-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueBox Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
Boost Your Sales
Every part of your business can be evaluated as a process, including your sales funnel. Optimizing your selling process requires a coordinated effort between marketing and sales. In this issue, industry experts in marketing and sales offer their best advice on how to boost your sales efforts.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Incap Posts 18% Revenue Growth in 1H
August 4, 2010 |Estimated reading time: 6 minutes
Earnings Highlights:
- Revenue in January-June stood at EUR 29.3 million, down 17% compared with corresponding period in 2009 (1-6/2009: EUR 35.4 million).
- Operating profit (EBIT) in January-June was EUR -2.8 million (EUR -1.0 million)
- Earnings per share were EUR -0.26 (EUR -0.16).
- The second-quarter revenue increased and the loss clearly decreased compared to the first quarter.
- Structural change was implemented as scheduled, and the planned savings will begin to take effect in the latter part of the year.
- The directed share issue was subscribed in full, and EUR 1.3 million was recognised in the reserve for invested non-restricted equity.
Sami Mykkänen, President and CEO, said, "The period's revenue fell short of expectations, as demand was low due to the general economic recession, especially at the beginning of the year. In the second quarter, demand picked up markedly and many customers estimated their needs would increase in the latter part of the year.
"The merger of the operations of our two electronics factories, in line with the company's strategy, has progressed according to schedule. Product transfers from Vuokatti to Kuressaare have required us to maintain partly overlapping resources, which has made it impossible to fully adjust operations to match the revenue. We expect the cost savings targeted with the structural change to have an impact on the result from the third quarter onward.
"Many customers have growing order books, and demand looks to be taking a positive turn. We have also signed new delivery agreements, which are expected to generate significant revenue in the next few years. To secure future growth, we launched cooperation with Cleantech Invest and expect it to bring us new customers from growing technology companies that market applications based on energy efficiency and renewable forms of energy."
Revenue and Earnings in April-June 2010
The second-quarter revenue amounted to EUR 15.8 million, up nearly 18% from the first quarter. The positive development was mainly driven by the recovery in demand for well-being technology as well as energy and electrotechnology equipment manufacturing in India. The second-quarter revenue was 6% lower than in the comparable period last year, when it totalled EUR 16.9 million.
The second-quarter operating profit improved clearly from the first quarter, but dropped from the comparable period last year. Operating profit (EBIT) for April-June was EUR -1.1 million (4-6/2009: EUR -0.5 million), representing -6.9% (-2.8%) of revenue. Net profit for the second quarter amounted to EUR -1.5 million (EUR -1.0 million). Earnings per share were EUR -0.12 (EUR -0.16).
Revenue and Earnings in January-June 2010
Revenue in the first quarter stood at EUR 29.3 million, which was 17% lower than in the comparable period in 2009 (1-6/2009: EUR 35.4 million). The trend in revenue was affected especially by the decline in demand caused by the general uncertainty in the economy. Consequently, in this period the order volumes of many big customers fell clearly short of last year's level.
Profitability dropped from last year's comparable period. The operating profit amounted to EUR -2.8 million (EUR -1.0 million), representing -9.5% of revenue (-2.8%). Profitability was mainly affected by the decline in revenue. It was impossible to fully adjust the cost structure to match the lower revenue, since the merger of two electronics factories, related to the structural change, required the Group to maintain partly overlapping resources.
The revenue from Indian operations was growing towards the end of the review period. The delivery volumes of our biggest customers have increased and the demand for design services is brisk.
The cooperation agreement signed in June with Kenyan Thames Electricals Ltd. opens new opportunities for marketing electrotechnical products of Incap's own design in the growing markets in Africa. Inverters designed and manufactured by Incap are currently sold besides the Thames brand also under two other brands. Incap's design unit in Bangalore currently employs 25 designers, the goal being to increase the team's size to 35 designers in the latter part of the year.
The delivery contract of rotor components for electrical motors and generators between Incap and ABB was renewed, thus ensuring continuing of a long span cooperation.
