Electronics Production | May 07, 2008

Incap reports revenue increase of 20%

Revenue during the first quarter was EUR 20.3 million (EUR 17.0 million) or 20% higher than during the comparable period in 2007.
The period's operating profit, EUR 1.3 negative, was slightly lower than during the comparable period last year (EUR 1.2 million negative) and as a percentage of revenue it was 6.5% negative (7.0% negative). The comparable operating profit from actual operations during the final quarter of 2007 was EUR 1.1 million negative. The profitability of the report period was affected particularly by the focus of manufacturing on material-intensive products, which have a relatively low sales margin. The comparable period in 2007 does not include operations in India, which were consolidated into the Group on 1 June 2007.

Net profit for the report period amounted to EUR 1.7 million negative (1.3 million negative). The decline in net profit was affected by increased financing expenses. Earnings per share amounted to EUR 0.14 negative (EUR 0.11 negative), while equity per share stood at EUR 1.41 (EUR 1.56).

The company won new customer accounts during the report period and the products of some important customers moved from the prototype and preliminary series stage into actual production. A contract was concluded in February with ABB Oy Electrical Machines concerning the manufacturing of flat bar copper windings for the magnetic poles of electric motors which starts in June 2008 at Incap's factory in Vaasa.

The materials management organisation was reformed. To improve the efficiency of sourcing and procurement operations and to reduce the cost of materials, a cooperation concerning procurement of electronics and mechanics was started with a partner operating in Shanghai, Suzhou and Hong Kong. The material and purchasing operations of the Indian subsidiary were strengthened to serve the needs of the whole Group.

The active acquisition of new customers continued in India and cooperation with six new customers started during the report period. Most of the new products are at the prototype stage at the moment. The new customers are equipment manufacturers in energy technology and industrial electronics for which Incap supplies both electronics and product entities.

Construction work has started on the new factory in Tumkur, India and production is due to move to the new premises in November/December.

On 1 January 2008, Jarmo Kolehmainen started as the managing director of Incap's Indian subsidiary and as a member of Incap Group's Management Team. Kolehmainen has wide experience in the electronics industry and business operations in Asia.

The Group's equity ratio was 33.3% (45.3%). Interest-bearing net liabilities totalled EUR 18.3 million (EUR 11.6 million) and the gearing ratio was 106.5% (61.2%). Net financial expenses were EUR 0.4 million (EUR 0.2 million) and depreciation expenses were EUR 0.8 million (EUR 0.7 million).

The balance sheet total at the end of the report period stood at EUR 51.7 million (EUR 41.9 million). The increase was a result of the change in the Group structure on 1 June 2007 when the operations of the acquired business in India were consolidated into the Group. The delay of some deliveries increased the inventory compared with the turn of the year.

The Group's equity at the close of the report period was EUR 17.2 million (EUR 19.0 million). Debt totalled EUR 34.5 million (EUR 22.9 million), of which interest-bearing debt amounted to EUR 18.9 million (EUR 11.7 million).

The Group's liquidity was satisfactory: the quick ratio was 0.6 (0.6) and the current ratio 1.4 (1.5). Cash flow from operations was EUR 1.8 million positive (EUR 2.6 million negative) and the change in cash and cash equivalents was a decrease of EUR 0.3 million (a decrease of EUR 0.4 million).

At the end of the report period, Incap Group had 724 employees (525) in addition to which a total of 91 leased employees worked at the company. At the end of the report period, 51% of personnel worked in Finland, 27% in Estonia and 22% in India.

Eeva Vaajoensuu, M.Sc. (Econ.), was appointed as the Chief Financial Officer of Incap Group and as a member of the Management Team after the end of report period on 14 April. Her area of responsibility includes the Group's administration, financing and IT management.

On 11 February 2008, layoff negotiations pursuant to the Co-operation Act started in the material and purchasing operations of the Finnish units and the Group support operations, which ended after the report period on 2 April 2008. The negotiations on temporary layoffs that were started at the Vuokatti unit on 28 February were interrupted on 3 April 2008 due to an improvement in demand.


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