Harvia Oyj (G1U.F) Earnings Call Transcript & Summary

[Presentation] Hello, everyone, and welcome to Harvia's Second Quarter '25 Earnings Webcast. My name is Matias Jarnefelt. I'm the CEO of Harvia. And with me, I have Ari Vesterinen, our Chief Financial Officer.

Hello.

Today, our presentation outline is here. So I will start by covering the highlights of the second quarter in terms of the business events and financial performance, and I will also update you on our strategy implementation. After my part, Ari will then cover more in detail in the financial side of our earnings release. So let's start. First of all, the highlights of the second quarter, starting with the top line. Harvia's top line growth continued, but on a more modest level than we have seen in the past quarters. So revenue increased by 9.4% to EUR 47.3 million. In terms of organic growth, that's 2.4%. When you look at our numbers, you can clearly see that the biggest change from the past quarters comes from the fact that our sales growth in North America was quite substantially slower than we're used to seeing in the past. And basically, there's 3 main explaining factors to this: Market environment; timing of deliveries; and weaker U.S. dollar. And let me open this a little bit here. So in terms of timing of deliveries, when we look at the situation we had a year ago, so the comparison period, we had, first of all, a year ago, in the winter season, we actually were in the end of the quarter 1 in sold out situation with some of our high-selling sauna models in the United States. And that meant that part of our order intake from the winter last year then was moved to the quarter 2 in '24. The other factor affecting timing of deliveries a year ago was that we had political strikes in Finland during that time. And our largest heater equipment manufacturing facility in Muurame had some challenges in delivering because of those. And that also meant that deliveries towards -- to significant part U.S. were postponed a year ago from quarter 1 to quarter 2. This year, we were very successful in inventory management and having good availability for our products in the U.S., and there was no disruptions like we experienced a year ago with the political strikes. That is actually visible when we look at the quarter 4 and quarter 1 numbers for the U.S. So quarter 4 last year, we grew by 60% in the United States or North America, and we also grew by 60% during the quarter 1 this year. So that shows how successful we were in capturing the high selling season during the past half a year. But then that left no support from the winter season to the quarter 2 this year. So that's one factor. And actually, it's a multimillion impact on kind of baseline. And then the second thing is the weaker U.S. dollar. And as you know, U.S. dollar has significantly depreciated since the beginning of the year by over 10% versus euro. And in fact, it's actually quite historic. So I was actually looking at the history books. And the previous time U.S. dollar had such a poor first half year was actually 1973. So 52 years ago, when there was the oil crisis of the '70s. So this weaker U.S. dollar had also quite significant impact over EUR 1 million impact on our reported revenue for North America in this quarter. And of course, then there was, I would say, quite substantial volatility in the market environment generally in particular in the United States, the tariff discussions. And also, we saw, in particular, in the beginning of the quarter, the consumer confidence in the United States plummeted significantly. So when you look at, for example, the consumer board, consumer confidence indexes, it was on the lowest level since the beginning of the pandemic in April this year. Then we saw gradual recovery as the quarter progressed. But indeed, there has been significant factors affecting the business during quarter 2 impacting the United States. When we look at the other regions, APAC and Middle East and Africa continued strong sales growth. And then when we look at Europe, it was rather modest, but this is also something that we've seen in our figures in the previous quarter. So the big difference, of course, now comes from North America for the reasons I just explained. Now profitability. Operating profit adjusted was EUR 8.2 million, and that's 17.3% of our revenue. That is below our 20% target level. And essentially, there's 2 key reasons to this. One is that, of course, sales growth was more subdued than kind of anticipated. And Harvia growth model is that we need to grow rather at high speed and at high gross margin to finance our sort of activities to build stronger foundations for our future growth. And that means, for example, we are increasing our operating expenses in the areas of marketing, research and development, et cetera. And now in quarter 2, there was a mismatch between the sales growth and the rate that our operating expenses have been growing. The other factor was one-off in nature. And we are systematically modernizing our IT landscape in the company. And during the second quarter, we went live in beginning of June with the new ERP system in Harvia U.S. And as part of that transition, there was a full inventory recount including also inventory valuation. And as a result of that activity, we decided to make a correction of around EUR 800,000 to the inventory value in the U.S., that was then impacting our materials