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Electronics Production | November 04, 2009

Incap's revenue down 24% in first 9 months

Revenue for Incap in January-September was approximately €52.0 million, down approximately 24% from the same period the previous year (Jan-Sep 2008: EUR 68.1 million).

Sami Mykkänen, the President and CEO of Incap Group: "The overall demand for Incap's services remained fairly steady despite the general economic recession. However, there was much customer-specific fluctuation in delivery volumes. The decrease in revenue was mainly due to a controlled winding down of the high-volume manufacturing of telecommunications products." Revenue and earnings in July-September 2009 Revenue during the third quarter totalled EUR 16.6 million, or approximately 22% less than in the same period the year before (7-9/2008: EUR 21.4 million). Despite the holiday season and production shutdowns, revenue remained at nearly the same level as during the second quarter. The demand for well-being technology products in particular was good. Operating profit (EBIT) for July-September, EUR 0.3 million negative, was better than during the previous quarters of the year and the corresponding period the year before (EUR 0.4 million negative). Net profit for the third quarter was EUR 0.8 million negative, the same as a year before (EUR 0.8 million negative) despite the decrease in revenue. Net profit was burdened by an increase in financing costs compared to the corresponding period last year. Earnings per share were EUR 0.07 negative (EUR 0.07 negative). Revenue and earnings in January-September 2009 Revenue for January-September was EUR 52.0 million, or about 24% lower than during the comparable period the year before (Jan-Sep 2008: EUR 66.1 million). The decline in revenue was the predicted decrease in manufacturing of telecommunications products by approximately EUR 12 million compared with the same period the previous year. Revenue also declined due to cutting down on small or unprofitable customer accounts at the beginning of the year in order to improve profitability. The recession did not have a significant impact on the demand for Incap's services. Revenue from well-being technology products increased considerably compared with the year before, while the demand in the energy efficiency sector decreased somewhat in Europe. Deliveries from the Indian unit increased, but revenue in euros remained at last year's level due to exchange rate differences. Operating loss was clearly reduced with operating profit amounting to EUR 1.3 million negative (EUR 2.4 million negative), representing 2.5% negative (3.5% negative) of revenue. The reorganisation programme was continued and cost savings were achieved in personnel and material costs and administrative expenses among others. Fixed costs for the period were approximately EUR 2.2 million lower than for the same period the previous year. Net profit for the report period amounted to EUR 2.8 million negative (EUR 3.5 million negative). In particular, the net profit was burdened by net financing costs, which were approximately EUR 0.4 million higher than during the corresponding period the year before. Personnel Incap Group employed 773 people at the end of September 2009 (727 people at the beginning of the year). Of the personnel, 43% worked in Finland, 34% in India and 23% in Estonia. The number of personnel increased in India, where there were over 50 employees more at the end of September than at the beginning of the year. In addition to Incap employees, there were 59 employees hired from staffing agencies at the end of September. Operations and capacity were adjusted to the demand, and at the end of September, 34 people were temporarily laid off. After the report period in October, the personnel of Group services and the plants in Helsinki and Vaasa were temporarily laid off for a week in December 2009 and for a week in January 2010. In addition, the personnel can be temporarily laid off based on monthly review until the end of May 2010 so that the maximum total duration of the temporary layoff is 64 working days. At the Vuokatti plant, the white-collar personnel were laid off for three weeks while the statutory negotiations with regard to the blue-collar workers will continue in November. Outlook Incap's estimates of the future business development are based on its customers' forecasts and the company's own assessments. Due to the continued uncertain economic situation, customers' views of the future market development are still cautious. Some device manufacturers in the electric power industry have predicted a slight decline in demand. Incap expects that its revenue in 2009 will be approximately EUR 70 million. The operating profit for the latter half of the year will be better than during the first half of the year. Full-year operating profit (EBIT) is estimated to be clearly better compared with 2008. According to Incap's previous estimate on 5 August 2009, the Group's revenue in 2009 would be lower than in 2008, when it totalled EUR 93.9 million. Operating profit for the latter half of the year was estimated to be better than during the first half of the year. Full-year operating profit (EBIT) was estimated to be clearly better compared with 2008 (EUR 3.6 million negative).
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