Harvia Oyj (HARVIA) Earnings Call Transcript & Summary

Hello. Welcome to Harvia's first half year review. My name is Tapio Pajuharju. Next to me, in a safety distance, is Ari Vesterinen, our CFO. I will have a short review of the performance, both on the financial terms as well as on the operational terms. Welcome aboard. We'll have a look on the full 6 months, but we'll have a deeper dive on the second quarter. Then we'll have a short review on our strategy, what we've been doing, where we've been successful, where we still have some issues to do. And then Ari will have a bit of a deeper dive on the financials. Then I may also introduce the one on the picture. That's the heater. That's one of the heroes of the show. That's the new cylindrical black metal, still coming out of the gates in the October month. Just a bit of a sneak peek on that. I'm very happy and at the same time, very humble on the performance. Very good top line growth. And I think despite of the pandemic, the whole team has maintained a full operational capability and been successful in reaching the top line growth as well as on the bottom line, excellent growth on that level as well. Both of our main categories, the sauna heaters and equipment as well as the sauna rooms, experienced a very healthy growth. And our relative and absolute profitability take a nice step upwards. Most of you may remember that we acquired EOS, and now since the 1st of May, that has been on board of our numbers and happy to announce that the integration has started well on that front as well. Most of the integration streams have operated on a virtual format, but I'm very happy that during the process of the acquisition, we get to know the people, we get to know the team on both sides of the companies, and hence, we've been able to execute what was in the plans. Ari, our CFO, has been the only brave one who has made a trip to Germany and physically seen the operations and working in the team with a week over there, but we'll continue on this format. In all of our operations and units, we've been very happy of the approach by the team who's taken a very professional anti-COVID precautions. And so far, with our supply chain, the same thing has happened, and we've been happy to perform as planned. And I think keeping in mind that the fluctuations of the demand has been exceptionally high. The team, both with our partners, our suppliers and team players as well as our own personnel, they've done an excellent job. Very happy with the performance and special thanks for our own personnel. Excellent teamwork. Thank you. Then a bit on the numbers on the first half, solid growth, 26.5%, and at comparable rates, slightly below that. So we had a bit of a tailwind on the currencies during the first half. When you take a deeper dive on the second quarter, then you see that, that was not exactly the case on that one. Organic growth presenting 18.1%, very solid and nice. Profitability taken a step upwards. Very nice. And we are above the benchmark, 20.9%, and a nice 2 percent points up on the previous year. Operating profit mentioned over here. And the cost related to the EOS acquisition landing at EUR 1.8 million on this format. Earnings per share around EUR 0.30. And then operating free cash flow, very solid and nice improvement compared to prior year. And Ari may take a deeper dive or you may have questions on all that, so we'll entertain that when Ari will have the financials. Net debt at EUR 43.6 million and leverage 2.2. And the leverage, I think, during the acquisition, we were indicating that we may temporarily be out of the range, 1.5, 2.5, but luckily, we are on the 2.2 even after the acquisition. And equity ratio, 41.3%. Then taking the second quarter. Second quarter, we experienced even a stronger sales growth and in most of the markets. Revenue, very nice growth of 50%. Then of that organic growth, representing 32.3%. Profitability, a good step-up on that one, EUR 5.4 million against the prior year EUR 2.8 million. And also in the relative terms, 21.1%. So nice upgrade on this one. Earnings per share, EUR 0.17. Cash flow continued in a very solid, good development. Net debt as we've seen and the equity ratio as stated on the previous page. Then on the actual operational capabilities. We follow the same 3 paths of the strategy. The increasing of the value of the average purchase of our customers on the wood burning arena, where this is one of the peak seasons. We introduced the lower fine particle emission Harvia Legend GreenFlame successfully in Finland, and now we are ready to roll it on to the