cost in the P&L. On the positive side, as you can see in our release, our so-called materials margins, or margin we make after deducting materials and services costs from our sales, remained on a very good level at around 66%. So essential gross margin of the business is at a very high level. Now if we put this kind of a full first half in context, first half actually was pretty strong. We delivered 16% revenue growth in total and over 20% adjusted operating profit margin. And even when we look at North America region, specifically, North America grew by 35% during the first half this year versus first half last year. And that's roughly EUR 10 million additional business that we delivered in North America during the first half. Out of that EUR 10 million, roughly half is coming from the acquisition of ThermaSol, so inorganic, and roughly half is actually driven by organic growth. So not too bad. While we've been navigating rather volatile operating environment and kind of macro environment, we have also taken significant and meaningful steps in advancing our strategic initiatives to make Harvia stronger for the future. I already mentioned that we are in the process of a step-wise transition in the whole group to a more modern and simplified IT infrastructure where significant milestone was hit in the U.S. when we went live in the beginning of June. We're also investing in marketing, brand building, making our D2C sales channel stronger. And of course, our innovation pipeline to strengthen our portfolio of products. And in all of these fronts, we've seen good development. And looking ahead, it's very important we realize in which kind of business and which kind of moment in time we are. Sauna business globally is a growth business that is driven by significant long-term growth drivers, such as health and wellness experience, increasing awareness, for example, due to visibility in Internet and social media. And we are in the pole position be the absolute leader of this business in the years to come. So we are systematically continuing to invest in making the company stronger for the future. Having said that, of course, at the same time, we want to deliver strong, solid results all the time. And key parts of that equation are continued sales growth and also operational efficiency to get the most out of our expenses as we develop our business. But in the big picture, we are strong believers of the long-term attractiveness and growth potential of this business and of Harvia. So then let's look at the summary of quarter 2 figures. So revenue at EUR 47.3 million, and that's a 9.4% growth year-on-year. And you can actually see here as that the U.S. dollar had quite significant impact on the numbers because at comparable exchange rates, our revenue would have grown 12.2% this year. And the whole difference really comes from the dollar and euro. So in particular, this relates to our numbers in North America. Organic revenue growth are set at 2.4%. Adjusted operating profit at 8.2%, I said, a little bit below our target level of 20% for the reasons I explained in the previous slide. Operating free cash flow was around EUR 4 million, and that's around 40% cash conversion. The biggest item affecting cash conversion in this quarter is the increase in our inventory. And I'd like to also give some context to what's happening there. On one hand, we are in high gross margin business. So it's very important for our business success that we have good availability of products to deliver when the customers and consumers want them. The other thing is that we want to tap into the market potential in countries like the United States, even more than we've been doing so far. So we are launching new products, and ahead of new product launches, we're also building inventory. So we have availability of those new products as they hit the market. And then actually quite importantly, during the quarter 2, there's also tactical moves because of the tariff environment volatility. So we actually took tactical decisions to ship products from Europe to U.S. when there was periods of low tariff and also anticipation that the tariffs while we now also know that there is a tariff agreement in place between the United States and European Union would likely see the tariffs go up. So we have been taking anticipatory steps to build inventory when the import duties are on low level. So this is the explanation for these figures. And then when you look at the first 6 months, in total, revenue nearly EUR 100 million at EUR 99 million, and that's 16% growth, and organic revenue growth of close to 10% at 8%, and growth at comparable exchange rates are nearly 17%. Adjusted operating profit in EUR 20 million and in percentage, 20%. Operating free cash flow at EUR 14 million and cash conversion at 60%. So then when we look at the kind of regional growth in more detail. You can see here that we have 2 regions that really delivered the growth this quarter. It's North America at 13%, but this is all growth coming from ThermaSol acquisition. In fact, organically, we saw a slight decline in the business during the quarter 2. But as I said, there were significant reasons such as the shifting of timing of deliveries this year versus last year between quarter 1 and quarter 2. And then APAC and MEA, which delivered 50% growth last year for the full year, continued strong path at 54% this year, adding EUR 2.2 million to our top