Earnings call transcript: Harvia’s Q3 2025 shows solid growth, stock surges

Harvia Oyj reported a strong performance in Q3 2025, with revenue reaching €46 million, marking a 19% growth compared to the previous year. Earnings per share (EPS) increased by 12%, contributing to a positive market reaction. The company’s stock price rose by 17.97% following the earnings announcement, reflecting investor confidence in Harvia’s growth trajectory and strategic initiatives.

Key Takeaways

• Harvia’s Q3 2025 revenue grew by 19% to €46 million, with a 16% organic growth rate.
• Earnings per share increased by 12%, supporting a positive market response.
• The stock price surged by 17.97%, reaching €41.35, close to its 52-week high.
• Harvia maintained its long-term financial targets, focusing on innovation and market expansion.
• Significant investments in operational efficiency and product innovation were highlighted.

Company Performance

Harvia demonstrated robust growth in Q3 2025, driven by strong demand across all geographical regions. Notably, North America saw a 24% increase in revenue, while Europe returned to double-digit growth. The company’s strategic focus on product innovation and operational efficiency contributed to its market leadership in the sauna and wellness equipment sector.

Financial Highlights

• Revenue: €46 million, a 19% increase year-over-year.
• Earnings per share: Increased by 12% from the previous year.
• Adjusted operating profit: €8.8 million, maintaining a 19% margin.
• Operating free cash flow for Q3: -€600,000, but €13 million year-to-date.

Earnings vs. Forecast

Harvia’s Q3 performance exceeded market expectations, with revenue surpassing the forecast of €42.88 million. The actual EPS was not explicitly mentioned, but the 12% increase indicates a positive surprise compared to the forecasted EPS of €0.2874. This marks a continuation of Harvia’s trend of outperforming market projections.

Market Reaction

Following the earnings release, Harvia’s stock price increased by 17.97%, reaching €41.35. This surge reflects investor optimism and positions the stock near its 52-week high of €52.4. The positive market sentiment is attributed to Harvia’s strong financial performance and strategic initiatives.

Outlook & Guidance

Harvia reaffirmed its long-term financial targets, including an average annual growth rate of 10% and a sustained operating profit margin of 20%. The company expects capital expenditures to decline slightly in 2026 and continues to focus on channel expansion and product innovation.

Executive Commentary

CEO Matias Järnefelt highlighted the resilience of the sauna market, stating, "The story of sauna resonates extremely well, almost no matter what the economic times are." He emphasized Harvia’s commitment to making it easy for customers to access the "Harvia world" through innovative products and strategic growth initiatives.

Risks and Challenges

• Potential tariff impacts on pricing could affect profit margins.
• Economic challenges may pose risks to consumer spending in certain regions.
• Supply chain disruptions could impact production and delivery timelines.
• Market saturation in mature regions may limit growth opportunities.
• Currency fluctuations could affect international revenue and profitability.

Q&A

During the earnings call, analysts inquired about Harvia’s growth strategies in different regions and potential market opportunities. The company addressed concerns about tariff impacts and highlighted the retrofit and upgrade potential for its existing install base, indicating a focus on sustaining long-term growth.

Full transcript - Harvia Oyj (HARVIA) Q3 2025:

Matias Järnefelt, CEO, Harvia: Hello everyone, and welcome to Harvia’s Third Quarter 2025 Earnings Webcast. My name is Matias Järnefelt. I am the CEO of the company, and with me I have Ari Vesterinen, our Chief Financial Officer.

Ari Vesterinen, CFO, Harvia: Hello.

Matias Järnefelt, CEO, Harvia: I will first start by taking you through the highlights of Quarter Three in terms of business and financial performance, and I will also talk a bit about our strategy implementation. After that, Ari will continue and will shed more detail on our financial performance and numbers, after which we are very happy to get your questions. Let’s start and summarize Quarter Three. This time, it actually is very easy. We can summarize it even with just one number: 19. So 19% top-line growth at 19% adjusted EBIT margin. Essentially, when we talk about the top-line, we delivered EUR 46 million, and that’s a set 19% growth versus the comparison period. In terms of comparable exchange rates, that’s 22% growth from last year. Organic growth was solid double-digit at 16%. We’re very pleased that the growth was broad-based.

Essentially, we had double-digit growth across all of our four geographical sales regions. This is despite the fact that, of course, this year has been rather volatile in terms of the macro environment. We had a modest Quarter Two in North America. Now, returning to a solid double-digit growth. That is, of course, something we are very, very pleased with. APAC and MEA continued very strong double-digit growth, and we are also very happy that Europe, that has been a bit on the slower momentum for the past couple of years, returned to double-digit growth as well. Our adjusted operating profit was EUR 8.8 million, and that represents 19% of our revenue. That is an improvement from Quarter Two when we had 17% margin, while it is still slightly below our long-term target.