other markets for the coming seasons. In most of the markets, especially in the U.S. and in the Central Europe, our sauna sales, the sales of the complete sauna rooms has been extremely successful. And on that, we've also been learning how to further improve on the upselling. So the sales of the special heater motors, small premium heater models, control units and all of the sauna accessories we've been doing rather good and steady job. As of 1st of May, we've been including the EOS premium and professional heaters to the range and been able to entertain that part of the market, which was beyond the reach of the Harvia before. Geographical expansion. Especially in the Nordic area, we've been able to add some of new customer base and networks on that one, and the same applies for the U.S. In the U.S., it's more of the ones we started are now coming into play with a full power. So that's visible on the U.S.A. almost every sauna sales numbers. And on top of that, our sauna heaters and sauna equipment component of sales has been performing extremely well on the U.S. marketplace. Cross-selling in Central Europe. I think we've been able to introduce new combinations to the market, and also the sauna rooms, we've been able to make them more visible for the customers and our customers' customers. And in the Russian marketplace, the EOS is basically presenting as a way to learn how to become a project partner in the business. So we are learning that as we speak. Then on the operational improvement and on the productivity improvement. In all of the production units, we've been taking very steady steps, and I'm very happy of the performance, especially of the Muurame unit as well as the Guangzhou unit in China, and the way they almost have an operation in the Renick has been doing is an excellent job over there. And then in the German EOS factory, which we've now taken aboard into the family, they've been continuing very steady way forward. So happy of all of that. On top of that, I think in the past, we've been making good selection of the partners. And the supply chain we have with us has been doing an excellent job. We've been able to cope up with the demand volatility. Then in the U.S., we made -- towards the end of the second quarter, we made a decision to invest in the productivity improvement as well as expanding on the capacity. It's not a major investment. It's on the magnitude of EUR 0.7 million, roughly. But by doing that, we can expand the capacity by roughly 40%, and at the same token, we can improve the productivity on the Renick facility. We estimate that to be ready towards the end of the year and is not disturbing any of the seasonality in our day-to-day operations. EOS. Most of this is a bit of a recap. But the acquisition has been completed. Integration is working as planned. And now we have also Mr. Rainer Kunz on Board of the Harvia management team, and he's been also the brave one to come and physically visit our management team meetings and has already started to contribute in a very, very good manner and also with a good team spirit, which is very important in these type of situations. COVID. I think it's also a bit of a -- thanks to the early on learnings from our China factory, we've been maintaining and improving the performance and systematics, how to tackle that. It's not been a smooth ride. Some of our customers still have been and still are impacted by this. Markets like France have been basically steadily opening, but very, very slowly and gradually. But markets like Spain, Portugal, Italy still mainly closed. So when you see the total number, some of the markets have been booming, some of the markets still been in a COVID mode. Health and safety. I think even as we speak, we continue the same manner, and we'll tackle that at our best. So far, knock the wood, we have had no incidents and hope to keep it on that way going forward. Some irritations, mainly irritations, not problems, have been caused by the availability of some of the critical components. We've been also increasing the inventory of some of the critical components and then some delays in transportation, but they've been minor. We expect that to continue, but we'll be better prepared for that. On the market split, I think half year, no major change on that one. But North America, Central Europe, Finland, steady growth. Organic growth, as I said, slightly below 20%. But I think the more you learn from the second quarter, and that also tells when the EOS business is into the picture with full 2 months. Even though Finland has been growing very nicely and