line. Northern Europe and Continental Europe were sluggish, pretty much flat looking at year-to-year. Now first few words about North Europe as I cover all of our 4 geographical regions. North Europe represents now 24% of our revenue and has been pretty much flat for the last 3 years. And the main explaining reason is the kind of lackluster performance in our home markets in Finland where both new build construction and basically housing market, property market have been very slow. And there hasn't been a significant uptick even today, while there seems to be some encouraging signs going forward. Also, one factor, we believe, affecting quarter 2 this year, in particular in Finland and Sweden, was actually weather because in both Finland and Sweden, summer houses or summer cottages, holiday houses represent a significant opportunity, in particular, for the wood burning heaters. And as you might remember, those who are based in this geographical part of the world, we had actually quite poor weather during the spring and early summer. Then, of course, July has been much hotter and nicer, but the beginning of the kind of the summer was not so great. And basically, when the weather is great, people go to their summer cottages and renovate. When weather is not so good, they stay home. In Continental Europe, we've seen gradual growth now for 3 years, but this quarter was rather modest, flat year-on-year. It's very clear that we see significant opportunities here and are systematically working to turn this region to a more substantial growth. And one important step in our journey is that we've appointed a new region head for Continental Europe, Ivan Sabato, who joined us from Technogym, and he started his position in the beginning of the quarter, so 1st of April, and we are very much looking forward to having him in the team and seeing the results that he and the team be delivering in the coming years. Then let's look at North America. And of course, you can see that we have had a rather strong track record of multiple years. And even if we go further back in history, this time, the growth rate was somewhat more subdued at 13% as discussed than the history, but we need to also put it in the context of that we have 2 60% growth quarters behind us. And when we look at the first half in total this year, I said it's 35% growth and half of it is organic. And I think it's actually a pretty good achievement given everything that has been happening around us in terms of currencies and kind of micro -- macro environment, including consumer confidence. Now maybe a word about the consumer confidence. We are very glad to see that the kind of dip happened in the beginning of the quarter. And since then, the consumer confidence has gradually been picking up. And we also feel it in the business and felt it in the business that impacted in the beginning of the quarter, there was visible slowdown in the activity. But at the same time, then we have seen that as time progressed, things have been getting better. APAC and Middle East and Africa, strong growth continued. And when you look at this figure and in particular, the figures from '22, a significant portion, roughly half of it was Harvia's business in Russia, which we closed down all of it during the year of '22. And then we had to start to rebuild the business in the region from rather low levels. And I'm actually very happy to see that in a rather short period of time, we've been able to bridge the gap that Russia and exiting Russia left in our books. And while we comment here that this is the smallest region, it's already 14% of our top line. We also comment that there -- unlike the other regions, project deliveries, in particular Middle East, play a rather significant role. But I'm also happy to say that we had strong double-digit growth figures also in other focus markets like Japan and China in this region. Then let's look at the product dimension. As we've communicated, Harvia wants to be the absolute leader in the sauna products and solutions worldwide, including products across the sauna types of traditional Finnish sauna, infrared and steam and also at different price points and different applications in terms of private and professional customers. Now if we look at the share of revenue from different product categories, we're still quite heavily on technical equipment for sauna, so heating equipment over 50% of our revenue. And similarly, technical equipment like steam generators, that's 10% of our revenue; significant growth from last year, driven by ThermaSol acquisition. Saunas and Scandinavian hot tubs, the share declined somewhat. And basically, the reason is shipments of sauna cabins in the United States and also kind of slowing kind of business with the Kirami branded hot tubs. Accessories and heater stones and spare parts and services were stable compared to the comparison period. So then when we look at which product categories contributed to the growth positively and negatively, we can see that the star was the steam product, adding EUR 3.4 million to our top line, and that's around 250% growth, most of it from the ThermaSol acquisition in the United States, but not entirely since we had some good steam deliveries in Middle East also during this period. Heating equipment up by around 8%, and accessories and spare parts up by 10 percentage points roughly. Sauna and Scandinavian hot tubs declined by 15% versus the