Deep Dive - Harvia
The heat is on - Harvia's engineering the global sauna boom
This new in-depth report will cover our updated thoughts on Harvia, the leading sauna and spa company. The company’s primary listing is on the Helsinki exchange under the ticker “HARVIA”.
It’s the most comprehensive research report we’ve ever published, aimed at serving our growing base of institutional readers (e.g., family offices who’ve taken a sizable position in Harvia over the past 6 months).
The PDF (75 pages) of this report can be found below, so you can re-read/store the thesis more easily.
Back in 2024, we said:
Given that there isn’t a lot of (high-quality) coverage available, we’re very excited to share this in-depth report on Harvia, the world’s largest sauna and spa manufacturer.
That’s still true today, and it’s maybe become even worse as superficial analysis does not get you anywhere with this company - relying on a stock screener does not make the analysis process easier. For instance, reported ROIC mixes up the historic goodwill due to the restructuring of the former legal entities into Harvia Group (pure accounting impact) before the company IPOed.
As to the quarterly performance, the impact of shifts in delivery from one quarter to another, and the timing of deliberate growth in OPEX (e.g., marketing, development) adds noise to the near-term outlook. And it has to be said that 2025 was yet another eventful year for many consumer companies: tariffs resulted in pre-buying ahead of the price increases leading to some kind of air pocket performance in the next quarter, and the holiday season was watched very closely.
We’ve also experienced the post-COVID backdrop, with several puts and takes on Harvia’s organic growth and the margin profile of acquired companies. Hence, there are still a lot of misconceptions around this Finnish company’s true performance, cyclicality, and other factors that impact longevity and terminal value. However, that’s where the opportunity lies for sophisticated investors who maintain a very rational view on what matters most: solid revenue growth, high ROI(I)Cs, high IRRs, and a robust balance sheet.
Today, Harvia’s investment thesis remains quite misunderstood because of the points highlighted above, as well as the continued underperformance for several discretionary companies. The labeling of what consumer discretionary is and what the prospects for the whole economy are does not help here.
In all candor, it also took us quite some time (multiple years actually) to do all the digging, weigh the pros and cons, talk to people in the field, and spot the multi-year growth story for Harvia. Unsurprisingly, building conviction is time-consuming and typically slow, especially when macro volatility’s more elevated.
Today’s discussion around the business, pre-IPO vs. COVID and post-COVID performance, and other information will be consistent with the initial deep dive but supplemented with additional insights.
Re-evaluating and fine-tuning the orginal thesis reveals new elements you didn’t even think about initially. Having published an e-book on Return on Capital late last year, one of the goals of this deep dive is to connect the several dots in the whole framework of compounding.
We’ll also dive deeper into Harvia’s M&A performance: debunking the IRRs and the nuances, as well as the strategic layers that drive optionality and enhanced returns for shareholders. We’ll also present the financial profile, ROIICs, and IRRs of key (private) competitors. For instance, back in September 2024, we didn’t have the full details on the ThermaSol acquisition (e.g., purchase price allocation), integration process, and cross-sell opportunities (which we now clearly have a better understanding of).
Additionally, the consumer discretionary space has had its fair share of macro volatility as of late - FX, tariffs, geopolitical tensions, the continued post-COVID normalization amidst revenge travel and what not. During tougher times, it should be easier to identify whether a company’s truly agile and the management team sticks to its playbook.
As such, this extensive in-depth report provides the framework through which we believe long-term intrinsic shareholders should assess Harvia’s investment case, consistent with how we would analyze other companies as well.
The in-depth report will cover:
Part I - Harvia’s History & Product Assortment
Part II - The Sauna Market - a Growing Industry & How Harvia’s Evolved
Part III - Harvia’s Strategy & Financial Performance
Part IV - Competitive Lead
Part V - Management Team & Incentive Program
Part VI - Capital Allocation Mix
Part VII - M&A Track Record
Part VIII - The IRR Framework for Capacity Investments
Part IX - Recent Performance & Accelerating Growth Momentum
Part X - Base Case Valuation
Part XI - Risks & Uncertainties
Part XII - Conclusions