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Electronics Production | August 05, 2009

Incap's revenue decrease in high-volume manufacturing of telecommunications

Revenue in January-June decreased by approximately 24% on the same period the previous year, amounting to EUR 35.4 million (Jan-Jun 2008: EUR 46.7 million).
Focus of business volume shifted over to energy efficiency and well-being technology products, whereas business with telecommunications products was decreased strongly according to the restructuring plan. Operating profit (EBIT) improved on the same period the previous year, amounting to EUR 1.0 million negative (EUR 1.9 negative).

Capacity and cost structure were adjusted in line with the reorganisation programme, while at the same time creating prerequisites for growth in selected business areas in energy and well-being, which provide good prospects for improved profitability. Net profit for the report period amounted to EUR 2.0 million negative (EUR 2.7 million negative).

This unaudited interim report has been prepared in accordance with international financial reporting standards (IFRS). Unless otherwise stated, the comparison figures refer to the same period the previous year.

Sami Mykkänen, the President and CEO of Incap Group: "The decrease in revenue was due to a planned and controlled winding down of the high-volume manufacturing of telecommunications products. Other customer industries have developed positively, without any surprises. We continued with our reorganisation and restructuring programme and managed to cut costs and develop our business operations as planned compared with the first half of last year. The increase in financing costs continued to burden net profit.

The restructuring has proceeded as planned and we have made advances in new customer acquisition. New inquiries are at an active phase in India, in particular, where the quotation base and demand for design services by global customers have grown sharply. The introduction of modern production premises has further enhanced the opportunities for business growth in India.

Revenue during the second quarter totalled EUR 16.9 million (4-6/2008: EUR 26.4 million), or 36% less than in the same period in 2008. Decrease in revenue was due to the expected discontinuation of volume production in telecommunications. Revenue developed positively especially in well-being technology products, whose sales increased in the second quarter compared with both the first quarter and the corresponding period the previous year.

Operating profit for April-June was EUR 0.5 million negative (EUR 0.6 million negative), representing 2.8% negative (2.3% negative) of revenue. Net profit for the second quarter amounted to EUR 1.0 million negative (1.0 million negative). In particular, net profit was reduced by the increase in financing expenses by about 40% compared with the same period the previous year.

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