comparison period. Now in this very interesting market where we believe that there are significant growth opportunities for many years to come, and there's an opportunity to make Harvia a significantly larger business than we are today, the cornerstones of our strategy, how to get there are here. So they center around 4 questions, what do we sell in terms of portfolio? Where do we focus geographically? To whom we sell in terms of channels and customers? And how we do it in terms of operations and great people? And I'm happy to report that, again, during the quarter 2, we've made significant process -- progress in each of these areas. So in terms of the portfolio, we've been complementing and making our offering for the traditional sauna category stronger. For example, launching a new wood burning version of the cylinder heater, which is a very high-selling product model for us, launching new kind of mid-range touch-based control panel called Harvia Fenix. And I will, in the next slide, talk about something that's quite and really novel in the business, a partnership with Toyota, but let me get to that in a short while. Also, in terms of steam, based on our acquisition of ThermaSol, we have been continuing to make the ThermaSol core business stronger. And also, we have been taking steps to leverage ThermaSol as a cross-selling platform for the remaining parts of Harvia's portfolio, and also good progress with our premium brand EOS in Europe. In terms of winning in the strategically important markets, the core question here is that we are still a relatively small company playing in fully global business. So roughly 50% of our revenue is coming from Europe and roughly 50% outside Europe. And with a company our size, we need to focus on. So the most important market for us, obviously, is the United States, where we continue systematic work to strengthen our portfolio, open new channels and making our own D2C even stronger. And as I said, during first half, 35% growth, half of which is organic, I think it's a testament to the work we are doing there. APAC and Middle East and Africa, we have focused systematically on China, Japan and Australia in terms of our continuing business, and then Middle East area for our project business. And all of these are yielding great results, as I just explained that APAC numbers are not dependent on any single country or any single project delivery. It is now more wider or broad-based. Continental Europe and Northern Europe clearly need more work. And there are signs of kind of encouraging progress in a number of markets, but the totality is still too slow to our liking. And here, the work clearly continues. And one step for us is the appointment of Ivan Sabato to be the new head of Continental Europe. Leading key channels, we are expanding our channels with new partners. For example, in Sweden, we have some significant new partners. In the U.S., we have been expanding our distribution to higher end price points than we have been kind of focusing in the past. But at the same time, we are also deepening partnerships with our important existing customers, and their situation is solid. We're also accelerating our progress in making direct-to-consumer channel an even bigger part of Harvia's business. And this project business in APAC and Middle East is one of the highlights of the past quarter. We are building the company for the long-term success. And a few things I mentioned is the IT landscape, which used to be quite old fashioned and very diverse and fragmented as a result of growing through acquisitions. And now we are stepwise moving the whole group to a unified, more modern and simplified architecture, where a significant milestone for us was the biggest geographical region, United States, moving and go live in the beginning of June. And I'm happy to say that operationally, it was a smooth, good transition. We also have made significant investments in increasing our efficiency and capacity, for example, in our most important factories in Muurame and Lewisburg. And there's -- there was some changes in the management team, Ivan Sabato joining the team. And then Jennifer Thayer, the Head of Northern America, resigning during the quarter, but the recruitment of the successor is ongoing, and we have a good backup solution in place at the moment. And then my final slide before handing over to Ari is just brief kind of highlighting a recent announcement that actually Toyota, which is a leading player, not only in the car business, automobile business, but they are also a leading player in hydrogen-based energy transition. And we are very happy that they approached us and made a proposal to partner with hydrogen-based energy technology in the saunas. I think it's really a testament of also visibility of sauna as a category growing and huge players taking a notice. And actually, hydrogen and sauna really go hand-in-hand. If we think about hydrogen energy, it's hydrogen, H2, plus O, oxygen, it's H2O. So hydrogen plus oxygen is water and energy. And sauna is steam, water steam and heat. So almost like they are kind of a perfect couple, and it's actually pretty exciting to see that we can do it also with hydrogen and in actually a very pleasant experience. We don't anticipate this to be commercially significant for us in many years to come, but still it's a testament of innovation opportunity in this business. So then I would hand over to Ari.