The operating profit margin was impacted by the gross margin, and in particular, higher cost of goods sold due to tariffs and currency exchange rates. This specifically refers to our heating equipment business, where we make the products mainly in Europe, and then when we sell them in the United States, they are sold in USD, and of course. The increased tariffs also apply. Also, we’ve been increasing our operating expenses as we continue to build a foundation for long-term success in areas such as product development, brand building, channel expansion, and operational efficiency. If you think about the year-to-date performance, it could be summarized as 17-20. So 17% top-line growth at 20% operating profit margin. Looking ahead, we remain focused on executing our strategy and building the foundation for long-term success, and at the same time, we are focused on also delivering strong results in the short term.

In the near term, our key focus areas include commercial excellence. That includes topics like driving growth and driving pricing in this volatile environment, also sourcing and operational excellence to manage the materials cost. Also prudent OPEX management. It is very clear: this is an extremely attractive market that is supported by strong long-term growth drivers, and Harvia is extremely well positioned to continue to lead this market and deliver significant growth. Here are the key figures for quarter three. Revenue at EUR 46 million, and that is 19% growth. Organic 16% and comparable exchange rates, that is 22%. Adjusting operating profit margin at EUR 8.8 million, and that is 19% of our revenue. Operating free cash flow in this quarter was minus EUR 600,000, and there are two reasons to this.

One is that historically, quarter three is our lowest cash-generating quarter, and the reason for that is that during quarter three, we are building products to sell during the high winter selling season. Also, we do believe in the long-term growth and success of Harvia, and that’s why we’re also investing in the platform to grow. We have been making quite significant investments compared to our investment history in improving our operational efficiency and also building capacity to grow. Last year we grew, last year we bought land around our West Virginia factory in the United States, and we have started to develop the site, and that’s just one example of what is going on in our business. In terms of the first nine months of the year, revenue at EUR 145 million, and that’s 16% growth versus last year, and organic growth at solid double-digit 11%.

Growth at comparable exchange rate at 18%. Adjusted operating profit very close to that 20% mark at 19.7%, and operating free cash flow for the first nine months positive EUR 13 million. As I opened, I mentioned that we are really pleased that we delivered strong broad-based growth during this quarter. All of the regions grew double-digit. The highest growth rates continued to be outside Europe, and also in terms of absolute contribution, North America and APAC contributed the most. As said, we are very pleased that now we also saw Europe playing strong and delivering double-digit growth in both of the European sales regions. When we look at Northern Europe, the region grew by 15%, and that’s a significant momentum change after tough three years. During Quarter Three, Northern Europe represented 24% of our total revenue. Where did this momentum come from? We had strong.

Performance in Sweden in particular, and there that momentum has been built through channel expansion and development. Also, I personally believe that here there’s some impact from the excitement that KAI and Eurovision created around sauna in Scandinavia during the first half of the year, and now we see that realizing in our numbers. Also, Baltic countries delivered strong growth. I’m also very pleased that Finland, that has been also struggling already quite some time, actually turned back to growth. Here our focus is to continue on a positive path and really build foundations for sustainable steady growth for the years to come. Continental Europe grew by 10%, and that’s on top of 8% growth a year ago in the comparison period. I think that tells a story about continued solid progress in the market.

Essentially not just a temporary swing, but there is now already a longer trend where we see Continental Europe strengthening. If we look at Continental European markets, sub-markets. We have many very strongly performing countries there. For example, United Kingdom, Spain, countries in Eastern Europe like Poland. North America. Returned to double-digit growth after the modest Quarter Two. Essentially our revenue grew by 24%. The region represents now 36% of our total revenue. If we look at the comparison period and exchange rates, the dollar is now around 6% weaker than a year ago. Give and take at constant currencies, North America would have grown around 30%. In terms of organic growth and inorganic growth in North America, I’d like to note that ThermaSol, a company we acquired in the summer of 2024, has been fully consolidated in our numbers since August 2024.

Essentially, it contributes to inorganic growth for Harvia Group only for the month of July. August and September this year are already part of organic growth. The majority of our revenue growth in North America clearly came from organic development. I’d also like to highlight a piece of news that came after quarter three was closed, and that is that we have appointed a new President of Harvia North America and region head, Nathan Hagemaier. We had a thorough process to find the best possible person to take the lead of this crucially important region for us. Nathan brings a wealth of experience in selling technical products to residential and commercial facilities in a multi-channel sales environment that resembles largely the sales setup that we have in Harvia in the U.S.

I think there is a strong culture fit, something that we also value a lot, and I am extremely pleased that Nathan accepted our offer and has already started actually since Monday this week in his new role. APAC and Middle East and Africa is continuing on its strong growth path, and you can see here the comparison figures from 2022 through 2025. This region is really picking up momentum, and also in terms of just absolute size, representing now 12% of our total revenue, it is a significant part of our business. What we are also very pleased with is that APAC, when it was smaller, was more volatile and prone to, for example, individual product deliveries. When we look at the numbers now, the growth is broad-based, and we feel that the growth is on a strong platform in APAC and Middle East.

