Incap Reports 33% Revenue Growth in January-June 2017

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Key figures in January-June 2017

• The Group’s revenue in January-June 2017 increased by 33% on corresponding period last year and amounted to EUR 23.8 million (1-6/2016: EUR 17.9 million).
• The Group’s operating profit (EBIT) increased on corresponding period and amounted to EUR 2.3 million, being 10% out of revenue (EUR 2.2 million or 12% out of revenue).
• Net profit for the report period improved year-on-year and amounted to EUR 1.6 million (EUR 1.3 million).
• The company estimates that the full-year revenue in 2017 is approximately EUR 45-50 million and the operating profit (EBIT) is somewhat higher than in 2016, provided that there are no major changes in exchange rates. In 2016 the full-year revenue was EUR 38.6 million and the operating profit (EBIT) EUR 4.4 million.

Key figures in April-June 2017

• The revenue of the second quarter amounted to EUR 12.8 million, showing an increase of 39% compared with the corresponding period last year (4-6/2016: EUR 9.2 million) and up 16% compared with the first quarter of the year (1-3/2017: EUR 11.0 million).
• Operating profit (EBIT) for the second quarter was EUR 1.3 million, i.e. approximately 24% higher than in the corresponding period last year (4-6/2016: EUR 1.0 million) and in the first quarter (1-3/2017: EUR 1.0 million).

The accounting principles for the half-year report

This half-year report has been prepared in accordance with international financial reporting standards (IFRS) – IAS 34 Interim Financial Reporting standard. When preparing the release, the same principles have been used as in the 2016 financial statement. Unless otherwise stated, the comparison figures refer to the same period in the previous year. The information in this half-year financial report is unaudited.

Ville Vuori, President and CEO of Incap Group:

“Our business grew in the first half of the year according to our expectations and especially the second quarter of the year was excellent both in terms of revenue and the operating profit. Equity keeps improving, though it was not yet visible in equity ratio as inventory and receivables were peaking at the measuring point due to the growing business. The financing position of the company is good.

In India the new Goods and Services Tax was introduced as from 1 July 2017. The implementation required some additional effort from us and caused some delays in transactions between companies. The transfer went finally relatively smoothly. We prepared for the change and eventual delays by increasing the inventory volumes towards the end of June.

Performance in the Indian operations continued strong. This year the business unit in Tumkur has been a part of the Incap Group since 10 years and it has had a significant role in the internationalization and development of Incap’s operations. The extension of the factory was taken successfully into use and the increased capacity enables the acquisition of new customers and production of new products.

Operations of the factory in Estonia have stabilized being on the track of profitable growth. As an act of development the company has updated its operations to meet with the latest Medical manufacturing ISO 13485/2016 certificate that is needed in the manufacture of medical devices.

Currency fluctuations have had no significant effect on the revenue or profitability.

The pressure from customers on the price reduction and the increased costs for raw-materials at the same time are challenging us also in future. I trust that we can with our efficient and lean operational model grow our business further while at the same time keeping the profitability at the present good level. The market outlook is good at the moment and I trust that our active operations aimed at realizing organic growth will produce successful results.”

Incap Group’s revenue and earnings in January-June 2017

Revenue for January-June amounted to EUR 23.8 million, showing an increase of 33% year-on-year (1-6/2016: EUR 17.9 million) and being 15% higher than in the latter half of the year 2016 (7-12/2016: EUR 20.8 million). The growth was mainly caused by the increased manufacturing volumes in the Estonian factory.

The operating profit (EBIT) for January-June amounted to EUR 2.3 million, improving slightly when compared with the corresponding period last year (EUR 2.2 million) and the second half of 2016 (EUR 2.2 million). The operating profit margin for the report period amounted to 10%, which is generally considered to be a good level in the business of electronics manufacturing services.

Weakening of the Indian Rupee in relation to Euro lowered the revenue by approximately EUR 0.6 million and the operating profit by approximately EUR 0.06 million.

Personnel expenses in the report period increased in line with the growing business volumes and amounted to approximately EUR 2.0 million (EUR 1.7 million). The value of inventories increased to EUR 8.0 million based on the growth of business volumes and the renewed taxation in India (EUR 5.9 million). In the most significant post-independence reform of Indian taxation various indirect taxes are integrated into a single Goods and Services Tax. The reform will improve the local business environment of enterprises. 

Net financial expenses amounted to EUR 0.3 million (EUR 0.3 million). Depreciation amounted to EUR 0.2 million (EUR 0.2 million).

Net profit for the period was EUR 1.6 million (EUR 1.3 million). Earnings per share were EUR 0.36 (EUR 0.29).

Strategy and targets

The positive development of profitability has enabled the strong development of the company aiming at ensuring the future growth. The operational model of the company has been adjusted to great efficiency enabling fast decision-making and operational flexibility. In 2017 the company is targeting at growing the volume of business further and at creating prerequisites for the expansion of operations also by mergers and acquisitions.

Outlook for 2017

Incap’s estimates for future business development are based both on its customers’ forecasts and on the company’s own assessments.

The company estimates that the Group’s revenue in 2017 will be approximately EUR 45-50 million and that the operating profit (EBIT) in 2017 is somewhat higher than in 2016, provided that there are no major changes in exchange rates. The Group’s revenue in 2016 was EUR 38.6 million and the operating profit (EBIT) EUR 4.4 million.

Previously on 16 May 2017 the company estimated that the revenue in 2017 would be higher than in 2016 and the operating profit (EBIT) somewhat higher than in 2016.

Incap will publish a financial business report for January-September 2017 on Tuesday, 14 November 2017.

About Incap

Incap Corporation is an international contract manufacturer. Incap’s customers are leading suppliers of high-technology equipment in their own business segments, and Incap increases their competitiveness as a strategic partner. Incap has operations in Finland, Estonia, India and China, and the company currently employs approximately 520 people. Incap’s share is listed on the Nasdaq Helsinki Ltd. as from 1997. Additional information: www.incapcorp.com.