Okay. Thank you, Matias. So here, we see, first, the last couple of years, the quarters, the development of the quarters. And I want to first remind you about the seasonality, what Harvia's business has. Typically, our peak sales seasons are Q4 and Q1, and then Q2 and Q3, they are a bit lower. And the Q4, Q1 sales are typically a bit more campaign driven than the lower season sales. And in this picture, you also see that we have been continuously being over 20% adjusted EBIT except last quarter 4 and now quarter 2. Matias already explained some reasons for the lower relative profitability in Q2 this year. But there were plenty of them shift in the comparison figures of EUR 1.8 million alone in Northern America and this one-off of inventory correction this year. Also, the IT landscape renewal took a couple of delivery days, and there were multiple reasons. But I'm really happy to say that we succeeded quite well with all these happenings during the Q2, and we are looking very positively towards the future. Here, we see the most important financial figures of the group, okay, probably some figures which need a little more explanation is the decline of the basic earnings per share. It doesn't just come from the lower adjusted operating profit, but it comes also from a rather high financial items, which I saw a little later. And they are related to the weakening U.S. dollar during the quarter. So dollar had multiple FX during the quarter. But on the other hand, we have been working with dollar for many years, and we will also work with dollar in future. And this is the normal fluctuation what we face with dollars. The number of employees has been increased slightly over the number of steam -- ThermaSol Steam Bath, LLC of some 38 persons there. Net working capital has been rather on a high level now at the end of Q2. But that's a really good to have, for instance, a lot of inventory now in U.S. since the effective tariffs, import duties are increasing slightly compared to what we had paid effectively during Q2. During Q1, they didn't have an effect at all yet. We are confident that we can handle really the tariff situation in U.S., we have a quite good pricing power, and we are flexible in many terms. And also the production, what we have in U.S., we make over 70% of the total sales in Northern America produced in U.S. So the import duties don't affect so much the business. And there are also customers, rather large customers actually in U.S., which import directly from our factory in Finland, for instance, the heaters and their duties by themselves. So we have rather well have the tariff situation going forward under control. The free operating cash flow and cash conversion very quite much from quarter-to-quarter, but there is a certain pattern. We have typically the Q4, the highest cash inflow. And during the summer quarters, Q2 and Q4, we invest in inventory and also in capital expenses like machines, IT, making our production more effective for the peak season. This was also the case in this year. Typically, Harvia has had a strong cash conversion in the past, and I believe it will be the case also in future. The net debt -- okay, that's a bank debt interest-bearing debts minus the cash situation. Since we have been investing in machinery, in systems and also increasing the net working capital, the cash position didn't grow so much. So actually, then the equation gives that the net debt went up slightly, about EUR 6.8 million compared to end of Q1. Towards the end of the year, typically in the history, we have been then able to produce more cash and reduce the net debt. The leverage -- the equation of the interest-bearing debt to the EBITDA is 1.3, which is remarkably lower than our long-term financial target of 2.5. So we have really capacity also with our internal targets, but also with our bankers to take much more interest-bearing debt if there is a need or opportunity for that, for instance, in the area of M&A or whatever. Here, we see the dotted line, it's actually the interest costs as we pay them to interest costs and bank duties out of our cash balance. And the rest of the box, they are the columns, they are then the calculatory financial costs. And unfortunately, in '25 Q2, we had a rather high U.S. dollar position in our hands. And when U.S. dollar went down, we had to book some financial costs on this calculatory positions in our P&L. We have also covered ourselves against the interest rate fluctuations and these interest rate swaps, derivatives, they was also some changes to the interest costs, but they were not so big in Q2 now. Here, we see the level of investments in Q2. It really went up. And this is actually a very good time to invest in our group. It's the -- we're quite peaceful time of the year compared to the peak season, Q4, Q1. I'm happy that we did, for instance, to go live in U.S. during that quarter. The go-live of the new IT system went very well, and now we are ahead of the situation where we were in the past many years. Harvia's long-term financial targets. They haven't changed. We target an annual revenue growth of over 10%. The profitability of adjusted operating profit margin, our target is to be over 20%, and the leverage under 2.5%. We could certainly get also with higher leverage with our cash flow financing if needed. But this is the leverage level, what our Board of Directors has set for us quite a long time ago. We don't publish a short-term outlook. We play the more long game, and our dividend policy is to pay regularly increasing dividends with 2 payouts in a year. This year, the AGM in April decided based on the Board of Directors' proposal that EUR 0.75 will be distributed to the shareholders. Out of which, EUR 0.38 were already paid in the middle of April, and the rest will be paid at the end of October. So we have had a different kind of seminars and celebrations in different units for the 75 years anniversary, and this will continue also to motivate our stakeholders, suppliers, customers, also own employees, and this has been a nice year. So questions?

