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Harju Elekter Group financial results, 1-3/2026

Teade

The  first quarter of  Harju Elekter proved  significantly more challenging than
anticipated,  and the results did not  meet expectations. While the strong order
book  at the beginning of  the year provided a  basis for steady growth, several
factors  hindered the planned  course of activities  and affected the ability to
fulfil  orders within  the agreed  timeframes. The  primary reason  for the weak
financial  performance included disruptions in the  supply chain - deliveries of
various  materials and  components were  delayed or  postponed by manufacturers,
which  in turn  caused the  fulfilment of  orders to  shift into future periods.
Although  the  order  book  remains  substantial,  rapid  cost  reduction is not
possible  without risking the ability to  respond quickly enough to a subsequent
increase   in   demand.  Retaining  competence,  ensuring  team  readiness,  and
maintaining  the  capacity  to  react  upon  the  arrival of the peak season are
strategically critical for us.

As  an additional external factor, the weakening of the Swedish krona (SEK) also
affected  the quarter  - since  a large  portion of  sales in the Swedish market
takes  place in local  currency, the decline  in the exchange  rate had a strong
negative  impact on both operating and net profit. Currency fluctuations are not
under our control, but their impact on the quarter was clearly felt.

We approach the year as a whole with moderate optimism but also with caution, as
there are several signs of a potential new crisis in the air. The order books of
both  the Estonian and Swedish units are  higher than average, and the volume of
orders  currently under  tender provides  a basis  to assume  that a significant
portion  of them will materialize as  revenue during the current financial year.
The  majority of  the results  of these  units, as  well as those of the Finnish
units,  will manifest  in the  second and  third quarters,  when the delivery of
substations to customers under framework agreements commences. At the same time,
delays  and  the  accumulation  of  semi-finished  products on production floors
create  additional challenges for  the use of  production resources and storage.
Inconsistent material flow disrupts planned work organisation, creates temporary
downtime,  and strains production space, which in turn makes resource management
and  production planning more complex than usual. Concurrently, the low sales of
the  Lithuanian unit  and the  resulting high  level of idle production capacity
remain a problem, pointing to market challenges and, unfortunately, the need for
a more efficient organisation of sales activities.

Although  there have  been no  cancellations of  orders so  far, caution  can be
sensed  in the behavior of customers. What is certain, however, is that the now-
customary  long  delivery  times  will  soon  be  joined  by price increases for
materials  and components. We have received  initial signals and new price lists
from  suppliers regarding this. The pass-through of price increases to customers
takes  place  predominantly  through  the  indexing  provided  for  in framework
agreements,  but due  to the  long ordering  and production  cycle, the positive
effect  on results will only reach the  financial statements with a lead time of
one to two quarters.

Geopolitical  tensions in the Middle East affect the activities of Harju Elekter
mainly  indirectly through the global supply chain, logistics, and input prices.
Instability  in  international  transport  channels  extends  delivery times and
increases  freight  costs,  which  in  turn  causes delays in components and the
postponement of projects. Consequently, the impact may manifest in the timing of
revenue  and in greater volatility of  quarterly results. Additionally, the rise
in  the price of energy, metals, and other inputs may increase production costs.
While  we have the possibility  to take changes in  input prices into account in
projects  to a certain extent, the impact  on profitability may not be direct or
uniform.

Revenue and financial results

In  the first  quarter, Harju  Elekter Group's  consolidated revenue amounted to
35.1 (Q1  2025: 37.4) million euros, remaining 6.2% below  the level of the same
period  last year. The change in revenue was primarily influenced by differences
in  the  timing  of  project-based  deliveries,  a high comparison base from the
previous  year, and delivery  postponements caused by  supply chain disruptions,
which  were  more  extensive  than  usual  during  the period. The manufacturing
segment  continued  to  account  for  the  dominant  share of quarterly revenue,
amounting  to  32.4 (Q1  2025: 34.5) million  euros,  representing  92.3% of the
Group's total revenue.

