1H revenue increased 15% YoY for Incap

Revenue and earnings in January-June 2011 Demand for Incap's manufacturing services developed positively during the first half of the year. Revenue grew by 15% from the comparable period in 2010 and stood at EUR 33.7 million (1-6/2010: EUR 29.3 million). Revenue increased in both customer sectors. The development of revenue was accelerated by the improvement of the general economic situation and the recovery of investment activities, as well as by enhanced sales efforts. The global shortage of components slowed down the increase at the beginning of the year but the availability of components improved significantly towards the end of the review period. Incap Group's result remained negative even though profitability increased considerably compared with the same period the previous year. Operating loss in January-June was EUR -1.0 million (EUR -2.8 million), or -3.1% of revenue (-9.5%). Profitability was negatively affected by rising material expenses. The revenue share of material- and labour-intensive products was large especially during the second quarter. In addition, the global component shortage increased material and logistics costs slightly. Personnel expenses decreased by some EUR 1.5 million year-on-year, which was mainly attributable to the merger of two electronics factories. Net financial expenses increased to EUR 1.1 million (EUR 0.6 million). Depreciation stood at EUR 1.1 million (EUR 1.5 million). Loss for the period was EUR -2.1 million (EUR -3.4 million). Return on investment was -6.8% (-18%) and return on equity -96.1% (-126.5%). Earnings per share were EUR -0.11 (EUR -0.26). Revenue and earnings in April-June 2011 The second-quarter revenue for the year amounted to EUR 17.7 million, up nearly 11% from the first quarter and 12% year-on-year. The second-quarter operating loss increased somewhat compared to the first quarter of the year, which was due to the large share of material- and labour-intensive products in production and increased variable personnel expenses. Nonetheless, the operating profit was clearly better than during the comparable period in the previous year, when it was EUR -1.1 million. Sami Mykkänen, President and CEO of Incap Group "Revenue developed favourably in the strategic focus areas of energy efficiency and well-being technology industries. The improving general economic situation has stimulated demand and the recovery of investment activities is especially evident in the increased sales of electrotechnical devices." "Even though our profitability in means of EBIT improved considerably compared to the same period last year, we cannot be satisfied with the negative result. Our main objective is to improve profitability and during the review period we have implemented a systematic adjustment of customer prices and used competitive tendering to select materials suppliers." "After the renewal of our production structure, our most important development target today is the enhancement of our global material management. We have established a sourcing office in Hong Kong, which gives us better opportunities to increase the efficiency of sourcing operations and to lower material prices. This increases our competitiveness and intensifies our global customer service." Personnel At the end of the review period, Incap Group employed 759 people (800). The average number of personnel was 736 (783). At the end of the review period, approximately 22% of personnel worked in Finland (39%), 29% in Estonia (23%) and 49% in India (38%). Outlook for the rest of 2011 Incap's estimates on future business development are based on its customers' forecasts and the company's own assessments. Even though the general economic situation has improved, should the uncertainty related to the economic development in Europe and in the USA increase, it may have an effect on the Incap's customer demand. The most important near future profitability measures at Incap are enhancing material management. In order to improve the profit margin, product pricing has been adjusted and the effects of changes in pricing will be more evident in the third and fourth quarters. In addition, business controlling activities will be strengthened by developing inter-unit cooperation. Incap specifies its previous guidance with regard to revenue and estimates that the Group's revenue in 2011 will be clearly higher than in 2010, when revenue stood at EUR 59.2 million. The Group's full-year operating result (EBIT) in 2011 is expected to be positive and, consequently, clearly higher than in 2010 (EUR -3.2 million). In the interim report for January-March published on 4 May 2011, Incap estimated that its revenue in 2011 would exceed that of 2010. The company also estimated that the full-year operating result (EBIT) in 2011 would be positive and, consequently, clearly higher than in 2010 (EUR -3.2 million).