The company says that these reduced profits, which stood at €297,000, resulted from rising labor costs and a sharp sharp increase in the price of raw materials, as well as falling revenues. Seasonal considerations, including winter snow, which postponed some of the company's work, also played a part.

The company told the stock exchange that: "Q1 2021 was for Harju Elekter a period of preparations for the year: Developments were started to fulfill the new framework contracts in Finland and Sweden, the construction of the Lithuanian plant extension reached its final stages, and the full-time operation of the industrial robot was launched."

Revenue also fell 12.2 percent on year to Q1 2021, to €30.7 million.

Consolidated net profit attributable to owners of the parent company totaled €310,000, 57.4 percent less than in Q1 2020, Harju Elekter told the stock exchange.

Earnings per share (EPS) amounted to €0.02 in Q1 2020, which also marks a 57.4 percent year-on-year fall.

Total operating expenses for the reporting quarter were €30.3 million, compared with €33.9 million in the same period the year before.

The majority of the 10.7 percent fall in expenses was the result of a decrease in the cost of sales, reported at €3.2 million year-on-year.

Harju Elekter's largest target markets are Estonia, Finland, Sweden, and Norway, meaning sales volumes of the group are strongly affected by the events happening in these markets.

Quarterly sales to the Estonian market increased by €1.5 million, to €5.1 million on year. During the reporting quarter, the group continued the production and delivery of prefabricated substations that began in the second quarter of 2020 in the Elektrilevi OÜ framework procurement.

Sales to the Finnish market fell by €4.9 million to €14.6 million in a quarterly comparison, and were most affected by the decrease in orders resulting from a relatively snowy and cold winter even by Finnish standards, starting with new long-term orders, but also stemming from supply difficulties and shortage in materials.

In the reporting quarter, 47.5 percent of the group's products and services were sold to its largest market, Finland.

The revenue earned from the Swedish market increased by €400,000, to €5.3 million. Sweden accounted for 17.4 percent of consolidated revenue in the reporting quarter, and was the second largest market.

Norway ranks fourth in the group's markets, accounting for 6.1 percent of the group's Q1 2021 revenue.

In the first quarter, products and services worth €1.9 million were sold to the Norwegian market, €3.6 million less than in the same period of the previous year. The fall in Norwegian revenue was caused by record high orders in the reference period.

Postponements of installation works in the group's largest market hit Finland hardest, while the coronavirus pandemic affected all markets.

Other Harju Elekter Q1 2021 results:

• Labor costs increased year-on-year to €7.3 million. compared with €6.6 million in the same period the year before.
• Increase in labor costs and average remuneration affected most by the increase of the proportion of Swedish employees in the group, as wage levels are significantly higher in Scandinavian countries than in Estonia or Lithuania.
• Consolidated gross profit for the reporting quarter stood at over €3.8 million, a year-on-year decline of 21.9 percent.
• Gross profit margin was 12.5 percent.
• Quarterly consolidated operating profit (EBIT) amounted to €516,000, a 51 percent fall on year.
• Operating margin for Q1 2021 was 1.7 percent.
• Core business, production, accounted for 89 percent of the group's consolidated revenue.
• Raw materials lowered the revenue of the production segment by €4.1 million, to €27.2 million, on year.
• During Q1 2021, the group invested a total of €2.1 million in non-current assets, including €2 million in property, plant, and equipment, and €70,000 in intangible assets.

The company's share price on the last trading day of the reporting quarter on the Nasdaq Tallinn stock exchange closed at €8.3. As of March 31, 2021, AS Harju Elekter had 7,387 shareholders, up 2,303 on year.

Harju Elekter concluded an eight-year, approximately €20-million framework agreement with regional Finnish electricity distribution system operator Elenia OY last autumn.

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