are interested in it. As I said, hopefully, not in too distant future, we could also report some practical outcomes also in this sense.
Ari Vesterinen: Then lengthy comment with the question. Several large foreign investors told me that they would consider adding Harvia to their portfolio if there would be a flexible mix of growing dividends and paybacks. There have been some paybacks in Harvia stock to service the long-term incentive program, but I'm talking about net reduction of the total share count. In the U.S., strong consumer companies with steady growth and high cash flow returns have created a lot of tax-free value for shareholders by repurchasing stock. What's your view on this considering the strong balance sheet and flexible investment policy? It's probably a matter of our Board of Directors, and we don't want to predict these discussions. We have noted that there is also the possibility of purchasing back shares. We now don't announce currently any program for that. Or would you like to?
Matias Jarnefelt: No, I think that's it. Of course, it's very -- it's clear that in any company's owner base, there are different interest and some of them are more focused on the share price growth and some are more dividend focused. I think in Harvia's case, probably the best way for us to create long-term value is that we deliver significant profitable growth in the coming years that then will turn into shareholder value. That's the perspective, I believe that the Board has when looking at this.
Ari Vesterinen: Reflection on the gross margin and OpEx. Now the question is relating to our products. You are still priced well below your competitors in many categories. Would you increase the pricing to then also invest more aggressively in marketing and other OpEx? In other words, there is a possibility to strengthen your strategic P&L investments by adjusting the prices.
Matias Jarnefelt: That is correct. I think there are different means that we want to use in a balanced way. One, of course, is that we have operational leverage, so scalability in our business, which we continue to improve, for example, through the investments that we made during the year. Then the volume growth will turn into stronger bottom line and in terms of absolute profit, but also in relative profit. The other thing, of course, is that we can push our gross margin through price increases, which we have been actually doing during '25, in particular, as a reaction to the currencies and the tariffs. The good news is, which you also pointed out in the question, we are practically in any category, Harvia is the best choice. You get the best product, best solution for the money you spend. That also has been one of the key formulas for success of Harvia, the reasons why we have become the market leader. We want to keep that going that Harvia is a premium brand, world-leading brand, but also provides great value for our customers. We, of course, look at this in a balanced way because we know that we need the margin to be able to keep investing in making the company stronger and introducing even more exciting innovations to the market.
Ari Vesterinen: Early Q3, you are launching the high-end sauna rooms via ThermaSol. How should we think about the future sales impact scaling implied margins, sauna rooms typically have lower margins is written here, total addressable market required CapEx. Is it an option to expand with the high-end sauna rooms into Europe as well, making you a direct competitor of glass?
Matias Jarnefelt: Well, the main reason for us to introduce a higher end, I would say, premium range of sauna rooms in the United States is really to tap into new price categories and help expand the size of the market. In a sense, the way we look at the United States, we see a market with significant growth potential. We believe that there is a great opportunity and plausible opportunity for more than 10 million saunas to be built or purchased in the United States in the coming years. Now, in terms of the market value, it, of course, then matters that what's the price point of those new saunas. Our stronghold in the United States has been in what I would call rather entry price point saunas. Almost Haven is the brand, which you could consider kind of like the IKEA of the saunas. Good-looking, affordable assembly of products with a strong American flavor. They are made in America in the heartlands of America in West Virginia. Basically, 10 million new saunas multiplied by USD 5,000 or so for almost Haven saunas would imply that there would be a possibility for USD 50 billion market potential with that sort of back of the envelope calculation. If we can actually inspire the market to spend some more with great designs, create more premium categories, maybe the market is not going to be full of USD 5,000 saunas, but maybe closer to, let's say, USD 10,000 saunas. That really has been the main reason we have been introducing these products and are very interested in playing in those price points as well because we know we are a market leader. We can actually, we don't have to only follow the market, but we can also shape the market. In terms of profitability, these products are highly profitable for us. We hope to scale that part of the business up rather quickly in the coming quarters and years.