Now looking at the portfolio view, we continue strong performance in our core of technical equipment for sauna and spa. You can see that heating equipment represented 56% of our top-line during quarter three. We also are having strong momentum in other areas, but heating equipment just grew so fast that the relative shares of some of the other parts of our portfolio did not develop. Now if we look at the growth bridge for quarter three by product category, you can see that the biggest absolute contribution, nearly EUR 5 million, came from heating equipment, and that’s 23% growth, but also solid double-digit growth in many other parts of our portfolio. This is also something we are very pleased about. Now let’s talk a little bit about our strategy. Harvia is playing in a very interesting market. We are.

World leaders in a market that has strong growth drivers that we believe have sustainability over a long time. We want to be a proactive leader and a leader that shapes the market and excites the market. Our strategy is based on four focus pillars that respond to questions: what, where, to whom, and how. What is delivering the full sauna experience about product leadership and portfolio leadership. Where is about winning the right markets that matter the most. To whom is having the leading channels and brands in this business, and how it relates to our operational excellence and competencies and people. I would like to mention a few things about how we have been executing our strategy during Quarter Three.

In terms of delivering the full sauna experience or product and portfolio leadership, I’m very pleased that we have a strong core, and a strong core helps us to build also the future. When you look at the heating equipment performance, you could see that it is really going from strength to strength. At the same time, we are clearly upping the game in terms of innovation and differentiation. In the following slides, I will share some of the examples of new products that we brought to the market or launched. In terms of winning in the markets that matter the most, North America, of course, we are very pleased that it’s back on a strong growth trajectory. Looking at the first nine months, North America is really performing very strong.

Also, APAC is performing extremely strong, and we are continuing systematic activities to drive growth across key markets and making sure that we are not too dependent on any single market in that region. I’m also very pleased that in terms of Europe, the tenacious and systematic work that we’ve been putting in place over the last couple of years is really starting to bear fruit. Having both regions now in double-digit growth is something that does help us in our strategic and growth journey a lot. In terms of leading the key channels, we at the same time want to deepen and grow our partnerships with the existing and traditional customers. That’s mass volume merchants and also dealer channel. We want to be the best partner.

At the same time, we want to build an even stronger direct-to-consumer channel, and I would encourage you to go and visit our almostheaven.com site and thermasol.com site. You will see the level of excellence that we have been able to build during the past 12 months on our direct-to-consumer channels. In terms of best-in-class operations and great people, we are continuing to invest in the heart of our competitive advantage, which is operational excellence. We have been investing, for example, in energy-efficient and new coating system for Tridorf that provides cost benefits and also efficiencies. We are investing in our Louisburg site in West Virginia, in particular in anticipation of driving a significant and ambitious growth strategy in the region. We are also investing in our group IT, streamlining, bringing common platforms, and bringing more simplified and modern platforms for us.

That’s also a very important enabler for us to keep scaling this business up. Now a few highlights from our innovation pipeline. We have now started the sales of Harvia Phoenix, which is a new full touch control unit for the volume segment. I think it’s really the leading product in this category. Exciting 4.3-inch full touchscreen product. It’s very easy to use with, for example, ready-made presets like mild, cozy, and hot. It’s smart, so actually it learns about your sauna, so it knows how fast the sauna heats up. Instead of programming your heater to start heating, for example, 30 minutes before you want to go to sauna, actually the sauna knows how long it takes to heat up your sauna.

You can just easily put that you want to go to sauna at 3:00 P.M., and the sauna will be ready, making it very easy for you and also saving energy. What’s really cool about it, it’s Wi-Fi-enabled and it’s over-the-air updatable, so we can keep updating the software and providing even more functionality over the lifecycle of the product. In addition to being able to sell it with new heaters, we can actually sell it to a significant install base of saunas already out there since it’s backwards compatible with huge seller Harvia Xenio control panel. A really exciting product that we are very happy about. Another example is our new MyHarvia smartphone app and definitely the most advanced sauna app there. It very nicely aligns the user experience with Harvia Phoenix. It’s modern, consistent.

Again, a lot of features functionally to help you get most out of your sauna, including over-the-air updates and for commercial users’ ability to control multiple saunas from the same app and interface. We’ve also been working on the Harvia cloud platform in the background, so really making us ready for the future. Now in the United States, we’ve been playing mostly when we talk about ready-made saunas in the more like entry-level through Almost Heaven Saunas in price points from $5,000-$10,000. With ThermaSol brand, we are now attacking the high-end much more aggressively than in the past. We’ve introduced a range of really exciting three new models for the premium sauna category in price points from $30,000-$35,000. The response to this introduction has been very, very strong.