strong growth in Finland, the relative share of the domestic market is now below 30%. And then we see that the Central Europe, Germany, gaining speed, thanks to the excellent performance in the U.S. that's also doing well. And when we jump on the product categories, I'd rather take the bridges so that we get a better understanding of what has been happening over there. So most of the markets very good and solid, but then Russia, Arab countries, Asia, steam generator sales not doing well, and that's why we see a negative number on the steam generator when we flip the next pages. I think this is important on the first half year, a solid growth. But what is the split of the growth? What are the growth drivers? U.S.A. is clearly the #1 over there. They almost have in sauna -- their own sauna sales -- own manufactured sauna sales have been doing very good. We've been also adding our Romanian-made saunas to the American offering and some of the Finnish-made saunas, and they've all been doing rather good over there. Other European countries, and I think, Germany, very strong, but also the other European market extremely strong, when you keep in mind that France, Italy, Spain, Portugal, very small or no business on those markets. So those markets have been doing good. Finland, very happy of the performance of the Finnish business, and I think on the heater business been gaining excellent speed, gaining market share. The sauna benches and the sauna components business has been rather soft, and the incumbent supplier has been rather strong fighting for their share. And towards the end of the year, I think we will see some gain on that area. But the early part of this year has been soft on that area. Scandinavia. Solid development over there. And then as you can see, the other countries, it's mainly the Arabic countries, small Asian countries, Australia, Oceania, not doing well, and that's mainly COVID-related. And then the picture is even amplified when you have the quarter 2 numbers. U.S.A. is still in the lead. Germany, other European countries doing extremely good. And Finland, a very strong growth, 23.3%. Then I think I may preempt some of the questions when discussing about the EOS business. The contribution of the EOS on the second quarter roughly on the magnitude of EUR 3 million. And the sales split, I think, at least in some of the expectations, it was more towards Germany. It's not. It's roughly half and half; half Germany, half rest of the Europe. Then the Russian part, strong contribution also on the Russian part. Don't remember exact number, but say, roughly around EUR 0.5 million contribution for the Russian marketplace. So then on the different categories. The sauna rooms, a very steady, solid growth. Sauna heaters the same. Steam generators behind the plan, especially due to the Arabic countries, Asian market and partially Russia. Then when we take the second quarter, the same phenomenon basically continues. But I'm very happy to see development on the sauna heaters and especially on the control units. That's good. And also in the control units, the EOS business has a strong contribution on the control units. But Harvia, as a stand-alone, very solid growth in all of the categories. So good job over there. Then by quarters, I think, revenue, we've been educating that the first and last quarters are very strong. Now we need to say that, okay, there are exceptions and this is exception, so we have a strong second quarter as well. And then when going forward, we know roughly what to expect. Then I think, thanks to the stronger offering on the professional heaters and steams, we can more entertain on top of the traditional Scandinavian sauna, the steam room business. EOS has a very strong equipment and professional equipment in that area. And then on the infrared market, we can also offer, even though we are still in the early stages of the infrared business. And then I think we stay very loyal to the strategy. We follow the 3 paths: we increase the value of the average purchase, help our customers and our customers' customers to do that; geographical expansion, more of improving the quality of the distribution than new markets and then also improving presentation and manpower on some of the -- for the new markets; and then on the productivity improvement, not only on the operation, but also other processes in that front. And I think this covers all what I had in my mind for the time being. Later on, I will come back and then I can entertain questions. But before that, we'll let Ari to dive deeper on the financials. Welcome aboard.