Ari Vesterinen: Excluding the very tough comparison last year, on a 2-year stack basis, the underlying normal sales performance in the U.S. has actually accelerated throughout the year. Still, many analysts and investors are focused on the smallest detail in every quarterly report. Wouldn't it be more useful if Harvia is reporting quarterly performance, but instead focus on half year and full-year results? Well, probably yes, but at least this European stock market requires that we report quite regularly, and we feel really that so we draw also our investors' attention to us. We have almost half of our investors outside Finland stock funds and so forth, we would really like to inform them on a regular basis. To create that basis, we need also the quarterly reporting. How do you see this?
Matias Jarnefelt: Yes. I think you answered very well the reporting, but I would also to complement and thank the person asking this question, because I think you're absolutely right that Harvia is not so much about the single quarters and some of the details in them. It's about the bigger story, how big the global sauna market can grow and will Harvia be the leader of this business also in the future. Personally, I believe we have everything it takes to play and win, and we are executing our strategy systematic and also putting the chips on the table so that's possible. Then if you look at just simply the longer-term perspective of Harvia being a public listed company since 2018, basically, we went to the stock exchange first year revenue, EUR 62 million. Now we're very close to EUR 200 million. We talk about compounded annual growth rates of around 18% for the full period. If we look at just the year '25, it was in comparable currency, 16% growth, majority -- clear majority organic. I think there is a clear threat and mega trend looking at Harvia's performance. Also, we have maintained strong profitability also during year '25, maybe not quite to the level which we, in the end, hoped to develop for the full-year, but it's not too bad. We have been managing a highly volatile environment impacting the heart of Harvia's business, North America in terms of tariffs and currencies and at the same time, brought great innovation to the market, developed our channels, develop our capacity and scalability of the business. All in all, I would definitely support your view that it's important to put things in perspective and in the bigger picture when assessing Harvia and Harvia's future value creation potential.
Ari Vesterinen: Back to M&A. On the M&A front, what's on the wish list, a local or worldwide player in infrared, for example? Or do you believe you have got the organic capabilities for that?
Matias Jarnefelt: We have been quite open in the previous communication that one of the prime candidates, of course, for us is infrared sauna business in the United States. United States is the most important single country for the sauna wellness business and infrared saunas play a significant part there. We would be quite interested in finding a suitable inorganic opportunity to accelerate when the deal is right and clearly value accretive and we can really see it, this is the way it would work. That's one opportunity. At the same time, we are looking at other significant sized markets with clear potential, both in Asia and also some of the fastest-growing big countries in Europe and looking at categories such as cold wellness, digital wellness capabilities that could provide even more benefits for those who seek for, for example, health benefits when using sauna, for example, digital sauna wellness protocols that are customized for person's health and personal needs. There are many, many different opportunities and directions that we are looking at. There are things cooking behind the curtain, but whether and when they will realize into announcements that we can make, I cannot really comment further.
Ari Vesterinen: Did you open new distributor doors in the U.S. in 2025? What is the plan for 2026?
Matias Jarnefelt: In U.S., we have, I would say, 3 main channels. One is, what we call the big box retail, so that's kind of mass merchants. The second is specialty dealers specializing in wellness products such as sauna, pool and spa and then our own D2C. That landscape has been pretty steady with the exception that we actually opened Amazon as, I would say, shop-in-shop during 2025. At the same time, we are working diligently with our commercial teams. We want to grow each of these key channel pillars that we have. We want even bigger key accounts in the big box retail, and we want more of them. We want to expand further our reach in the regional specialty dealership for wellness products. We see significant growth opportunity for our own D2C in the U.S., and we continue to develop all of those during this year.
Ari Vesterinen: Yes, follow-up question more or less to U.S. How do you see the underlying demand in the U.S.? Has the trends seen in Q4 continued in January and early February?
Matias Jarnefelt: Well, we don't comment the current quarter. All in all, I said, the year, despite all the noise in the macro environment, consumer confidence, etc., we delivered 26% growth for the full-year in the United States. Clear majority of that organic growth. I think it really tells a story that sauna is a strong trend that even defies the environment outside the sauna market. I think that I have all reasons to believe that, that is going to continue also this year.