Very much looking forward to what we can do in terms of delivering results in the coming quarters and years with this strengthened play in the high-end. One highlight is that we actually got a prestigious recognition as Time Magazine selected Harvia Group’s solar power sauna as one of the best inventions in 2025. This is quite a unique product. It is basically an electric heater-powered product, but designed so that it actually can be very efficiently and conveniently run with solar power. Really providing full freedom from electrical grids and a very sustainable solution. Again, a highlight of what Harvia can do. The final slide before handing over to Ari. This is just an example of how we also continue to build other group brands like EOS, our high-end brand for technical equipment. AUFKUS World Championships were held.

End of the summer in Italy. In the center of the picture, you can see an example of what kind of products we can deliver. That is an EOS event heater. That was really exciting to see us as the centerpiece of such an event. Maybe another event to mention. Osaka World Expo was running six months during this year with over 20 million visitors. Essentially, Harvia was part of a sauna experience site there, which ran for six months, and it was fully booked seven days a week, full day for six months. That really shows the power of sauna and what we can do to excite the market. With that, I would hand over to Ari. Okay, thank you. When we now compare the quarters, actually the quarter three was great. We had a very clear growth path, and the profitability level.

In absolute money, it stayed basically on the same level as a year ago, but the percentage is lower. One thing that is important to note here, almost all financial metrics in the profit and loss statement improved in Q3, except the use of materials and external services. This measure is not always the same from quarter to quarter. It depends on the promotions and product mix and so forth. Frankly speaking, we had a very good year last year. We had that percentage only about 30%, and now we had 37% of the annual quarterly revenues. This 37% is actually very close to our average, which has been in the past about 35% of the total sales. I am personally not worried about this percentage at all. It just requires certain price management, which we have been working on.

As said, the quarters are not always alike. Here we see the most important financials, the key figures for the review period. Okay, we have already seen the profitability and growth rates, but probably some highlights to note. The earnings per share increased about 12% now. The operating free cash flow is now lower than a year ago, and it’s because of the growth investments we have, also in networking capital and in CapEx. That is visible on the line investments in tangible and intangible assets. This year is an exceptionally high investment year. We are investing for the growth. Net debt stayed more or less on the same level as a year ago, and the leverage also. Networking capital has been growing. Also, our number of employees has grown, but only about 8% when we have grown 19% in the sales. The effectiveness of.

The staff and the organization has improved. Here we see the operating free cash flow and cash conversion over the quarters. What is very typical for Harvia is the seasonality. We have the lowest cash flow usually in Q3 and then the highest usually in Q4. That has been at least the pattern in the past. The reason is simply that we have been making products to our stock during Q3. The biggest sales seasons in North America, in Central Europe, and many other areas, the biggest sales seasons are actually in Q4 and Q1. We are well prepared for the Q4 sales season, and that’s demanding some investments in advance. The leverage has been staying on a rather low level, 1.4, as at the end of Q2. In our long-term financial targets, we would like to stay under the level of.

2.5, but in the case of acquisition or so, we could temporarily also exceed it. As you see, we have a very healthy balance sheet situation in terms of debt. The net financial items, no big changes now there. We had quite a steady environment now during Q3 with US dollar and also the interest and interest rate swaps. They helped also to keep the interest rates quite steady. Actually, the effective interest rates of interest costs, financial costs to be paid out, followed very much the accrued balance sheet related costs. Here we see how the investment levels have increased during Q3. I’m personally not expecting as high level for Q4 anymore, but this year 2025 is somewhat over the historical average level of investments.

The investments, they are really, really required, and they have quite short payback time, and they improve our operational efficiency also in the near term. Harvia’s long-term financial targets, just to repeat, they have not changed anywhere. They have been quite a while on the same level since last Capital Markets Day two years ago, a year and a half. The average annual growth rate over 10%, profitability at sustained operating profit margin over 20%, and leverage, as mentioned already earlier, under 2.5%. Harvia pays twice a year dividends, and now the second dividend installment was paid out October 28. This fall. Now there is time for questions, please. I have actually got a few questions here in the tablet, and most of them are business related, also some finance questions. I start to make, ask the questions from Matias first.

Is there an effect of pre-buying ahead of announced price increases in your strong US sales growth in Q3? Maybe I would take you back to three months ago when we talked about quarter two. I understand the quarter two results were a bit of a disappointment to the market, in particular what comes to the modest performance of North America during that quarter. At that time, what I told you, I said that look at quarter one and quarter two in combination, because there were clear kind of shifts between quarter one and quarter two, in particular in the comparison period from 2024. When we look at the performance in North America now, quarter three, it’s actually a logical continuation of the first half. Another thing that I did mention during that.