We have got a list of different questions over the chat and I'll just start from the beginning. Can you talk more about growth in APAC? Relatively new market, but not so small anymore for the group. What types of saunas are popular there? Do you need M&A to grow further? Or can you grow organically?

Great question. And you're indeed right that with APAC, Middle East representing now 15% of our top line and the growth rates that we're seeing, it's no longer insignificant region for sure. And as I explained in my presentation, what I'm very pleased with is that as region keeps growing and as we continue to systematically work to develop the region, I don't feel that we are any more dependent on any single country or subregion, per se. And for example, during the second quarter, we had strong double-digit growth figures from Japan, strong double-digit growth figures from China and also strong actually triple-digit growth because from the Middle East subregion, but in the Middle East, there is also this project delivered dynamics. But the kind of the point is that we are having a rather broad-based growth in APAC. Now we're still a rather small company for the global market and also APAC and Middle East, geographically, it's just absolutely vast. And if we think about geographical differences and cultural differences. And we made the choice that we focus on 4 or 3 countries plus 1 subregion. So it's Japan, China and Australia. Australia for the reason that it dynamics-wise and product-wise kind of resembles a lot in the U.S. So kind of the same recipe for success can be multiplied in Australia. And then Middle East for the Pro 20 business. There's also quite significant differences in terms of what sauna types are popular. So for example, when we go to Japan, actually, it's the kind of the traditional Finnish-style sauna that really is picking up and increasingly part of many of the Onsen experiences, the spa experiences. When we go to Middle East, it's traditionally more steam-based and really high-end kind of home spas and commercial spas being built. In the -- in Australia, we see that traditional kind of easy-to-assemble and rather affordable like Almost Heaven sauna-type products are very popular, but so are also infrared saunas. So there is certainly a variation between kind of the countries and subregions in APAC and Middle East. But as I said, we feel that it represents a significant potential for us. In most countries, we still are not actively present ourselves kind of no feet on the ground. Instead, we work through distributor partners. And the idea is that as we keep growing there, we might take one step at a time to add our own sales organizations in the most potential countries as we move forward.