Ari Vesterinen: Can you discuss the outlook for operating margin for the next 2 to 3 years? Can you generate operating leverage or likely to stay close to 20% given reinvestment and ForEx headwinds?
Matias Jarnefelt: Well, it also decision by management, how do we steer the business. If you look at the, for example, fourth quarter on the full-year '25, it is clear that we have increased the OpEx levels. That relates to, for example, marketing, channel development, R&D, etc. Why we are doing it because we are seeing such a big growth opportunity for years to come in this market, and we want to have the absolute best portfolio to play and the best channels to play. We made the choice. Of course, we could have made the choice that we not invest as much in marketing, not as much in product development. I think it would not be maximizing the value potential of Harvia in the longer term. The way I think is that still in a couple of years, we are in this phase where there are significant needs and opportunities for us to make Harvia stronger, while those actions do require also us to spend some money, so put chips on the table for payback over time. At the same time, we try to manage also that the results even on a quarterly basis would provide evidence to the market that we are on the right track. It is clear that management wants to avoid dips in the EBIT. At the same time, if EBIT margin would be significantly higher way beyond 20-plus, then we might not be investing enough to make the future happen and make sure that Harvia is by far the most competitive player in the market. Ultimately, it's very much about the management decisions we make. This is the way I see Harvia in the big picture. We see clear operational leverage. When we have the volumes and volumes come through, it is really in our high gross margin business having a very positive impact on the bottom line. Now, assuming that my vision of Harvia, which is that Harvia will be much bigger in the future than we are today, I think it should have a positive impact through operational leverage, so scalability of the business also in the bottom line in the years to come.
Ari Vesterinen: Could you please explain the spike of CapEx in '25? What should be expected in '26 and beyond, please? I can take this. I calculated that the CapEx now for '26 was about 7.5% of the total net revenues. In '24, it was 3.5%. We haven't really put this as an official financial long-term target, but a good estimate could be somewhere lower than what we had in '25, but higher than what we had in '24, so somewhere in between. We will have some substantial investments still in '26 and time after that. We want to invest for the growth. What was the organic growth in the U.S. in Q4? We don't disclose really the single countries, even if North America is really the biggest part is U.S. As you see, we had in euro terms, 2.8% in the spreadsheets there in the report. Since the dollar depreciated about 8%. It should be somewhere about 12%, 13% during Q4, including Canada.
Matias Jarnefelt: Yes. Just to comment that we didn't have any inorganic moves that would have impacted. All of that growth in North America was organic because ThermaSol has been consolidated in our P&L since August '24. All you can see for North America is organic.
Ari Vesterinen: That's right. Yes. How much did the mismatch in deliveries in North America affect the quarter, so mismatch of deliveries. What would growth have been in those orders, if they would be included in Q4? How will this affect Q1 in '26 in North America?
Matias Jarnefelt: Well, we didn't have a number that we would have published for the overflow from quarter 4 to quarter 1 in North America. What I can say that the campaigns went really well, and there will be deliveries happening in quarter 1 based on significant and great order intake during quarter 4. From that angle, it does look positive.
Ari Vesterinen: What kind of sales growth did ThermaSol deliver in financial year '25?
Matias Jarnefelt: Well, we haven't disclosed that fully, but we are pleased with ThermaSol. It's providing us a solid base to grow our position in the steam. It's also an avenue for us to drive our higher-end offering beyond steam since ThermaSol's channel mainly relate to high-end home spas and commercial spas. The integration is working as planned. The profitability impact is coming through. Of course, in ThermaSol's case, the dollar depreciation has been a bit of a topic. When it comes to, for example, the steam numbers that we reported for quarter 4, there is a significant portion that is coming from that Middle East project business. ThermaSol,'s good.
Ari Vesterinen: Yes. A follow-up question from another person. Can you provide some color on development of ThermaSol? We did it. Has it developed as expected? I think yes. What type of synergies have you seen so far? Are there more synergies yet to come?
