Deep Dive - Harvia Plc

The "Healing with the heat" money machine

Given that there isn’t a lot of (high-quality) coverage available, we’re very excited to share this new deep dive on Harvia, the world’s largest sauna and spa manufacturer.

Following its initial public offering in 2018, the company has accelerated its internationalization efforts and broadened its product offerings, all while markedly enhancing returns on invested and incremental invested capital and generating significant growth in NOPAT per share.

Exhibit I - Harvia heater

The deep dive will cover:

• Part I - Harvia’s History & Product Assortment

• Part II - The Sauna Market - a Growing Industry

• Part III - Harvia’s Financial Performance

• Part IV - M&A Track Record

• Part V - Reconciling NOPAT and Organic ROIC

• Part VI - Recent Financial Performance and Emerging Trends

• Part VII - Base Case Valuation

• Part VIII - Risks & Uncertainties

• Part IX - Conclusions

Part I - Harvia’s History

Going Back to the 50s

Harvia’s story began in 1950 when a Finnish sauna enthusiast, Tapani Harvia, sought healing and warmth after a plane accident from the most natural source Finns can imagine – sauna. That’s how the production of wood-burning heaters for the local communities was born.

Exhibit I - Harvia’s founder - Tapani Harvia

Since then, Harvia has been developing the production of sauna heaters, a core area of expertise that has remained central to the company's business, although the heater dominance has been reduced notably from 59% of total sales in FY17 to 55% in FY23 (but that also includes a sizable portion of control units).

Harvia produces both electric and wood-burning heaters, with electric heaters making up the majority of sales. Related heater accessories include safety rails, protective sheaths, protective beddings, electric heater embedding flanges, and chimneys and pipes for wood-burning heaters. Electric heater sales also encompass combi heaters, which feature an integrated steamer.

Exhibit III gives the FY17 sales breakdown by product and country. In the financials section, it will become clearer how Harvia has internationalized its strategy since the IPO.

Exhibit III - The Compounding Tortoise