North America, you mentioned improvement of the situation towards the end of Q2. Do you see any tangible signs of improvement signals from retailers? Or do you refer to the political agreement when you mentioned the better situation? Can you say anything about how Q3 has started? What organic growth is reasonable to expect in North America, rest of the year?

Sure. So when I'm talking about seeing gradual signs of improvement during the quarter, actually, it's many, many things. And one kind of post-quarter thing is achieving a trade deal between the EU and the United States. But they also -- like, for example, consumer confidence really took a big hit in April and then started to gradually come up. It's actually still on a lower level than during kind of last year when the consumer confidence was really on a very high level. But clearly, the trend since April has been pretty positive. One of the key indicators of the health of the market that we follow very closely is we analyze the search word activity in the Internet, so Google Searches as an example. And we can actually see that there is actually a really positive development in search word development in the United States, which we also believe it's a nice sign of continued interest to our category. And it's more like there's just more short term, for example, shipment and kind of currency-related things that are really now visible in the results rather than kind of more fundamental shift in the kind of the market potential. And as I've discussed earlier, kind of we take an assumption that there's easily space for 10 million more new saunas in the United States. And if we take an average kind of cost of sauna, let's say, on the low end, $5,000 per sauna, we talk about USD 50 billion opportunity for the coming years. So we are strong believers that despite this, I would say, a blip on the road that we kind of experienced in quarter 2, the big picture remains very favorable for us. Of course, there might be some variation between months and quarters, but the big picture remains solid in our views.

Okay. Then a couple of short questions before we go back to North America. Higher personnel expenses, are you addressing the cost situation?

Well, let's kind of -- now if we look at -- again, we don't manage personnel costs by the quarter. And there's, first of all, there's a reason why there's a change in personnel cost. Basically, new products don't just come from Norway. Engineers and product managers need to develop them, also kind of efficiencies in our operations. There's also a need for process development. As we keep growing, we need to, for example, add resources in, let's say, finance team in the United States, et cetera, to make sure that the books are in good order and we can manage the business based on good visibility to the data. So these are just examples of what has caused us to actually systematically kind of make conscious decisions to add resources in the critical areas. And if we look at the whole first half and not just in the quarter 2, first half, actually, it's in okay balance, maybe not entirely where we want it to be, but it's not too bad. And that's kind of the testament is that 16% top line growth and 20% plus EBIT-adjusted margin. So in the big scheme of things, it's not far off. But of course, in quarter 2, the balance was not quite right. But of course, we stay vigilant. And if necessary, we are -- we have a great track record of showing that we can react even strongly when that's necessary. But at the same time, we want to manage personnel situation with a steady hand and not like overreact to short-term events.

Okay. There are a question. When will we see CEO on insider stock purchase list?

I cannot comment on that. But basically, there's many reasons that I've actually sometimes even explained them. One of the key things is that you have to understand in what kind of strategic or business situation Harvia is. We're actually going through a significant business transformation in many ways in terms of how we sell, in terms of the partners we work with, in terms of the import of the D2C channel, in terms of, of course, acquisitions, ThermaSol was made public around a year ago, but it's also important to understand that we work on M&A pipeline continuously. Now sometimes, it's a bit of a line drawn to the water, whether they would be open window for me personally to make moves or not. But in this environment, it's actually really -- it also poses challenges to kind of the trading kind of window being open for me personally. So it's not related to only our earnings releases, but actually, what's happening inside the company. And as a CEO, have practical full visibility on all corners of the business, and that's something that I need to take into account. Maybe a comment is that assuming things go well, you'll see me rather shortly in the -- on the onerous list due to LTI programs. And like my approach during this time has not been to trade, I don't expect to trade. So I'm intended to become a long-term shareholder in Harvia.

And just to remind, you can see really the insider shareholders on our web pages. There are, for instance, in the Board of Directors and management team, really big shareholders in this company, but they haven't been trading lately actively. Yes. Your organic growth was slightly negative in North America in Q2. Do you believe that you gained market share versus competition? Also, do you see pricing pressures?