Okay. Thank you. So let's get into the steam room. Okay. Here is first, our normal table of the figures. Now this wasn't very normal, the second quarter, in terms of finance and in terms of sales. It was quite exceptional -- exceptional quarter. So we had a growth of 50% in the net sales, and it turned also then the cumulative sales to 26%. And really, 32% of the growth in Q2 was internal, organic, without any acquisitions, and the rest came from our EOS acquisition. So -- and we were also able to improve our profitability quite substantially. The productivity in all the plants was very high since we had a good workload and, at the same time, we were, due to COVID, not necessarily traveling so much and having other outdoor costly activities. So we were also working quite effectively in other activities. And also, the market demand during that time was very, very interesting and successful for us. Then the profitability levels of EOS, we have announced earlier that it's slightly -- almost the same level as traditional Harvia. So it didn't boost the profitability, but it didn't reduce it, so helped us to grow the business. And now we are really in the beginning of creating synergy together. The operating cash flow is normally the lowest actually during Q2, but we were now able to increase the cash flow compared to last year quite clearly, thanks to the good results and EBITDA. The investments, they were actually lower than last year, and we decided in the beginning of Q2 to postpone a little the investments, not much, but a little, and see what happens during Q2. And -- but we have made all the necessary replacement investments, and there isn't any problem with that. But as Tapio already said, at the end of the quarter, we made also the decision to invest more in the U.S. now to increase the production capacity there. As you saw from the earlier figures, the sales and demand in U.S. have been increasing quite nicely. Net debt increased, actually, almost exactly the EUR 20 million, what we took -- we raised new debt capital for the EOS investment compared to the end of Q1. So there are any -- no major changes in that. And the leverage ratio stayed still nicely under our target level of 2.5. We haven't -- or I will show it on the next page, but for instance, the estimated liability we have for the redemption of the rest of the EOS shares, it's not interest-bearing bank debt, so it's not calculated in the leverage. Only the interest-bearing financing debts are calculated in there. The adjusted return on capital employed really increased very, very nicely. And we have to remember that we eliminate there always the goodwill, so it's the other capital employed without goodwill. But the profitability has been very good, and we are earning nice percentages right now. Equity ratio dropped to 41%. We had -- end of Q1, we had 57%, and that's due to the EOS acquisition. We took EUR 20 million more debt, and then we have had also a couple of other IFRS reporting-related accounting entries there. I will show them next -- on the next page. And now we are a group of over 560 employees altogether. So we got roughly 150 new colleagues in the EOS transaction, but we have been also employing some -- recruiting some new people during Q2 due to the increased production capacity. So this is more for analysts and accounting people just to show what happened with the balance sheet based on the EOS transaction, and this is also in the report in more detail. But we want to open so that you can follow the numbers more clearly. And basically, what happened is that we had -- we booked some EUR 7 million of intangible assets out of the deal, which will be amortized approximately EUR 1.7 million a year in the future, so acquisition-related amortization. And then we have a EUR 10 million -- EUR 10.8 million goodwill there, which will be just tested with impairment tests annually. And we had also so called step-up of the inventory value to the fair valuation of EUR 1.3 million in -- at the end of April, and that will be amortized in 12 months. So that will be above the EBIT level as expenses during the next 12 months so vis-à-vis IFRS requirements. And also one thing, we -- as you may remember from our information from March, we have a call option, the possibility altogether 8 years to buy the minority shares of EOS companies in future. So we have estimated after certain amount of years that redemption liability will be EUR 9.5 million. We will be increasing the value together. And that amount was booked as debt and at the same time, as a decrease of shareholder equity. So that was the second reason that reduced the equity ratio. These are just more or less like IFRS requirements. But this is just as a background when you update your models. Okay. As told, the net debt increased about EUR 20 million compared to end of Q1, and that was only related to the EOS acquisition, and also the net finance costs increased correspondingly. The investments were on the quite lower level of EUR 0.4 million during Q2, but these were necessary replacement investments we did. And during the next quarters, we make some other investments, for instance, for the U.S. production capacity. Last year, during Q2, we had higher comparison figure, and that was because of the acquisition of the Renick production facilities. Okay. Then the share of the shareholders. We have, as you may remember, after the IPO in March 2000, we had about -- 2018, we had about 2,000 shareholders; end of last year, 5,200; and currently, we have almost 8,000 shareholders on the Euroclear list plus the foreign funds in nominee registered. And this is the structure of the -- of our shareholding. Now the nominee registered, mainly foreign funds. They are slightly under half of the shareholding. Our biggest shareholder is the family-owned investment company, Onvest, and then the households, banks and private corporations. And yes, our management and Board members are also quite substantial shareholders in this company. We keep our long-term financial targets on the same level as we were also during the last year. And -- but these are really long term. Currently, we have higher growth rate than this 5%, but we haven't -- we don't want to guide or change our long-term targets too often. We have a resilient, good, stable business. Currently, there is very interesting phase going on in the market, but it might be that this demand is coming a bit earlier than what it would happen in other case. So the long-term financial targets are still the same as in the past. We are a good dividend payer. Our Annual General Meeting decided last April to first pay EUR 0.19 dividends and then gave the authorization for our Board to decide another EUR 0.19, and the Board will discuss this dividend payout approximately on October 16. So we pay twice a year, the dividends. So that was it. Any questions for Tapio or me?

