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Estonia: Harju Elekter's quarterly sales up 12.7% at EUR 29 mln

BC, Tallinn, 02.05.2019.Print version
Listed Estonian electrical equipment maker AS Harju Elekter finished the first quarter of 2019 with a sales revenue of 29.3 mln euros, which is 12.7 % bigger than the sales revenue posted for the same quarter a year ago, reported LETA/BNS.

The consolidated net profit of the reporting quarter grew to 165,000 euros from 102,000 euros in the first quarter of 2018, the company told the stock exchange.

Operating profit totaled 300,000 euros.

The company said that low profitability was the result of an increase in input prices and wages and lower-than-expected order volume from Finnish electricity networks. Usually, seasonality has a certain effect in the first quarter. 

The consolidated gross profit for the reporting quarter was 3.8 mln euros, marking an increase of 13.3% year over year. At 12.9%, the gross profit margin was unchanged from the first quarter of 2018.

Sales in the Estonian market grew by 24.7% year over year to 3.5 mln euros and made up 12.0% of the consolidated sales revenue of the reporting quarter.

"Competition on the home market is tight and winning a procurement is difficult. The group's Estonian companies make a significant contribution to increasing our market share in the Estonian market, both in potential procurements and in offering rental premises to corporate customers," Harju Elekter CEO Andres Allikmae said.  

Products and services sold to the group's largest market, Finland, made up 55.1% of total sales in the reporting quarter. A y-o-y decrease by 1.8 mln euros to 16.1 mln euros was registered in sales to the Finnish market. The decrease in sales revenue was mostly a result of a postponement of electricity and grid projects in Finland to the second half of the year, which shifted the works planned for the beginning of the year to the second and third quarter.

Sales to the Swedish market increased the most, growing by 1.7 mln euros to 3.7 mln euros in the first quarter. The share of the Swedish market in the consolidated sales revenue rose to 12.7%. The growth was due to the added sales revenue of the Swedish subsidiaries acquired in 2018, as well as the goal-orientated work of other subsidiaries towards Sweden, the company said.

"We expect Swedish sales volumes to increase further in the coming quarters, as indicated by the continued growth of orders from Sweden's largest grid company E.ON Energidistribution AB, as well as several new major projects with orders starting from the second quarter. In early May, the Group's subsidiaries will participate in the Scandinavian largest electricity fair Elfack, in Goteborg," Allikmae said.

Sales on the Norwegian market doubled year over year to four mln euros, making up 13.7% of the consolidated sales revenue of the reporting quarter. Deliveries and supplies to the Netherlands, where the group has managed to retain a stable sales revenue for the third quarter in a row, also continued. The Netherlands made up 5.4% of the consolidated sales revenue in the reporting quarter.

Operating expenses in the first quarter totaled 28.9 mln euros, being bigger by 3.2 mln euros or 12.3% than in the same period the year before. The main factor behind the increase was a rise in the cost of sales by 2.9 mln euros.

Demand for local labor and related wage pressure, but also the increased share of employees in Finland and Sweden where the salary level is notably higher than in other companies of the group, raised labor costs of the reporting period. Labor costs increased by 12.9%, to 6.4 mln euros y-o-y. The labor cost rate accounted for 21.8% of the sales revenue in the reporting quarter.

As at the end of the reporting period, the group had 744 employees, 45 more than a year ago. In the first quarter of 2019, the group employed an average of 733 people, 54 more than in the same quarter in 2018.

In the reporting quarter, 5.1 mln euros was paid to employees in salaries and remuneration. The average pay per  employee of the group was 2,368 euros, representing an increase of 10.3% compared to the first quarter of 2018. Labor costs were affected by the hiring of new workers in Sweden, but also by the decision of the Republic of Lithuania to calculate a part of the social tax as the gross salary of the employee. The latter did not have a significant impact on the labor costs of the group.

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