Earnings call was that we saw quarter two in North America modest in the earlier part of the quarter, but we saw signs of improvement as the quarter progressed. Essentially, I would say that this is a logical continuation of the performance already from a longer period of time. Maybe, however, I’d like to make one brief comment, which is related to quarter four last year. That is of course relevant for the baseline now in the quarter that we are now living in, quarter four this year. That of course is that we had a very strong top line growth last year, overall 28% growth in quarter four last year, and 63% growth coming from North America, which had a significant portion of rather low margin campaign sales. Maybe that’s something to take into account as you assess Harvia’s near-term outlook.

All in all, we see strong performance, continued performance in North America despite all the noise in the market. Despite that, the consumer confidence generally on the macro level we’ve seen, of course, taking a hit. What comes to interest in our category, we seem to be in a good place. There is actually quite a close question to that. What is your strategy ahead of campaign heavy Q4 in terms of inventory levels and pricing? First of all, the plan is to participate in campaigns. Campaigns are a significant part of many of our partners’ business model. When we think about, in particular, large volume retailers, typically they want to have something exciting to offer to their customers during the high selling season, for example, Black Friday, Cyber Monday. We have a choice. Either we participate or we do not participate in that.

For us, it is clear we want to keep developing these partnerships. We want them to be win-win for both. We feel that there’s great opportunities for us. Of course, we’ve also reflected. The outcome of quarter four last year and always try to learn from the past experiences. In terms of building the inventory, that’s also visible in the cash flow. It is very clear that we have been building inventory to be able to deliver and sell during quarter four and quarter one. I think it’s also a sign of confidence that we in the management have for the business. One question, actually. You shortly mentioned it, but I ask this anyhow. Can you please tell more? What is the here behind the premium range launched under ThermaSol brand? The ThermaSol saunas that we launched will be equipped with EOS heaters.

If you think about our premium brands, we practically have two of them. We have the German-based EOS that we have had in our portfolio since 2020, and ThermaSol, a high-end brand for the steam and kind of home spas in North America that we acquired last year. In the U.S., ThermaSol is clearly a more well-known brand versus EOS. While ThermaSol has great channel access to high-end spas and high-end commercial facilities, we feel it’s a great opportunity for us to piggyback with EOS on that. Essentially the idea is that what comes to steam products and then the kind of full sauna solutions in North America, they are branded ThermaSol. What comes to the heating equipment is powered by EOS. So, ThermaSol powered by EOS. Can you specify the investments into efficiency you made in Q3? What segments and regions?

The investments are rather broad-based. One of the examples we pointed out was the EOS factory that is located in Tridorf, close to Frankfurt. We made quite significant investments there. Another example I did mention as part of my presentation, we bought land around our West Virginia factory in anticipation of building. Options to grow. Now we are taking action. There is already groundwork ongoing on the site, and we are expanding the facility as we continue to see significant growth opportunities for us for years to come in that region. More finance-related question. What was the forex impact on sales level in North America? I am after the EUR-USD exchange rate you used in Q3 2025. The exchange rates we use for our P&L, they are the average rates from Bank of Finland. For this quarter, we used exact average. It was 1.168.

Dollars per euro, and a year ago it was about 1.10. Actually, the dollar was about 6% weaker than a year ago during this quarter. As we saw from the pictures already in the presentation, we were way over 20% of the growth in North America. In terms of US dollar, it was about 30%. Is EMEA growth more one-off or new projects already coming after current project deliveries? EMEA, so is that Europe? Let’s consider the whole area, APAC, EMEA. Okay, APAC and Middle East and Africa, okay, sure. It used to be much more volatile. Of course, when the scale of the APAC, Middle East and Africa business was smaller, it was quite easily swung either direction by single large orders, for example, significant project deliveries.

Over the past few years, our key goal has been to develop the region in a sense that it really provides not only growth opportunities but also on a stable ground. We diversify the kind of outreach that we have in the region. When we look at quarter three in terms of the markets and countries that delivered to that regional performance, it is widespread. That is a very good thing for Harvia. We saw significant growth in countries like Japan, China, Oceania, Australia, and also strong performance in EMEA. It is not like something really stood out and kind of made the whole thing happen. It really is broad-based growth. There are always some project deliveries in the Middle East, in particular. That is more a project-based business. I would consider it almost.

Something that is very part of the business we do in that part of the world. There were not any particular outliers in terms of, for example, project business impacting our quarter three. All in all, I would assess it as a solid broad-based performance. Yeah, there is really a great interest for sauna, growing interest in wealthier Arabic countries. Certainly some business to come also in the future. It was really not one-off even in those areas. The new Phoenix control and app, is that an opportunity for installed base? Does it give modernization demand? This is exactly the thinking we have. I think in the sweet spot of innovation, we have something that excites the market and we can sell with the new products. At the same time, it provides us an opportunity to tap into the existing Harvia installed base.