Thank you, Ari. And I think also the ones who are on the teleconference now, the operator, we are ready for entertaining questions. Maria first.

This is Maria Wikstrom from Danske Bank. I have a few questions. I think you both said that Q2 was somewhat exceptional with an organic growth of 32%. So if you could a little bit give us a feeling that, I mean, how has the demand started to develop in the third quarter.

I think the trend we've seen in the second quarter seems to continue to a certain extent, but I think there is no guarantee that it will continue as strong as it's been. We've been trying to figure out how much of that was from the professional market, how much is from residential market. Still very difficult to say what is -- and still, I think, in the marketplace, there are certain uncertainties. And as we've seen that some of the European markets are almost not open at all and some really strong inactivity in investment level, so I think the diversity and the volatility continues to remain on a high level.

Good. Yes. The second question on North America, which you recorded, I think, it was over 100% growth in the Q2. And do you have a feeling how much of this demand is coming from replacement sales and how much is coming from new clients?

From the actual sauna room sales, our estimate is that, I think, 95% of that is new business. On the heater and equipment sales, I think, the same rule of thumb, roughly, is right rest of the market, but U.S. is still a bit of an emerging market. So if we say that 80% of the business over here is replacement, my own personal estimate is that over there, clearly, more than half is new build, even on the equipment. When you go to the professional market, the professional categories of the heaters and equipment, then the replacement number may be higher, but on our range with the residential and the less powerful equipment, I think more than 50% is, in a way, new build.

And then you said that -- I mean, it's hard to say how much of the demand is professional and how much is from private segment. But it's, of course, interesting, now with EOS on board, to get a bit of feeling what is currently happening in the professional channel, that if the, I mean, Q2 still had investments that had been already started and they were carried on. Or like how does the ski resorts, hotels, gyms -- I mean what is currently the eagerness to invest?

I'm afraid I may give you an answer which you don't like. But I think it's still a very split picture. Some of the hotels and resorts who have a strong balance sheet, they've been really utilizing the time to upgrade and improve and renovate premises. Now they'd be gradually opening. Domestic travel has been also very good and solid. So they may try to use the opportunity on the markets which are closed. You also have companies and hotels, which are closed. So it's a really -- I cannot give you one answer which could apply for all of the markets and all of the customers. It's a split picture.

EOS, which is quite strong with the commercial field, had a clear growth also during the first 2 months with us.

Yes, yes. That seems to continue at that level. And we'll be discussing with the EOS management team, and they don't see any major change. And their feel is also that, okay, the professional market is doing strong and solid, but some of the customers are not operating for the time being, but some are really active. And as an outcome, we've been enjoying a steady growth on the EOS business.

And can you give us a feeling that -- you said it was growth, but is it single digit, double digit?

Double-digit strong growth, clearly above our long-term targets. Very strong growth.

I actually have one more, if I may. This is relating to the IFRS, how you calculate for the inventory, which you took to the fair value? And now when you sell that inventory on the balance sheet, I mean, what is the impact on the profitability?

This one -- it will -- well, if nothing would have changed, the company would have probably got for that inventory EUR 1.3 million more profit. So it reduces the normal level of gross margin for approximately 12 months by EUR 1.3 million and then it's done. Very good. Thank you, Maria, for very professional questions. Do we have any other questions on the online or teleconference?

Yes, we have some questions from Petri Kajaani at Inderes. First one is, how does the demand situation look like now in your different geographical areas?

As we tried to reflect on Maria's questions, roughly, we see the same type of a picture. On the other hand, when you monitor, for example, what is happening on the do-it-yourself market in the month of July, I think people have taken a bit of a holiday. Now people are coming back to the school and back to the offices and back to work, so we'll see how that will continue. But roughly, the same selling trend continues.

Next one from Petri Kajaani as well. Does COVID-19 still affect your business positively or negatively in some market areas? Has there been any surprises in the development of certain market areas?

I think -- the surprises have been that, I think, when we were about to enter second quarter, we were all a bit fearful of what will happen with the COVID and what is the impact on the business, and we've taken precautions. And as Ari said, we even postponed some of the investments due to the COVID situation, afraid of can we install, can it be done and can it be still operational. On that area, we've been positively surprised, no major impact on that. And some markets really hurt badly, but some markets are enjoying benefits of people being active and renovating and rebuilding and building new. And maybe also when people -- and it may continue a bit longer term. And this is just my own thinking. Take an example of the domestic marketplace, where the sales of the summer cottages and summer homes have taken [ up big ]. And even the ones which were almost unsellable 3 years or 2 years ago, they've been sold. People have been buying them. They will need to upgrade and do some things. So during this, next and the year after, still people will do renovations. Maybe sauna is small part of that, but I think it's going to be a part of that. And I think the other markets applies the same. Even though the global travel will take a hit, domestic travel take an upside, and I think people want to have experience, sauna is high on the list. So in that respect, I'm not skeptical. Some type of a mild favorable trend may continue.

