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Electronics Production | August 04, 2010

Incap's revenue down 17%

Incap's revenue in January-June stood at EUR 29.3 million, down 17% compared with corresponding period in 2009 (€35.4 million).
Operating profit (EBIT) in January-June was EUR -2.8 million (EUR -1.0 million). 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.

Sami Mykkänen, the President and CEO of Incap Group: "The period's revenue fell short of expectations, since demand was slack 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 that 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."

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 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.

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