13.12.2024 10:00:02 EET | HLRE Holding Oyj |
Interim report (Q1 and Q3)
Comparison figures in brackets refer to the corresponding period previous year.
Brief Look at August – October 2024
Q3 revenue decreased by 5% to EUR 33,6 EUR million (EUR 35,4 Million).
Q3 gross profit decreased to EUR 14,0 million (EUR 14,3 Million).
Q3 adjusted EBITDA was EUR 3,6 million (EUR 4,8 million).
Q3 net cash from operating activities was EUR 4,2 million (EUR 8,5 Million).
Brief Look at February – October 2024
Q1-Q3 revenue decreased by 10% to EUR 79,3 EUR million (EUR 87,8 Million).
Q1-Q3 gross profit decreased to EUR 31,6 million (EUR 35,2 Million).
Q1-Q3 adjusted EBITDA was EUR 5,0 million (EUR 7,2 million).
Q1-Q3 net cash from operating activities was EUR 1,6 million (EUR 10,5 Million).
Key Figures
HLRE HOLDING GROUP
EUR Million
Aug– Oct 24Q3
Aug– Oct 23Q3
Feb- Oct 24Q1-Q3
Feb– Oct 23Q1-Q3
Feb 23 – Jan 24Q1-Q4
Revenue
33,6
35,4
79,3
87,8
108,2
Gross profit
14,0
14,3
31,6
35,2
42,6
Gross margin,%
41,6 %
40,4 %
39,8 %
40,1 %
39,4 %
Adjusted EBITDA
3,6
4,8
5,0
7,2
3,8
EBIT
1,9
2,6
-0,6
0,2
-10,7
Net cash from operating activities
4,2
8,5
1,6
10,5
4,3
Company description
HLRE Holding Group (commonly known as Vesivek Group) is a leading provider of roof and roof product renovations offered primarily to detached and row houses in Finland and Sweden under the brand name Vesivek. In addition to roof and roof product installations, Vesivek provides underground drain renovations in eight locations in Finland. The Group also develops, manufactures, and sells high quality rainwater systems and roof safety products.
HLRE Holding Group operates in 14 locations in Finland and three locations in Sweden in October 2024 and employs around 730 employees currently on average. The Group has two in-house manufacturing facilities in Finland, steel roofing profile production in Pirkkala and manufacture of rainwater systems and roof safety products in Orimattila.
Management Overview of the third quarter
In the third quarter of 2024, the Group’s installation operations in Finland showed improvement compared to previous quarters but fell short of the set targets. Low sales volumes and short order backlogs in certain units resulted in installation inefficiencies, which were the primary contributors to the weaker overall performance.
In Sweden, the roof installation business demonstrated improvement; however, it also did not meet the defined targets. Meanwhile, direct product sales in Finland declined compared to the previous year, although profitability remained at a satisfactory level.
Short-term market growth expectations for installation business areas in both Finland and Sweden remain subdued. This outlook necessitates a focus on increasing market share across the Group, coupled with stringent cost control measures.
Third quarter August – October 2024
Q3 revenue decreased by 5 % to EUR 33,6 Million (35,4 Million). Low sales volumes and short order backlog in some of the roof and underground drain installation units in Finland had negative impact both on revenue and profit in Q3. Gross profit was EUR 14,0 Million (14,3 Million) in Q3.
Q3 reported EBITDA was EUR 3,6 Million (4,8 Million) and adjusted EBITDA EUR 3,6 Million (4,8 Million). There were no reported adjustments in Q3.
Q3 net cash from operating activities was EUR 4,2 Million (8,5 Million) due to weaker business performance and some negative net working capital changes. Net change in cash and cash equivalents in Q3 was EUR 3,4 Million (7,1 Million).
February-October 2024
Q1-Q3 revenue decreased by 10% to EUR 79,3 EUR Million (EUR 87,8 Million) and gross profit decreased to EUR 31,6 million (EUR 35,2 Million).Q1-Q3 reported EBITDA decreased to EUR 4,8 Million (6,2 Million) and adjusted EBITDA to EUR 5,0 Million (7,2 Million). Reported adjustments totaled to EUR 0,3 (1,0 Million) including one-offs regarding restructuring costs in the businesses in Finland, EUR 0,25 Million and other nonrecurring costs, EUR 0,05 Million. Impact of the adjustments to the operating cashflow in Q1-Q3 amounted to EUR 0,3 Million (0,75 Million).