If we think about the kind of strategic rationale of how we see Harvia in the long term, it is very important for us now to be a winner as the market goes through a significant growth phase. We want to have more Harvia products and saunas out there in the world. The way we think about it is that we want to make it easy for customers to get into the Harvia world. Once they are in the Harvia world, they want to stay. One of the examples is that if you have already a Harvia sauna where you have that Xenio kind of mid-range control panel, it works perfectly with the new Phoenix. There is no need to renew, for example, the wirings. That is an exciting opportunity for us to reach out to Xenio owners and basically send a message that there is an exciting innovation.

Do you want to upgrade your sauna experience and modernize it with now this full touch smart control that Harvia Phoenix is? The idea is that as we basically sell products and new products, we also want to build the foundation for recurring revenue and loyalty for the long run. Okay, now there is a series of three US-related, more or less US-related questions. Let’s start. What is your best estimate on your performance relative to competition in the US? Is part of the cross-marching pressure attributable to increased price competition or merely by the impact of tariffs? Around 30% growth after nine months in the US. I think it’s a solid performance. The market continues to grow. I believe that we have taken share. That’s one perspective to it.

On the kind of pricing competition side, I think it’s more related to inertia in having price increases effective that then truly reflect the changes in the cost of doing business due to tariffs and, for example, exchange rate changes that happen actually pretty rapidly. If you think about the dollar depreciation, it really started to happen actually towards the end of quarter one. Quarter two was significant rapid deterioration and then more stabilizing during quarter three. Of course, the tariff increases. We used to have tariffs of around 4% for our heaters that we made in Europe and sell in North America. Essentially, with that 15% general tariff plus extra tariff on the steel part of the product, we talk about a little bit about 20%. It’s also quite a significant impact in terms of that hardware business from Europe.

We have implemented already pricing changes, but it’s also a little bit of a balancing act that what’s the right strategy and right pace? Because at the same time, we want to keep growing, want to keep our customer relationships strong. Of course, we also need the appropriate compensation for the great products that we make. Ultimately, the sort of margin dynamics, I think, is more related to just the macro factors, the exchange rate and tariffs, rather than there would have been significant intensification of competitive landscape. Do you expect that the price increases implemented to counteract tariffs will be fully visible in Q4, thus supporting margins? Long story short is that I think, of course, price increases are always supportive. There’s maybe kind of one area of uncertainty, which is basically kind of financing rules.

Basically, to a degree, we’ve still been selling some products that were imported to the market before the tariffs took effect. It’s first in, first out principle. Of course, we have been modeling also the kind of what’s the full impact of the tariffs as we will transition in the situation where practically 100% of the products will be having a tariff attached to them. All in all, I’m confident in the work that we have been doing. Significant effort has been put in pricing analytics and assessing the situation and agreeing and implementing the right course of action. How do you aim to improve your margin performance in Q4 in the U.S. versus last year when aggressive campaigns heavily diluted your margins? Less aggressive campaigns.

No, that’s maybe a little bit of a kind of with the tongue in the cheek, but there is some truth to it. That’s, of course, for sure. There’s many things. Generally, general price increases that we have been implementing, and they have been also coming in force step by step. We basically built a more like a transition path. It’s not yet in full effect, but it’s already partially in effect. It’s about also being smart in terms of what kind of campaigns and campaign pricing, not only with the kind of IKEA accounts we have, but also what do we have available in our direct-to-consumer, which is the fastest channel where our pricing decisions can basically be affecting the price the next minute.

Most likely, you would see a little bit less aggressive campaigns, but still good campaigns because at the same time, we want to continue to drive top-line growth. We want to continue to take share in this growing market to place us very strongly in terms of Harvia products out there, building the install base and building the brand leadership for years to come. If there is a retrofit demand, perhaps you talk about ASP for such an upgrade. Average sales price. Yeah, I think that’s a great comment and something that we are increasingly focused on. While we are driving growth and volume growth and, as I said, building the install base, it is very clear that in our minds, there’s also the long-term future where hopefully there will be essentially millions of products and saunas where we can sell more continuously.

In terms of kind of metrics that we would be reporting, like ASPs and ASPs by product category, that’s something that we haven’t done so far. The idea, of course, behind that question is a very good one. Yeah, just to remind, in the more traditional sauna areas, 70-80% of our total revenues is actually replacement revenue. People are buying new saunas to their old place or replacing the heaters. Actually, our sweet spot of heaters is the second heater for the same sauna. When the construction company has selected the cheapest heater, Harvia heater usually for the new sauna, and after a couple of years or probably five, six years, the user of the sauna wants to have a better one. That’s the most interesting heater for us with more equipment and features and also with higher margins.

