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The increase in sales revenue was supported by the acquisition of new business combinations in the second half of 2017. In addition to the regular seasonality, the profitability of the quarter was influenced by postponed installation of works of many clients due to the cold winter months, resulting in a large quantity of production into the warehouse. In the first quarter, the heating and electricity costs also increased notably, in addition, several preparations and development works were undertaken to perform the new procurement contracts of Sweden and Finland, Harju Elekter told the stock exchange.

During the reporting quarter, 79.2% of revenue was earned from the manufacturing segment, while real estate and unallocated activities contributed 20.8% of the consolidated sales volume.

Sales revenue increased for the comparable period for all products and services. The biggest contribution to the 8.5 million growth came from greater sales volumes of electrical equipment within 52.6% and new electrical installation works within 40.2%, added to the services of the group in 2017. Sales of electrical equipment increased by 4.5 million euros to 19.8 million euros in comparison with the quarter.

In August 2017, AS Stera Saue opened a new production hall and warehouses in the Allika Industrial Park owned by AS Harju Elekter, which has increased sales revenue from the real estate segment for the comparable period. The sales revenue of unallocated activities has increased by 3.9 million euros to 4.8 million euros in the quarterly comparison, of which electrical installation work comprised 71.3%.

The group's sales revenue earned outside Estonia accounted for 89.1% in the first quarter of 2018, increasing by 9.6 million to 23.2 million euros.

The group's largest market is Finland. Compared to the reference period, sale to the Finnish market has grown by 54.1% or 6.3 million euros to 18.0 million euros. The main reason for the growth was the contracts concluded with Finnish grid companies at the end of the years 2016 and 2017. Telesilta Oy, acquired in June 2017, also made a significant contribution to the growth of the Finnish market. In the reporting quarter, 69.1% of the group's products and services were sold on the Finnish market.

Compared to the first quarter of 2017, the sales revenue to Swedish market has doubled, to 2 million euros. The growth came from the purposeful work of the group and AS Harju Elekter Elektrotehnika to increase the market share in Sweden and the combining of new companies to the group. AS Harju Elekter Elektrotehnika's participation in several tenders resulted in a three year framework agreement to deliver substations to E.ON Energidistribution AB. The deliveries of the substations will start in the second quarter of the year.

In the reporting quarter, the Lithuanian subsidiary Rifas UAB continued to increase its order volumes from Norway. Compared to the first quarter of 2017, deliveries to the Norwegian market increased threefold to 2 million euros, accounting for 8% of the consolidated sales revenue. Sales revenue was also earned from Austria, Denmark and the Netherlands.

Due to the low level of investment in the energy distribution sector, sales to the Estonian market in the first quarter decreased by 28.8% to 2.8 million euros and accounted for 10.9% of the consolidated sales revenue of the reporting quarter.

Operating expenses increased by 52.9% or 8.9 million euros in the reporting quarter compared to the reference period. The main reason for the upsurge in costs was the increase in the cost of sales by 7.8 million euros in the first quarter of 2018 compared to the first quarter of 2017, exceeding the growth rate of sales revenue, while at the same time decreasing the gross profit margin by 2.3 percentage points compared to the reference period.

Labor costs increased by 53.5% up to 5.6 million euros. The rate of labor costs accounted for 21.7% of the reporting quarter's sales revenue, decreasing by 0.7% percentage points for the comparable period. The group's distribution costs increased by 45.9% and the rate of distribution costs accounted for 4.5% of the sales revenue in the reporting quarter, the same as in the first quarter of 2017.

The group has incurred expenditures on the preparation of new procurements and completing the acquisition of new subsidiaries in 2018. Besides that, the exponential rise in the volume of specific orders has brought with it the need to hire additional specialists. All this has grown the rate of administrative expenses to revenue to 7.4% in the first quarter of this year. The growth in administrative expenses is mainly due to the increase in development costs.

In the first quarter of 2018, an average of 679 employees worked in the group, which was 189 people more than in the comparable period. At the end of the reporting period, there were 699 people working in the group, which was 182 persons more than a year earlier. Including with the acquisition of SEBAB AB and Grytek AB, 45 employees were added to the group.

In the reporting quarter, 4.4 million euros was paid to the employees as salaries and fees. The growth of salary cost was due to the hiring of new employees related to the significant increase in production volumes and the acquisition of new Swedish subsidiaries. In the reporting quarter, the average monthly salary per employee of the group was 2,147 euros, an average increase of 367 euros.

In the reporting quarter, the gross profit of the group was 3.4 million euros. The gross profit margin was 12.9%. The decline in profitability was caused by wage pressure of employees due to overall economic health and in the comparison of quarters, the price of raw material, above all sheet metal, has increased, which also raised the level of cost of sales.

In the reporting quarter, the group's operating profit was 231,000 euros and EBITDA amounted to 849,000 euros. Return of sales for the reporting quarter was 0.9% and return of sales before depreciation 3.3%. The profit before taxes for the reporting quarter was 229,000 euros. The calculated income tax expense of three months was 127,000 euros.

In the first quarter, several of the group's companies were influenced by the lower than expected volume of orders due to seasonality, being the main cause of the decline in profitability. Preparations for new procurements continue, leading to higher development costs, and several professionals have been hired.

In the reporting quarter, the consolidated net profit was 102,000 euros, of which the share of the owners of the company was 133,000 euros. Earnings per share in the first quarter of 2018 was 0.01 euros. The consolidated net profit without extraordinary income of the first quarter of 2017 received from the sale of PKC shares was 527,000 euros.

In the first quarter of 2018, the group made a total of 2.3 million euros worth of investments to fixed assets, including acquisitions through business combinations amounted to 1 million euros. Investment growth is related to the ongoing developments of the Allika Industrial Park as well as investments into the production. During the first quarter, Harju Elekter's share on Nasdaq Tallinn increased by 24.8% from 5.00 euros up to 6.24 euros.