Q1-Q3 net cash from operating activities was EUR 1,6 Million (10,5 Million) due to weaker business performance, some negative net working capital changes and other nonrecurring financial items. Net change in cash and cash equivalents in the period was EUR 2,6 Million (6,3 Million).
Events after the reporting period
The Group companies HLRE Group Ltd, Vesivek Ltd, Vesivek Salaojat Ltd and Vesivek Tuotteet Ltd initiated a process for change negotiations regarding potential temporary layoffs of less than 90 days. These negotiations scheduled to take place on November 20th 2024 and concerned all employees of the group companies listed above. The payroll function within the HLRE Group Ltd. is excluded from these negotiations.
The negotiations officially commenced on November 26th, 2024.
The purpose of the change negotiations was to address plans for potential temporary adjustment measures and their possible personnel impacts. These measures were being considered in response to anticipated seasonal fluctuations that may result in a decline in volume, as well as to safeguard financial profitability during the Q4/Q1 financial periods. The negotiations will focus on the rationale for the proposed measures, their potential impacts, and possible alternative solutions.
Outlook for the financial year 1 February 2024 – 31 January 2025
No outlook for the financial year 1 February 2024 – 31 January 2025.
Risks and uncertainties
The Group’s revenues and operating profit are affected by general economic conditions, which are, in turn, influenced by many factors beyond the Group’s control. The Group currently operates in Finland and Sweden. Currently, the majority of the Group’s operations are located in Finland but growth in both markets, for example, by way of increasing market share and/or expanding the Group’s product and service offering is an important factor in fulfilling the Group’s strategic objectives. Respectively, the Group’s revenue and operating profit are particularly susceptible to general economic conditions and perception of future general economic conditions in the Finnish and Swedish markets.
Uncertainty or adverse trends in general economic conditions could affect the Group’s business and demand for the Group’s products and services through, inter alia, affecting consumer confidence as well as through adverse impacts on the business activities of the Group’s corporate clients purchasing the Group’s rainwater systems and roof safety products. Importantly, the general economic conditions may adversely affect the level and cost of financing available to the Group’s consumer and corporate clients to make investments in renovations and refurbishments. Moreover, increases in the costs of financing and decreases in the level of available financing may adversely affect the Group’s ability to make investments and fulfil its strategic objectives and may have a material adverse effect on the Group’s business, financial position and results. Through its manufacturing operations, the Group is furthermore exposed to the risk of fluctuations in certain commodity prices (such as steel, aluminium and wood) and energy prices (especially through fuel costs for vehicles) and increases in prices due to economic disruptions and changes in general market conditions may have an adverse effect on the Group’s business, financial position and results. All of the factors mentioned above could harm the Group’s operations and the Group cannot predict the ways in which the future economic environment and market conditions may affect the Group’s operations.
In general, the frequency of accidents at construction sites is worth noticing and the Group operates in a business segment subject to extensive laws and regulations regarding the work environment. Despite required health and safety measures and, for example, the use of scaffoldings on its construction sites improving the safety of the personnel, the Group is exposed to the risk of, possibly even fatal, accidents at the workplace especially on its roof renovation sites but also at its manufacturing facilities. In addition to physical injuries, employees of the Group are exposed to risks related to hazardous substances as certain of the Groups renovation sites contain asbestos. Respectively, the Group must also comply with specific environmental regulations with respect to asbestos. Finnish legislation includes particularly stringent requirements for any activities involving asbestos and the safety requirements for such activities. Any failure to comply with the regulations concerning health and safety or asbestos related activities may result in liability for the Group and/or the Group’s permit being revoked. For example, if Group’s permit to handle asbestos would be revoked, the Group would need to stop all business activities relating to handling of asbestos and acquire the work through subcontractors. Moreover, all potential accidents and health impacts have an adverse effect on its personnel’s well-being. The Group as an employer is exposed to the risks related to health and safety issues of its employees possibly resulting in reduced working capacity of employees.
The Group may, in the future, become in breach of financial covenants and other obligations in its financing agreements that constitute grounds for termination or acceleration. A failure by the Group to obtain necessary capital in the future, or obtaining financing on less favourable terms, may have an adverse effect on the Group’s business, financial position and results.