The availability of electronics materials and components weakened clearly, raising market prices and increasing logistics costs. The shortage of some electronics components postponed Incap's deliveries to customers, which led to a rise in the value of the material inventory.
To boost new customer acquisition in the company's strategic focus areas, Incap signed an agreement in June on participating in a venture capital fund. The fund, managed by Cleantech Invest Oy, invests in cleantech growth companies, which are Incap's potential customers. In accordance with the agreement, Incap will invest a total of EUR 0.3 million, which is recognised under other non-current assets.
Net profit for the period totalled EUR -3.4 million (EUR -2.0 million). Net finance costs decreased as a result of the Indian rupee strengthening. Depreciation stood at EUR 1.5 million (EUR 1.4 million). Losses before tax amounted to EUR -3.4 million (EUR -2.0 million).
Return on investment was -18% (-4%) and return on equity was -127% (-33%). Earnings per share were EUR -0.26 (EUR -0.16), while equity per share stood at EUR 0.30 (EUR 0.92).
The Group's balance sheet total rose to EUR 2.8 million in the period, amounting to EUR 42.5 million. The Group's equity at the close of the period was EUR 4.3 million (EUR 4.5 million on March 31, 2010 and EUR 11.3 million on June 30, 2009). Liabilities totalled EUR 38.2 million (EUR 36.3 million on March 31, 2010, EUR 31.5 million on June 30, 2009), of which EUR 22.9 million comprised interest-bearing liabilities (EUR 22.1 million on March 31, 2010, EUR 19.3 million on June 30, 2009). Of liabilities, current liabilities took up EUR 27.9 million (EUR 25.5 million on March 31, 2010, and EUR 19.9 million on June 30, 2009). The parent company's equity totalled EUR 11.6 million, representing 57% of the share capital. The directed share issue offered on the basis of the Annual General Meeting's decision, totalling 2,000,000 new shares, was subscribed in full and the subscription price of some EUR 1.3 million was recognised in the reserve for invested non-restricted equity.
The Group's equity ratio was 10.1% (26.4%). Interest-bearing net liabilities totalled EUR 22.3 million (EUR 18.6 million) and the gearing ratio was 523% (165%).
Outlook for the Rest of 2010
Incap's estimates on future business development are based on its customers' forecasts and the company's own assessments. Demand is showing signs of recovery in several customer sectors and the outlook for new customer acquisition is also positive. However, it is difficult to assess with certainty the impact that these factors have on Incap's revenue.
By the end of 2010, the company will have implemented most of the strategic change process initiated in autumn 2008, which will form the basis for profitable international business. Centralising the Group's European electronics manufacturing in a single plant will make it possible to considerably boost profitability. The cost savings targeted with the merger of the company's two plants will affect the profitability beginning from August 2010.
Incap specifies its previous guidance and estimates that the company's revenue in 2010 is smaller or at the same level than 2009, when it was EUR 70 million. Profitability is expected to improve in the third quarter, and operating profit (EBIT) is estimated to be positive in the latter half of 2010. The Group's full-year operating profit is expected to be in the red, yet clearly better than in 2009 (EUR -5.0 million).
In the January-March interim report, dated May 5, 2010, and the prospectus published on June 29, 2010, the company estimated its revenue in 2010 to increase from 2009 and its operating profit (EBIT) to be clearly higher than in 2009.
About Incap
Incap Corporation is an internationally operating contract manufacturer whose comprehensive services cover the entire life cycle of electromechanical products from design and manufacture to maintenance services. Incap's customers are leading equipment suppliers in energy-efficiency and well-being technology, for which the company produces competitiveness as a strategic partner. Incap has operations in Finland, Estonia and India. The Group's revenue in 2009 amounted to around EUR 70 million, and the company currently employs approximately 800 people. Incap's shares are listed on the NASDAQ OMX Helsinki Oy. For additional information, visit http://www.incap.fi/.