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Harvia: a sauna leader with global reach


Mild winters in western Europe mean that many private investors are less aware of the benefits of saunas, or just how important a household accessory they can be in colder countries. Yet the global demand for saunas is picking up and even the coronavirus is playing a role in fuelling this demand.

This week we look at Finnish sauna specialist Harvia (HEL:HARVIA) and its global ambitions for expansion.

Harvia was first listed 2018 when Nordic asset manager CapMan Funds brought the company public: it proved to be a real success when CapMan decided to exit the company and find a Finnish anchor investor for the shares – the winner was Finnish investment company Onvest, controlled by Marja Toivonen, and the company purchased 12% of the remaining shares from CapMan.

Harvia is very popular with Finnish private investors who love its saunas and the Nordic sauna lifestyle. The shares have traded over the last 52 weeks between €6.01 – €11.95. Harvia stock is currently trading around €10. We think it represents a very solid investment right now.

Onvest CEO Kalle Kekkonen has been happy with the purchase and the role his firm plays as an anchor investor – too many great Finnish businesses have been sold lately to foreign buyers, including the Chinese, Americas and others, so it is good to see a stock like Harvia being supported by local funds.

Harvia is looking to buy more market share and distribution channels in the USA. The recent purchase of Almost Heaven Saunas in 2018 was completed in 2019. Harvia also opened a relationship with the Home Depot, the so-called Orange Box, the fourth largest hardware store in the country. Harvia CEO Tapio Pajuharju  has gone on the record as saying he is especially interested in expanding in the USA.

A hidden investment gem?

Harvia’s key targets in the long term include an average 5 percent annual growth rate of net sales, 20 percent adjusted operating profit margin, and a minimum of 60 percent dividend payout ratio.

The sauna industry has always been quite popular in Nordic countries and especially Finland, the birthplace of sauna. In the early days many people were even born in saunas before hospitals become popular. There have been many different models over the years of the sauna heaters and sauna rooms and visitors to Finland are frequently impressed by the sheer variety on offer.

The Finnish Sauna Society has many studies of the health effects of regular sauna use: for example experts from the Finnish Ministry of Agriculture stated on September 5, 2005 that the sauna can effectively kill the bird flu virus because the virus cannot survive high temperatures; the same applies for COVID-19.

For this reason, the Ministry requires people who return from COVID-19 flu-affected areas to immediately “sauna disinfect” themselves and their clothes, shoes, and luggage. Clothes need to be steamed for three hours at a high temperature of 80 degrees Celsius (in Finland almost every household has a sauna – the sauna penetration rate is extremely high, the number is estimated to be over 3 million saunas in a population of 5.5 million).

Sauna temperatures usually range from 70 to 120 degrees Celsius depending on the shape of the sauna.

Harvia operates in growing market

The sauna and spa market has historically seen stable development irrespective of economic cycles due to the high amount of replacement demand. In 2010–2016, the global sauna and spa market grew at an average annual rate of five per cent and that growth is expected to continue at  between 5-12% with the rising wellness trend, increased sauna awareness and higher average purchase.

Harvia has over 60 years of experience in the sauna and spa industry. Measured by revenue, Harvia is the global leader in heater and sauna component manufacturer with a market share of approximately 11 per cent.

Harvia is the largest player in the Finnish sauna and spa market and the second largest in the Swedish, German and Russian sauna and spa markets. In addition, Harvia occupies the position of strong challenger in the new and emerging sauna and spa markets of the United States and the Asia-Pacific region.

Harvia is the most often-recognized international sauna brand among Finnish, Swedish, German, Russian and American consumers. In its domestic market of Finland, Harvia clearly has the best name recognition.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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