Harju Elekter Group: Strong Q2 Performance Amidst Challenges
Strong Financial Performance Despite Challenges for Harju Elekter
The second quarter of 2025 brought a mix of successes and challenges for the Harju Elekter Group. While revenues have seen a decline compared to previous periods, the company continues to enhance its profitability, which remains a long-term strategic objective.
Highlights of Operations in the First Half of 2025
In the first half of the year, the Estonian production unit led the charge, benefiting from sustained demand for substation solutions in distribution networks and advanced E-house type solutions vital for data centers. The Finnish subsidiary, Telesilta OY, also made notable contributions by specializing in electrical solutions for the shipbuilding sector.
Although operations in Lithuania, Finland, and Sweden displayed modest results, growing order books indicate increasing customer interest and readiness to initiate new projects. This progressive development is poised to positively influence results for the latter half of the year as well as into 2026.
While demand for industrial automation and energy efficiency solutions has remained robust or increased, the overall industrial sector continues to face pressures, primarily due to elevated input costs and subdued export performance. These factors are continuously impacting key target markets, leading to cautious investment activity.
Financial Overview
For the reporting quarter, the Group witnessed a decline in revenue of 19% compared to the same period last year, with revenue recorded at 46.1 million euros as opposed to 56.8 million euros in Q2 of the previous year. The cumulative revenue for the first half stood at 83.5 million euros down from 103.6 million euros in the same timeframe last year. Despite this drop from record sales in prior years, revenue levels remain stable and show resilience against seasonal fluctuations that reflect more stable periods from years past.
In terms of operational efficiency, total operating expenses decreased significantly by 18.8% year-over-year, totaling 42.4 million euros in Q2 compared to 52.2 million euros in Q2 2024. Similar reductions occurred over the six-month comparison period, where total expenses dropped by 20.3% to 78.0 million euros.
Although distribution and administrative costs increased slightly both quarterly and over six months, totaling around 0.1 million euros, this adjustment was deemed essential to maintain revenue stability, strengthen customer relationships, and secure new contracts.
Gross Profit Insights
The gross profit for Q2 reached 7.4 million euros, a decrease from 8.2 million euros in the previous year. However, there was a positive development in the gross margin, which improved to 16.1%, up from 14.4% in the same period last year, primarily due to effective cost control measures.
Operating profit (EBIT) for the quarter totaled 3.6 million euros, with the operating margin holding steady at 7.8%. Net profit reached 2.6 million euros, demonstrating resilience close to first-quarter figures, despite the earlier noted decline in sales for the first half.
Core Markets and Revenue Growth
The revenue for Harju Elekter during the second quarter and the first half of 2025 highlighted a continued downward trend within Scandinavian core markets compared to previous periods. The primary markets—Estonia, Finland, Sweden, and Norway—contributed to 80% of quarterly revenue.
Estonia's revenue hit 7.0 million euros, displaying a slight increase, marking the highest results achieved in the second quarter on the home front. Meanwhile, Finland, though still the largest market, experienced a significant decline with quarterly revenue falling 32.9% to 13.8 million euros. This downturn was attributed to reduced sales volumes in compact substations and lower contractual manufacturing.
Sweden also faced challenges, reporting a 40% decline in quarterly revenue and a 34.9% decrease for the half-year, resulting from a strategic shift towards standardizing products rather than offering turnkey projects.
Conversely, Norway exhibited promising growth, with a 33% increase in quarterly revenue reaching 10.6 million euros, showcasing resilience in the market despite overall challenges.
Investments and Future Prospects
During the reporting period, the Group invested 1.9 million euros into non-current assets aimed primarily at enhancing operational capabilities through upgraded production technology. These investments are expected to bolster future product development efforts, particularly in next-generation, sustainable energy solutions.
As of June 30, 2025, the total value of Harju Elekter's long-term financial investments stood at 27.2 million euros. The recent divestment of a 9.15% stake in IGL Technologies OY brought in proceeds of 0.9 million euros, aligning with the Group's focus on core operations and R&D initiatives.
Frequently Asked Questions
What were the main highlights of Harju Elekter's financial performance in Q2 2025?
The second quarter of 2025 reflected a decline in revenue but an improvement in gross margin and profitability. The Group's profitability was enhanced through effective cost control measures despite challenging market conditions.
How did the different production units perform in H1 2025?
Estonia's unit showed strong performance, while the units in Finland, Lithuania, and Sweden faced more modest results, though increased order books indicate potential for future growth.
What factors impacted Harju Elekter's revenues?
The decline in revenue was primarily due to lower sales in compact substations and a strategic shift in Sweden’s business model, along with challenges in the broader industrial market.
What is the outlook for Harju Elekter in the second half of 2025?
The outlook remains optimistic with anticipated stability in revenues, supported by declining interest rates and increased investment activity expected in key markets.
How does Harju Elekter plan to enhance its operations moving forward?
The Group is focusing on investments in production technologies and R&D for product development, especially to meet the growing demands for innovative energy solutions.
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