For more information
Jari Raudanpää, CFO
+358 40 566 6399
jari.raudanpaa@vesivek.fi
HLRE Holding Group
2611405-7
Consolidated Statement of Comprehensive Income
1000 EUR
1.8.-31.10.2024
1.2.2024-31.10.2024
1.8.-31.10.2023
1.2.2023-31.10.2023
1.2.2023-31.1.2024
REVENUE
33 636
79 295
35 420
87 838
108 161
Other operating income
-244
769
633
1 469
1 330
Material and services
-12 852
-29 877
-13 225
-31 743
-39 864
Employee benefits expense
-11 629
-31 092
-12 648
-35 484
-46 487
Depreciation and amortisation
-1 693
-5 265
-2 228
-6 004
-12 810
Other operating expenses
-5 319
-14 402
-5 349
-15 914
-21 001
OPERATING PROFIT
1 900
-572
2 603
162
-10 671
Finance income
18
931
41
1 279
259
Finance cost
-1 134
-3 526
-1 185
-3 485
-4 635
Finance income and expense
-1 116
-2 595
-1 144
-2 206
-4 376
PROFIT/LOSS BEFORE TAX
783
-3 166
1 459
-2 044
-15 047
Tax on income from operations
-203
357
-397
201
1 769
PROFIT/LOSS FOR THE PERIOD
580
-2 810
1 061
-1 843
-13 278
Profit attributable to:
Owners of the parent company
489
-2 681
874
-1 960
-13 113
Non-controlling interests
91
-129
188
117
-165
580
-2 810
1 061
-1 843
-13 278
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
-11
-61
-58
-91
12
Items that may be reclassified subsequently to profit or loss
-11
-61
-58
-91
12
TOTAL COMPREHENSIVE INCOME
569
-2 870
1 003
-1 934
-13 266
Total comprehensive income attributable to:
Owners of the parent company
479
-2 736
821
-2 043
-13 102
Non-controlling interests
90
-134
182
109
-164
569
-2 870
1 003
-1 934
-13 266
HLRE Holding Group
2611405-7
Consolidated Statement of Financial Position
1000 EUR
31.10.2024
31.10.2023
31.1.2024
ASSETS
NON-CURRENT ASSETS
Goodwill
35 273
40 304
35 273
Intangible assets
609
955
685
Property, plant, equipment
22 405
22 598
26 263
Other non-current financial assets
48
48
48
Loan receivables
6
15
13
Deferred tax assets
2 740
799
1 940
NON-CURRENT ASSETS
61 080
64 720
64 221
CURRENT ASSETS
Inventories
11 855
13 802
12 833
Trade and other receivables
9 672
9 756
6 261
Loan receivables
49
52
52
Income tax receivable
756
393
713
Cash and cash equivalents
5 125
9 890
2 574
CURRENT ASSETS
27 457
33 893
22 433
ASSETS
88 536
98 613
86 654
EQUITY AND LIABILITIES
Owners of the parent company
Share capital
80
80
80
Reserve for invested unrestricted equity
18 002
18 002
18 002
Translation differences
-193
-234
-140
Retained earnings
-6 355
7 471
-3 599
Owners of the parent company
11 534
25 403
14 343
Non-controlling interests
-175
181
-91
EQUITY
11 358
25 584
14 252
NON-CURRENT LIABILITIES
Finance and lease liabilities
54 349
22 304
10 738
Employee benefit obligation
400
427
400
Deferred tax liabilities
253
226
105
NON-CURRENT LIABILITIES
55 002
22 956
11 243
CURRENT LIABILITIES
Finance and lease liabilities
5 045
29 921
42 066
Other current liabilities
16 973
17 978
17 098
Derivatives
0
1 930
1 852
Income tax liabilities
158
244
143
CURRENT LIABILITIES
22 176
50 073
61 159
Liabilities
77 178
73 029
72 401
EQUITY AND LIABILITIES
88 536
98 613
86 654
HLRE Holding Group
2611405-7
Consolidated Statement of Cash Flows, indirect
1000 EUR
1.8.2024-31.10.2024
1.2.2024-31.10.2024
1.8.2023-31.10.2023
1.2.2023-31.10.2023
1.2.2023-31.1.2024
Cash flows from operating activities
PROFIT/LOSS FOR THE PERIOD
580
-2 810
1 210
-1 694
-13 278
Adjustments to the profit/loss for the period
Depreciation, amortisation and impairment
1 693
5 265
2 228
6 004
12 810
Financial income and expenses
1 150
3 435
960
2 836
3 801
Tax on income from operations
203
-357
248
-350
-1 769
Other adjustments
-70
-944
-211
-1 111
169
Adjustments total
2 976
7 399
3 226
7 379
15 011
Working capital changes
Increase / decrease in inventories
1 160
918
370
1 894
2 947
Increase / decrease in trade and other receivables
-2 025
-3 484
-348
-14
3 584
Increase / decrease in trade payables
2 049
3 506
4 862
5 506
-541
Interest paid
-387
-1 216
-756
-2 220
-3 030
Interest received