Matias Jarnefelt: There are both top line and cost synergies. Top line relates to especially the cross-selling between the channels that ThermaSol has and channels that we had before ThermaSol, which are complementary. We want to sell more of premium products from Harvia Group side through ThermaSol high-end channels, and we want to bring ThermaSol's steam expertise through our kind of, I would say, legacy or previously -- the channels we already previously had in Harvia in the United States. Mostly, we've been focusing on the cross-selling in the United States so far, but we will be also using ThermaSol to enhance our steam game beyond United States in places like Europe, Middle East and Asia, so that's top line. Then the cost synergies relate to things, like Harvia is a significantly bigger player than ThermaSol. When we look at, for example, procurement, so simply component prices that Harvia is getting and what Thermool used to get, there is a significant difference. We have been able to lower the cost of components sourced for ThermaSol even quite significantly. First, we had to burn through the existing component inventory that ThermaSol had at the time of acquisition, plus it took some time for us to find those alternative suppliers, do the appropriate testing, make sure that everything is fine for us to take those new cheaper components in use through Harvia's own sourcing, but it's really -- it's happening as we speak, and the impact has already started to come through. Not to the full effect yet.
Ari Vesterinen: When does Harvia start the cooperation with Ronaldo?
Matias Jarnefelt: Well, we are very thankful for Ronaldo and actually many other, I would say, mega celebrities in the world. Actually, sauna category is pretty interesting that people really love to talk about it. It's something that really sparks people's interest and emotion. On one hand, it's great for our health. On the other hand, it's great relaxing, pleasant experience, but it's also something that I think is very much into the core of humanity, connecting our body, mind and spirit. It's very physical experience, but also the physical reaction and our body reaction to the heat really helps to calm our minds, etc. People really love sauna. That's why I believe we see so much, for example, social media postings, not just from the mega influencers, like Ronaldo and others elite athletes, but also in entertainment superstars, but also ordinary people. We haven't paid anything really to the sort of mega stars. They would also come probably with a pretty high price tag. We have been estimating for fun at times that how much of free market making they are making for us, and it probably would be counted in tens of millions, if not even 100-plus million over multiple years, the value of posts that people, like Cristiano Ronaldo and likes have done for sauna. Then we think as the global leader of the sauna movement and sauna business, we probably are the company benefit most of this activity in social media, so we are very thankful for that.
Ari Vesterinen: What's the opportunity of team-up with other wellness players, such as [indiscernible], all others?
Matias Jarnefelt: Great question. Something that ease my mind. We're being about sauna provider in significant wellness benefits, we would like to see a future where those who are interest wouldn't just feel, have that feel, good feeling, relaxing feeling, more calm mind, etc., but also for those interested, we could also provide the data what's happening in the bodies through the sauna wellness programs and routines that they go through. That would obviously a key part of that would be sensoring what happens in our bodies. There are many players, like the ones you mentioned that are on our radar screen in terms of potential partners in the future.
Ari Vesterinen: Now, we have been in this session already over 1 hour. Now the last question. Thank you very much, by the way, for all the great questions. Could you elaborate what is the value of the brand? Considering the actual product from technology, it's not complicated to manufacture. Are there small barriers to entry to the business?
Matias Jarnefelt: Yes. I think the brand a significant part of Harvia and Harvia's success, and I think it's going to get even more important in the future. Why I'm saying that? If you think about what's happening in the market, Harvia has become and emerged as the leader of what used to be a niche business that was mainly known by just the industry insiders. In most countries, if you would just go and ask a consumer on the road, hey, name me one sauna brand, they would answer that I don't know any. This is changing, because sauna is becoming much more of a volume category or maybe even a mainstream category. In such an environment, the power of brands become stronger and more important. I have a dream that Harvia could be a brand, like to Google is ply a synonym for Internet search or Tesla became the icon for electric cars that Harvia would be the icon of sauna and basically the thought that it would invoke is Harvia, global leader of sauna and sauna feels better with Harvia. Maybe that's a good ending.
Ari Vesterinen: Okay. Thank you very much for everybody, and thank you for following. Let's sauna.
Matias Jarnefelt: Thank you very much. Take care. Let's sauna.