Maybe I could also continue on your very good answer. Just examples of this sort of building recurring business on the install base. One example is, of course, now Phoenix, where we can actually, through OTA over-the-air updates, actually sell new features during the lifecycle of the product. Of course, we are looking at basically these control panels are becoming fully connected interfaces in the wellness oasis that sauna is. What kind of, for example, digital services in the coming years we can offer that could also provide direct service revenue that would be high margin and scalable. You discussed already earlier about that we make probably not so strong campaigns, but we make campaigns during Q4. Now the follow-up question to that: shall we expect negative organic growth for North America for Q4? I will leave that to your Excel exercise.

We, of course, always want to see positive figures, and we have a high ambition level. As you know, we do not give short-term guidance. That is something that you will need to assess. Okay. Your CapEx has been now somewhat elevated both in 2024 and 2025. Is this higher CapEx expected to continue in 2026, or should it decline? Our estimate is currently that it will decline a little compared to this 2025. We do not give more exact figures for that. Okay, when are you able to offset the tariff impact with price increases? That was more or less already discussed a little. By the way, the tariff impact for completely sauna capping set in the U.S. for us is actually not so heavy because the saunas are produced there in North America and from local wood with local work power.

Only the heater, which is coming from Finland, has max up to 20% impact tariff for the landed cost. It makes from the total price of the package only about 10%-15%. The impact of the tariffs for the complete sauna capping, which we are mostly selling there, is only about 2%. With our pricing power, we should really be able to increase that 2% or somehow otherwise compensate. The biggest impact of the tariffs is for importers who are importing only the heaters for their saunas and for the distribution. We have that kind of customers also in the U.S. who are actually paying the import tariffs by themselves. Yeah. Maybe to also build on what Ari said, we, of course, are in close discussions with our key customers.

Some of them have also big companies, publicly listed companies, making statements also in terms of the development on kind of the pricing of the merchandise that they buy from suppliers from the Far East. I think it is clear that there is kind of this dynamic that the inventory that many companies have in the U.S., to a degree, has been imported before the tariffs took in place. Now more and more companies are really the kind of, I would say, the backs against the wall, implementing the price increases. Essentially, I would say, as my personal assessment, that we have not fully yet seen the pricing increase impact of the tariffs that are currently in force. Finally, that new equilibrium in the market will take probably another six months.

From some of my personal channel checks in Europe, it seems that the winter selling season has started earlier than normal. Several distributors told me that Harvia sales have been accelerated notably throughout the summer and since October. Would you like to comment on that? I can comment. Actually, I’ll take you again back to three months ago when we were talking about quarter two. Actually, usually I do not talk about weather as an excuse, but three months ago I did mention that. I did mention it in particular in relation to our Northern European performance. In Northern Europe, we had basically vacation house sauna season, so-called cottage season, which is very important for us. In North Europe, we had a very poor beginning of the spring and beginning of the summer, and the weather was significantly better in July.

That is what I also mentioned. I would say that the quarter three that you now see, it’s actually a little bit, there’s this dynamics from the season. Actually, the spring season started a bit later just due to the weather. The same is true for the U.S. when looking at recent momentum on Costco and Wayfair. Most importantly, customers are increasingly mentioning that Harvia has been the best value for money. Thank you. Not working for us, this. Asker. Somehow this feels like COVID-19 2.0 light, as consumers are staying more at home. Meanwhile, we are coming out of a period of subdued home improvement, which has started to pick up again. Also benefiting Harvia in mature regions. Does this match to your view?

I think there’s a bit of a little bit different dynamics between how much are we in wellness business and how much are we in home improvement business, depending on the region. For example, in Finland, it’s very clear that sauna has close connection to the property market and new build construction, just for the simple reason that sauna is in such a big majority of houses, apartments, and summer cottages. There is that sort of correlation. Whereas in regions where the sauna density is much lower, clearly, the dynamics is much more about buying a wellness product. Sauna is like a, I would say, miracle wellness oasis. Sauna has significant health and wellness benefits. It’s unique since you can get those health and wellness benefits in such a pleasant way. This combination, it does great for you, and it feels great.

Story resonates extremely well, almost no matter what the economic times are. Personally, I’m a strong believer of this. Sauna as a perfect wellness oasis and the strength of the story for years to come. During their conference call in September, Costco’s CEO said they would radically reshuffle their holidays offering. For the first time, they will also bring in saunas in store for which they did not have enough space previously. Does this impact Harvia, given that Costco members are now limited to shopping Almost Heaven Saunas product online? Does it imply that Costco will carry saunas in its own inventory and thus impact Q4 and future performance? I will not comment too much on the CEO of another company, but of course, we have taken a note. We have a long-standing relationship with Costco. The growth ambition of Harvia is to grow each of our accounts.