Well, again, I think it's -- it would not be correct to assess our performance in organic growth only looking at quarter 2. I think really, you should be looking at the first half of the year. For the reasons I explained that there was significant shifting between kind of the baseline during last year, between quarter 1 and quarter 2, as I explained a part of my presentation. And when we're looking at the first half as a whole, I said we added 35% to top line. That's EUR 10 million, and that's roughly 50-50 split between organic and ThermaSol. So actually looking at the first 6 months of the year, it's pretty good. Now what was the other part in the same question? Sorry. There was something that I didn't answer.

Price pressure.

Yes, price pressure. Well, price pressure, I'll give you 2 answers. One is you can look at our so-called materials margin. So the margin we make after you deduct from our net sales expenses related to materials and services. And that shows a very healthy development. We had 66% margin. And I think it's a strong testament to our ability to sell our products in profitable price points. And of course, it's a balancing act between also driving volume growth and being competitive in the market and offering good value for the end user and trade partners. But generally speaking, I feel we are in a good position, what comes to our pricing pressure. Of course, at the same time, it is visible that there are many players in Northern America. Sauna market, many players have taken notice of the significant growth of the market. And it's actually -- we know it that while there are several analysts and investors following this webcast, there are also representatives from our dear competitors following us as we speak because we are the reference point of the industry. We are the only pure-play sauna solutions product provider that's publicly listed and provides rather transparent kind of information on our progress. So our dear competitors have also, of course, taken note of how do we as a track record in North America. So also, it is clear that competition is heating up, but it's something that has been part of our strategic assumptions for a long time. And that's also one of the reasons why we have increased our OpEx to make sure that in terms of product leadership, brand leadership, channel leadership, we stay on the pole position.

Okay. Then more kind of a customer segmentation question. Can you describe Harvian customer in North America? What is the customer income bracket? Also, if you discuss demand trends in sauna cabins, in people's yards and sauna in-house, is there differences in demand trends in these categories in North America at the moment?

A great question. And there is -- I'll give you an archetype, but I still make a note that demand for sauna category interest toward sauna category is broad based. Now if you would look at kind of what has been kind of, I would say, the typical customer that we've been addressing with our, I would say, most successful product category in U.S. so far, which is the Almost Heaven sauna cabins, you can think of barrel sauna, it's basically homeowners backyard product. So it's basically American homeowner actually either based in California, Texas or Florida, so in the Southern big states. And we know that a lady in the family is in the pole position to drive the interest in this category. So kind of lady, women, they play a significant role in any practical -- in any wellness business. And U.S., sauna is considered clearly as a wellness product that provides you kind of longevity benefits, vibrant skin, stress reduction, better sleep, et cetera. So we know that ladies are in very important role in shaping the market in the United States. Now I said that Almost Heaven sauna is like the IKEA would make a sauna, good-looking affordable heat install product to American owners backyard. But we also do have other products like ThermaSol, which is for the, I would say, millionaire's homes. So higher end home spas, and that's also a lucrative category. We know that there are many customers in the United States that are willing to spend quite significant amount of money in wellness and an enjoyable life. And actually, we see also increasing trends in the commercial side. So commercial saunas, hotel, spas, fitness clubs, et cetera. So it's not just one customer type. Although in our case, this American owner is overrepresented, it's rather broad-based.

Then a calculatory question. Just to double check the organic sales growth or decline in North America in Q2 '25, whether your organic sales growth, 2.4% figure is calculated in local currency. What we publish is our euro figures. So the organic growth in U.S. terms is higher than what is in our report. So it is not published in dollar terms. Dollar declined quite heavily, especially for Q4 -- Q2, that's true.

And then maybe I can just give some further flavor. You can, of course, take this assumption that take the steam category number EUR 3.4 million that we reported and assume that, that ThermaSol sale additional. It's actually not entirely correct because we also sold -- we had some good deliveries in the Middle East in the steam category. But if you would then compare the growth of the region and what growth ThermaSol brought, you can see that the organic growth was somewhat negative, but it actually was single digit, not 10%, it's single digit negative in euros. And it would have been positive if the currencies would have been constant despite all of this shifting of the orders.