  Key indicators                                     3M       3M     +/-

  (EUR´000)
                                                   2026     2025
---------------------------------------------------------------------------
  Revenue                                        35,113   37,427     -6.2%

  Gross profit                                    5,533    5,667     -2.4%

  EBITDA                                          1,641    3,866    -57.6%

  Operating profit (EBIT)                           477    2,795    -82.9%

  Profit for the period                              19    2,636    -99.3%

  Earnings per share (EPS) (euros)                 0.00     0.14   -100.0%
---------------------------------------------------------------------------

The Group's operating expenses amounted to 34.5 (Q1 2025: 35.6) million euros in
the  first  quarter  of  2026, decreasing  by  3.3% year on year. The decline in
expenses  was primarily driven by lower costs  of goods and services sold, while
expenditures  incurred  to  support  operating  volumes and market activity were
reflected  in higher distribution and administrative expenses. Overall, the cost
structure  remained broadly unchanged,  with production-related costs continuing
to account for the largest share of operating expenses.

Distribution  costs amounted to 1.9 (Q1  2025: 1.3) million euros, increasing by
45.2%, mainly  due to higher volumes of  marketing and sales services to support
sales  and market activity.  This included participation  in international trade
fairs  to strengthen the Group's visibility in its target markets and to present
developments  related to the low-voltage switchgear  product group HECON EVO and
the electric vehicle charger Elektra Sense. Consequently, the distribution costs
ratio  increased  to  5.3% (Q1  2025: 3.4%) of  revenue. Administrative expenses
totalled   3.0 (Q1   2025: 2.6) million  euros,  increasing  by  16.6%, and  the
administrative expense ratio rose to 8.6% of revenue (Q1 2025: 6.9%).

Depreciation   and  amortisation  of  non-current  assets  amounted  to  1.2 (Q1
2025: 1.1) million  euros within operating expenses. Total labour costs amounted
to  10.5 (Q1 2025: 9.5) million  euros, and  the labour  cost ratio increased to
30.0% of  revenue (Q1 2025: 25.5%), reflecting the  impact of salary adjustments
and performance-based bonuses.

Despite lower sales volumes, the cost base remained stable, and gross profit
decreased moderately by 2.4% to 5.5 (Q1 2025: 5.7) million euros. Operating
profit (EBIT) amounted to 0.5 (Q1 2025: 2.8) million euros and business
profitability 1.4% (Q1 2025: 7,5%). Net profit for the period amounted to 19 (Q1
2025: 2.6 million) thousand euros, and earnings per share were 0.00 (Q1
2025: 0.14) euros.

Core business and markets

The  Group's  revenue  by  markets  in  the  first quarter of 2026 was primarily
supported  by sales  growth in  the Nordic  target markets, while sales declined
year  on  year  in  certain  project?based  Central European markets. Sweden and
Estonia  contributing  the  largest  increases  in  revenue.  In Sweden, revenue
increased  to 6.3 (Q1  2025: 4.9) million euros,  up by  28.4%, supported by the
execution  of several larger  projects and increasing  demand for substations as
investments  in  electricity  networks  have  begun  to recover. In the Estonian
market, revenue grew to 5.6 (Q1 2025: 4.8) million euros, an increase of 16.2%,
driven  mainly  by  orders  related  to  distribution networks and stable demand
across the Group's core product groups.

In  the Group's  largest target  market, Finland,  revenue amounted  to 13.1 (Q1
2025: 12.9) million  euros. Finland accounted for 37.4% of the Group's quarterly
revenue, and the moderate year on year increase in sales was supported by stable
deliveries, primarily of compact substations and low voltage switchgears.

Sales  declined year  on year  in the  Norwegian and  German markets. In Norway,
revenue  amounted to 4.2 (Q1 2025: 6.9) million  euros, while in Germany revenue
decreased  to 1.1 (Q1 2025: 6.5) million euros. In both markets, the decline was
mainly  related to a high comparison base  from the previous year, shifts in the
timing of large projects, and the project?based nature of sales.

In  other  markets,  revenue  developments  in  the  first  quarter of 2026 were
primarily  influenced by  the addition  of new  markets and higher sales volumes
compared  to the same period last year.  Notable sales were recorded in Denmark,
where  revenue  amounted  to  2.2 (Q1  2025: 0.0) million euros, and in Belgium,
where  revenue  increased  to  0.6 (Q1  2025: 0.0) million euros. In both cases,
sales  were related to one?off  project?based deliveries. Revenue also increased
in the Netherlands, rising to 1.2 (Q1 2025: 0.8) million euros.