Okay. Next one also from Petri Kajaani. How is the EOS integration going on in the midst of COVID-19 situation? Are you satisfied with the first steps?

Very satisfied. We are in the plan. We are both on the financial targets as well as on the actual targets on the operational and functional things. So we are in time. We will also -- and I think the Germans are asking about the good surprises. Our ability to be fluent in German has been somewhat limited apart from Maria and a couple of other guys, and my own is mediocre at best. They've been very capable of -- good command of English in the team. So very happy with the communication.

And in the beginning, we had a lot of different kind of integration, Teams meetings and so forth. So with the online meetings, it started very well. And we have been organizing different stream sales and marketing, product development, development of the production and so forth. So...

Sourcing.

Sourcing. We have really close teams together, and now we have started also to visit each other, very soon will the sales management come to us and train our people to their products. I've been there in Germany. Their Managing Director visited our management team meeting in Finland. So hopefully, the borders still stay open, but we can manage it also with electronic tools.

Also from Petri Kajaani. How does the sourcing and production work at the moment? I have seen a lot of sold-out signs at your distributors? Are there any problems in supplying products for the fast-growing demand? What product categories are affected by this? Why? And what are you -- how are you going to tackle this problem?

Wow. Very good question. But I think in the recent history and then also earlier on Harvia's history and track record in on-time and complete, good customer service has been impeccable. We've been 99.9%. On the worst moment now, we are in the high 80s. So there is some delay in our operation. On the other hand, within the industry and comparing with our peers, we are doing a good job. But having said that, we see also that some of our sauna customers post out the sold-out signs in the U.S., especially in some of the high-demand SKUs, both on the residential market and on the professional market regarding the heaters and equipment have been close to sold out, and we produce as much as we can. But I think still the track record is good, and our results are good, but they are not impeccable as they used to be.

Next one also from Petri Kajaani. Could you elaborate on your growth ambitions in the U.S. market? How much new distributors have you gained during last year? And what sort of growth potential do you see in the coming years? Are saunas becoming great again?

I think saunas are becoming great for sure. That's our mission, and that's what we are working. And it's also a bit of an internal joke. We developed red caps for the making saunas great again, and it seems to work in the U.S. like no tomorrow. And on the demand, now we expand by 40%. At the same time, we also utilized the capacity from the Romanian factory as well as from the Finnish operations. But we do foresee a good mid, even long-term potential in the U.S. marketplace, keeping in mind that currently, we are entertaining mainly the entry-level sauna business, and the COVID seems to be somewhat even favorable for this type of activities within the families. So definitely, we'll ride on that trend.

Then we have [ Paul Cavaghan ] at Raymond James...

By the way, I forgot to answer Petri's question on the distribution channels. We've been introducing one do-it-yourself with the Home Depot. Introduction was a bit time-consuming, but now it's up and running and selling well. Then we've been on the distributor -- or dealer network, we've been introducing one new dealer. But during the COVID, our experience is that our own direct sales has been doing rather well in the U.S. Good job with our local direct sales team.

Yes, we are really selling quite much online there. That's a difference to the European business model. So the online sales, they succeed very well in the U.S.

Then we have [ Paul Cavaghan ] at Raymond James. In terms of production capacity, what level of growth could be sustained?

Production capacity, we've been -- we still operate on a fairly low capacity utilization. In all of the factories, we operate Muurame in 2 shifts, and the second shift has been always not the full shift. The same applies for China. We've been extending the workhours. We've been recruiting some new team members. In the U.S., we've been also doing long hours and using the flexibility. And in Germany, the same. And I think based on that math, we could -- I cannot say easily, but we could up by 1/3, but we need to recruit capable people. So you cannot do it overnight, you need to do it gradually and train the people to take on board. But in theoretical calculation, 1/3, we still have a free capacity, but it's not the job to be done in 3-month time, requires roughly 9 to 12 months to take it full into action. And having said that, if that type of a sustainable upgrade on the demand would happen, we may also consider other means of tackling that, meaning, investments in certain parts of the operations.