39
116
53
115
192
Other financial items
-115
-2 482
-9
-14
-12
Income taxes paid
-88
-329
-88
-440
-551
Net cash from operating activities
4 191
1 620
8 520
10 511
4 322
Cash flows from investing activities
Purchase of tangible and intangible assets
-144
-427
-273
-1 041
-999
Proceeds from sale of tangible and intangible assets
20
648
-347
516
587
Acquisition of subsidiaries, net of cash acquired
0
-2
0
0
0
Loans granted
0
-1
0
-9
-9
Proceeds from repayments of loans
3
11
4
11
14
Addition / deduction of cash equivalents
-19
-16
-44
-39
0
Net cash used in investing activities
-139
213
-660
-562
-407
Cash flows from financing activities
Purchase of treasury shares
-4
-22
0
0
0
Proceeds from current borrowings
0
976
0
0
0
Proceeds from non-current borrowings
0
3 066
0
0
0
Payment of lease liabilities
-634
-3 302
-766
-3 616
-4 898
Net cash used in financing activities
-638
718
-766
-3 616
-4 898
Net change in cash and cash equivalents
3 414
2 551
7 093
6 333
-983
Cash and cash equivalents, opening amount
1 712
2 574
2 796
3 557
3 557
Net increase/decrease in cash and cash equivalents
3 414
2 551
7 093
6 333
-983
Cash and cash equivalents
5 125
5 125
9 890
9 890
2 574
Cash and cash equivalents, other arrangements
0
0
0
0
0
HLRE Holding Group
2611405-7
Consolidated Statement of Changes in Equity
Attributable to owners of the Company
1000 EUR
Share capital
Reserve for invested unrestricted equity
Translation differences
Retained earnings
Total
Non-controlling interests
Total equity
EQUITY 1.2.2024
80
18 002
-138
-3 601
14343
-91
14 252
Comprehensive income
Profit/loss for the period
-2 681
-2681
-129
-2 810
Other comprehensive income:
Translation differences
0
0
-55
0
-55
-5
-61
TOTAL COMPREHENSIVE INCOME
0
0
-55
-2 681
-2736
-134
-2 870
Transactions with owners
Acquisition of treasury shares
0
0
0
-22
-22
0
-22
Total transactions with owners
0
0
0
-22
-22
0
-22
Changes in ownership interests in subsidiaries
Changes in ownership interest without loss of control
-52
-52
50
-2
TOTAL EQUITY 31.10.2024
80
18 002
-193
-6 355
11 534
-175
11 358
Attributable to owners of the Company
1000 EUR
Share capital
Reserve for invested unrestricted equity
Translation differences
Retained earnings
Total
Non-controlling interests
Total equity
EQUITY 1.2.2023
80
18 002
-151
9 511
27442
71
27 512
Comprehensive income
Profit/loss for the period
-1 960
-1 960
117
-1 843
Other comprehensive income:
Translation differences
0
0
-84
1
-83
-8
-91
TOTAL COMPREHENSIVE INCOME
0
0
-84
-1 959
-2043
109
-1 934
Other changes
0
0
0
4
4
2
6
Total transactions with owners
0
0
0
-81
4
2
6
Changes in ownership interests in subsidiaries
TOTAL EQUITY 31.10.2023
80
18 002
-234
7 471
25403
181
25 584
Use of Alternative Performance Measures
Alternative Performance Measures (APM) are financial measures of historical or future financial performance, financial position, or cash flows, other than financial measures defined or specified in the applicable financial reporting framework. HLRE Group reports the financial measures [Gross profit], [Gross margin] and [Adjusted EBITDA] in its quarterly reports, which are not financial measures as defined in IFRS. The Group believes that the alternative performance measures provide significant additional information on HLRE’s results of operations, financial position and cash flows The APMs are used consistently over time and accompanied by comparatives for the previous periods.
Gross profit= Revenues – cost of goods sold
Gross margin (%) = Gross profit in relation to Revenue
EBITDA = Operating profit (EBIT) + Depreciation + Amortization
EBITDA % = EBITDA in relation to Revenue
Adjusted EBITDA = EBITDA – EBITDA Adjustments
Adjusted EBITDA % = (EBITDA – EBITDA Adjustments) / Revenue
Operating profit (EBIT) % = Operating profit in relation to Revenue
EBITDA adjustments = One-offs regarding restructuring costs and other non-recurring costs