Investments

During  the reporting period, the Group  invested a total of 1.7 (Q1 2025: 0.8)
million euros in non?current assets, including 0.02 (Q1 2025: 0.1) million euros
in  investment properties, 1.3 (Q1 2025: 0.3) million  euros in property, plant,
and equipment, and 0.4 (Q1 2025: 0.4) million euros in intangible assets.

The  majority of investments  in property, plant,  and equipment were related to
the   expansion  of  the  Estonian  subsidiary's  production  facilities,  where
construction  of the new production building  at the Keila continued. The modern
production  facility with a total area  of 4,000 m², scheduled for completion in
October this year, will increase the Group's total production space to 28,000 m²
and  create additional high  value?added engineering and  manufacturing jobs. In
addition,   investments   included  the  acquisition  of  production  technology
equipment to support growth in production volumes and operational efficiency.

Investments  in intangible assets were mainly related to development activities,
including  the  development  of  the  new?generation  electric  vehicle  charger
Elektra,  as well as the enhancement of the Group's digital solutions, including
website development.

As of the reporting date, the carrying amount of long?term financial investments
totalled 27.2 (31.12.2025: 27.2) million euros.

Share

The  company's share price on  the last trading day  of the reporting quarter on
the Nasdaq Tallinn Stock Exchange closed at 5.60 euros.


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 (EUR´000)                                                31.03.2026 31.12.2025
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                                     1,834      1,545

 Trade and other receivables                                  34,111     46,654

 Prepayments                                                   2,115      1,209

 Inventories                                                  22,447     19,896

 Total current assets                                         60,507     69,304
                                                         ----------------------
 Non-current assets

 Deferred income tax assets                                      137        142

 Non-current financial investments                            27,227     27,225

 Non-curren receivables                                            2          9

 Investment properties                                        27,856     28,228

 Property, plant, and equipment                               33,799     33,273

 Intangible assets                                            10,139      9,880

 Total non-current assets                                     99,160     98,757

 TOTAL ASSETS                                                159,667    168,061
-------------------------------------------------------------------------------


 LIABILITIES AND EQUITY

 Liabilities

 Borrowings                                                   13,477     15,452

 Prepayments from customers                                    5,815     15,326

 Trade and other payables                                     22,332     19,670

 Tax liabilities                                               3,330      3,324

 Current provisions                                              290        336

 Total current liabilities                                    45,244     54,108

 Borrowings                                                   15,072     15,072

 Other non-current liabilities                                    20         20

 Total non-current liabilities                                15,092     15,092

 Total liabilities                                            60,336     69,200



 Equity

 Share capital                                                11,706     11,672

 Share premium                                                 3,619      3,410

 Reserves                                                     22,532     22,397

 Retained earnings                                            61,474     61,382

 Total equity attributable to the owners of the parent
 company                                                      99,331     98,861



 TOTAL LIABILITIES AND EQUITY                                159,667    168,061
-------------------------------------------------------------------------------


 CONSOLIDATED STATEMENT OF PROFIT AND LOSS


  (EUR´000)
                                           3M 2026   3M 2025
-------------------------------------------------------------
  Revenue                                   35,113    37,427

  Cost of sales                            -29,580   -31,760

  Gross profit                               5,533     5,667

  Distribution costs                        -1,866    -1,285

  Administrative expenses                   -3,008    -2,580

  Other income                                  85     1,024

  Other expenses                              -267       -31

  Operating profit                             477     2,795

  Finance income                                65       633

  Finance costs                               -531      -284

  Profit before tax                             11     3,144

  Income tax                                     8      -508

  Profit for the period                         19     2,636
-------------------------------------------------------------
  Earnings per share

  Basic earnings per share (euros)            0.00      0.14

  Diluted earnings per share (euros)          0.00      0.14
-------------------------------------------------------------

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


  (EUR´000)                                                     3M 2026 3M 2025
-------------------------------------------------------------------------------
 Profit for the period                                               19   2,636
                                                               ----------------
 Other comprehensive income

 Items that may be reclassified to profit or loss

     Impact of exchange rate changes of a foreign
 subsidiaries                                                       205    -588

 Items that will not be reclassified to profit or loss

 Revaluation of financial assets                                      3      -5

 Total comprehensive income (-loss) for the period                  208    -593

 Other comprehensive income                                         227   2,043
-------------------------------------------------------------------------------

Priit Treial
Member of the Management Board/CFO
+372 674 7400

[email protected] (mailto:[email protected])