Is the whole market growing a double digit? Or is Harvia taking significant market share?

We don't have any official data on that, but we've been comparing roughly what is happening in the marketplace. And most of the markets we can say that we are clearly gaining share. Then the question is, how much we are gaining share? But we are gaining gradual share, but cannot tell you exactly how much. Russia is maybe the only market where we've been growing -- we've been not growing on the wood-burning market. The wood-burning market in Russia has enjoyed a solid growth, and that's where we've not been able to participate on that growth for the time being. And on the steam generators, even though we have a negative number, I -- my assumption is that we are not the only ones who have lost, and everyone else is experiencing the same unfortunate thing on the closed or almost closed markets.

Can you maintain the EBIT margins achieved in the H1 going forward? Is there a scope to improve them further?

As we speak, we have a lot of initiatives and plans and actions how to further improve. And even during the integration process, we've been also finding new avenues how to improve. So gradually, we can improve. But I don't anticipate any big steps. It's going to be a gradual, continuous improvement on that front as well.

Could volumes also improve? But automatically, the EBIT level, percentage-wise, to some extent.

No further questions. Thank you.

Thank you. Maria has one more question, so we'll pass the mic.

Yes. Maria Wikstrom, Danske Bank. Yes, one follow-up on the Russian market. I mean you said that the -- you are currently not growing in the wood-burning heaters, and I remember that that's been kind of the hardest part for U.S. You have a lot of low-end competition, but it has been an ambition to basically gain share again in the wood-burning heaters. But overall, if you could a little bit elaborate what is happening currently in Russia, as it's -- although it's a neighboring country, it's not that easy to actually get a view what is happening there. So if you can, a little bit of an update on the Russian market, please.

Yes. Regarding Russia, I've personally not been there during this year either. Now we operate with a remote virtual team over there. But in general, the sauna market has not been hurt as much as most of the markets in Russia. But on the wood-burning heater market, there are 2 trends. One is for the very economical, local Russia-made heaters, which are of rather good quality and solid. They are functional. So those are gaining speed. And on the other hand, there are very complicated and very advanced wood-burning heaters on the higher-end marketplace, combining a very good price point, and we are currently in the middle. And we need to figure out how to tackle the upper market. We cannot tackle the -- we have elected not to tackle. It's not profitable or less profit-driven than the other parts of the business. So we're out of the entry level, but for the higher-end wood-burning heaters, we have some plans how to do that, but it's not an immediate opportunity. It will take time on the next season starting February, March next year. So I think we have a bit of more ammunition for the seasons to come.

Do you think you could take an advantage of the new management capacity you have, like, sitting on the site with the EOS acquisition, who may be able to lift also the existing Harvia Russian business?

Yes. And I think -- yes -- the answer is yes. And also, we knew that we are buying a professional and premium brand, but what we didn't know and we later learned that in the Russian market, we also bought a super-premium offering. And unfortunately, I don't have the catalog now with me. But afterwards -- I have it in my backpack. So then once we'll get a bit of a flavor what we are doing in the Russian marketplace -- and yes, here, we have it. And unlike the picture we see over here, that would be on the mid-end of the Russian offering, not on the top-end of the Russian offering. But they've not been entertaining any of the -- which are closer to the Harvia marketplace, and we see opportunities on the Russian market. But we've been not able to meet with the Russian team, so we've been doing it virtually, and we still need to work. But it's a lot of opportunity in the Russian marketplace. And also on the project work, Harvia does not command any project work except with some type of a showcase. We may also learn how to entertain some of the project business elsewhere. But currently, we don't have the capability, but they have it.

And just remind me the option to acquire the remaining part of the EOS. I mean when did that expire?

Well, it has been announced that, that option is valid 8 years, and we don't have any future more exact plans for that. Now we concentrate on integrating and increasing the value of both companies.

Thank you. Thank you for the attention. Thank you for the questions. Wish you a good day. Bye now.