Incap Reports 35% Revenue Increase in January-June 2016

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Revenue increased by 35% and the operating profit by 49% on corresponding period previous year. Construction of the extension of the Indian factory is proceeding in schedule.

Key figures in January-June 2016

• The Group’s revenue in January-June 2016 increased by 35% on corresponding period last year and amounted to EUR 17.9 million (1-6/2015: EUR 13.3 million).
• The Group’s operating profit (EBIT) increased on corresponding period and amounted to EUR 2.2 million, being 12% out of revenue (EUR 1.5 million or 11% out of revenue).
• Net profit for the report period improved on corresponding period and amounted to EUR 1.3 million (EUR 0.8 million).
• The company repeats its previous guidance, according to which the full-year revenue in 2016 is estimated to be approximately EUR 35-40 million and the operating profit (EBIT) is estimated to be approximately on the same level or somewhat higher than in 2015, provided that there are no major changes in exchange rates.

Key figures in April-June 2016

• The revenue during the second quarter of the year amounted to EUR 9.2 million, showing an increase of 26% compared with the corresponding period last year (4-6/2015: EUR 7.3 million) and up 6% compared with the first quarter of the year (1-3/2016: EUR 8.7 million).
• Operating profit (EBIT) for the second quarter of the year was EUR 1.0 million, i.e. approximately 11% higher than on the corresponding period last year (4-6/2015: EUR 0.9 million) and approximately 11% lower than during the first quarter (1-3/2016: EUR 1.2 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 2015 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 performance showed a positive trend during the first half of the year. Both revenue and operating profit were in line with our expectations. Strong performance in Indian operations continues and also the factory in Estonia has now really got off the ground.

Our production portfolio is at the moment showing remarkable variations monthly and quarterly. This is causing seasonal fluctuations both in profitability and in the working capital need. Along with the growing business the relative impact of seasonal fluctuations will be decreasing.

The currency fluctuations had a declining effect both on revenue and profitability, when compared with the corresponding period last year. Construction of the factory extension in India is advancing as scheduled and we will have the new production space in use in the beginning of 2017. Transfer of new products into volume production and the financing of the factory extension in cash are reflecting in the cash flow of the first half of the year.

During the latter half of the year, the revenue will most probably grow faster than the operating profit, and we assume that the operating profit margin thereby is getting closer to the average levels in our industry. Our sales efforts are creating good opportunities for growth already today, yet we are enhancing and expanding the sales further.  We expect the sound development of the company to continue also during the latter half of the year.”

Incap Group’s revenue and earnings in January-June 2016

Revenue for January-June amounted to EUR 17.9 million, showing an increase of 35% year-on-year (1-6/2015: EUR 13.3 million) and being 3% higher than in the latter half of the year 2015 (7-12/2015: EUR 17.3 million). The growth was mainly caused by the increased demand in the Indian factory. Also the revenue of the Estonian factory increased as planned.

The operating profit (EBIT) for January-June amounted to EUR 2.2 million, improving remarkably when compared with the corresponding period last year (EUR 1.5 million). The operating profit margin for the report period amounted to 12%, 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 1.0 million and the operating profit by approximately 0.1 million when compared with the comparison period last year.

Personnel expenses in the report period increased in line with the growing business volumes and amounted to EUR 1.7 million (EUR 1.6 million). The value of inventories increased to EUR 5.9 million based on the growth of business volumes (EUR 4.9 million).

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

Net profit for the period was EUR 1.3 million (EUR 0.8 million). Earnings per share were EUR 0.29 (EUR 0.26).

Strategy and targets

The recent positive trend in profitability enables the strong development of the company aiming at ensuring the future growth. In 2016 the company is targeting at acquiring new customers and new products to production while at the same time securing that the operational efficiency and quality stay at high level. The sales operations are enhanced, organisations and competencies of the factories are developed further, a new operational model is implemented in global sourcing, production capacity of both factories is developed and the utilisation of the shared ERP is enhanced further. The Board of Directors is focusing in growing the business further and is not actively assessing opportunities for strategic alliances.

Outlook for 2016

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

The company repeats its previous guidance given on 12 May 2016, according to which the Group’s revenue in 2016 is estimated to be approximately EUR 35-40 million. The operating profit (EBIT) in 2016 is estimated to be approximately at the same level or somewhat higher than in 2015, when it was EUR 3.7 million, provided that there are no major changes in exchange rates.

About Incap Corporation

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.