We want to keep developing Costco, and we see significant growth opportunities. We also want to have more of the big box retailers as part of our partnership network. We want to grow in the dealer channel where we can sell more premium products like the thermal saunas, which require, for example, installation support for the end user. We see significant opportunity also in our D2C with a portfolio that’s tailored for D2C so that all channels can grow without cannibalizing each other. Of course, as I said, we know about the comment made, and it’s an example of actually. In essence, in the sort of big macro picture, the tariffs most likely are a bit of a negative thing, but they do also change the supply chains and competitive landscapes.

One example is that, of course, Harvia makes the majority of our products inside the United States. We are not fully insulated from tariffs as discussed, but we are better insulated than most of our direct competitors. There is also this competition between categories in big channels. Essentially, we know that many companies, like the one mentioned, and others have seen significant price increases in category products that have been imported from the Far East and are making reassessment of their commercial potential in their channels and also, for example, for the kind of sales season campaigns. This is something we have now seen, that actually a category like sauna seems to be resisting very well.

Kind of the macro environment because the story of the category is so strong and a partner like Harvia that can produce good value and much of that value created in the United States are in great position. Looking at the strong growth in heating equipment, Harvia has got more than 20% market share. No matter how you look at it, it can’t be coming solely from new build or replacement at your existing customers. You must be converting non-Harvia customers into Harvia customers coupled with upselling. The price difference between a digital controlled versus a basic heater. Can you comment on the drivers behind the strong growth in heating equipment? On one hand, the whole sauna category is growing. And many saunas in the world are powered by Harvia.

If we think about just putting things in scale with Harvia, we talk about Harvia making, we make clearly more than 200,000 heaters per year and give and take maybe 20,000 sauna cabins. Practically, that means that we have 10x more volumes in the heaters. That, of course, tells the story that many saunas which have been provided maybe custom made on site or maybe provided by some other sauna cabin providers actually use Harvia. The reason is very clear. We have excellent products and we provide great value for money, but we are also very good at designing the products so that the market wants them and we have efficiencies in production. That, of course, leaves good margins for us. Ultimately, this is the dynamics we want to keep growing in the equipment business.

We see significant opportunities and in terms of volume, in order of magnitude, it’s significantly larger than the cabin business at the moment. At the same time, we want to sell these full solutions because it does help us tap into much bigger spend potential in the key markets. These sauna and heating equipment do complement each other, and I think we are well placed in both of them. Looking at your LinkedIn pages, recruitment has ticked up quite a bit at ThermaSol and Almost Heaven Saunas over the past two to four weeks. This matches the early indicators that sauna demand is already a lot higher versus previous year, notably. It comes at the time of the shutdown. Here is the current shutdown meant. Are you impacted by the current shutdown? I would say mostly no. That would be the answer.

Maybe on the sort of recruitment, of course, if you think about a region that’s growing 30% year to date and has a history of growth of 40% over a period of six years on average, of course, that puts us in a situation where we have the opportunity and need to strengthen the organization. I would take it also as a sign of confidence from the management side to the future of Harvia. In the Q2 results information for Sweden, it was mentioned that consumer trade is expected to improve towards the end of the year as a new partner is being sought or studied to replace Kesko. What is the situation with this? If the partnership has already started, has it had an impact on the Q3 results yet?

Yeah, I did touch upon it when I talked about North Europe as part of the presentation. The answer is yes. For Harvia, when Kesko made the strategy alignment or realignment, kind of choosing to leave D2C technical trade in Sweden, that left a big gap in our channel landscape in Sweden. We have been able to bridge that gap, and we have started to work with a new partner, and that’s going very well. Kesko is still selling our products also in Sweden, but with a slightly different concept. In APAC MEA, given that the multiple markets seem now to demonstrate sustainable growth, but you are partly dependent on relatively long logistical routes from Europe, are there opportunities for M&A or have you considered adding capacity into the region? To the same note, are you delivering whole sauna kit solutions increasingly to the region?

Can you give a little bit color on your outlook in this regard? Yeah. We do have actually a factory in Asia. So since 2005, this is actually the 20th anniversary of our factory in Guangzhou. We have, I would say, a mini version of Murame. Murame is an equipment factory that is also a volume factory. We have another volume factory, which is the China factory. On top of that, for the heaters, we have the value factory close to Frankfurt in the EOS home space. We actually do have a supply source in that region. The majority of the products we sell in APAC are the technical equipment. If we look at the sort of the cabin full solution business, it is very clear that the star of the region is North America. We do have.

Ambition to also increase the full solutions business in Asia. We are already doing it mostly through partnerships. Some of the products’ cabins are also shipped from Europe. At the same time, we are assessing what potentially could be the right time for us to have a sauna cabin factory in that region when the volumes would justify it. Okay, ladies and gentlemen, we have now spent exactly one hour with Harvia. I do not have any more questions on the list. Thank you very much for following, and let’s sauna. Thank you very much. Let’s sauna.

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