© Electronics Production | July 31, 2013

Tough first half for Incap

Finnish Incap has seen a tough first half of 2013 - revenue dropped some 46% YoY during the company's second quarter. But with a clear action plan to improve profitability and a new shareholder new opportunities arise.

Sami Mykkänen, President and CEO of Incap Group, commented on the company's first half of 2013: "Revenue for the first half of the year was clearly lower than in the comparison period, although demand for energy efficiency products still remained good. Our delivery reliability suffered from the company's challenging cash position, which hampered the accrual of revenue. In order to ensure deliveries to customers, we temporarily transferred the responsibility for the purchase of materials to customers. Negotiations aiming at the improvement of the company's financial situation were continued, and after the end of the review period, a comprehensive financing arrangement was achieved that will improve the company's cash position and decrease liabilities significantly. We can now resume normal operations, especially in materials management and production control. Inission AB as new Incap shareholder - and a potential merger with it - create entirely new opportunities for developing our operations.” Incap Group's revenue and earnings in April-June 2013 Revenue for the second quarter amounted to EUR 9.9 million, down approximately 46% year-on-year. The decrease in revenue was due to the partial transfer of the responsibility for the purchase of materials to customers. Revenue for the comparison period includes products the manufacturing of which was discontinued in the second half of 2012. Demand for summer season products delivered to the energy efficiency sector remained good, although difficulties in deliveries arising from the poor availability of materials hampered the accrual of revenue. The operating result of the second quarter improved in comparison with the first quarter thanks to the production capacity in the manufacture of mechanics being utilised more efficiently than in the first months of the year when there were more breaks in the availability of materials. In addition, electronics production costs could be adjusted to decreased revenue. Measures aimed at improving administration efficiency reduced costs, too. The operating result for the first quarter of the year included an impairment provision of EUR 0.4 million made for the Vuokatti property. Action plan for improved profitability One of the most important objectives of the company in 2013 is the improvement of profitability. Previously the company estimated that by enhanced material sourcing, closing down the Helsinki factory and centralising Group Services to Estonia the company could achieve savings of approximately EUR 2.3 million in 2013. The savings were realised during the first 6 months of the year as expected. The action plan for improving the efficiency of production, launched at the beginning of the year, was continued in Finland and Estonia. The action plan will improve the operating result (EBIT) of 2013 by a total of approximately EUR 1.8 million, of which approximately EUR 0.8 million has been achieved during the first half of the year. The number of employees at the Kuressaare plant has decreased by nearly 30 since the beginning of the year, in addition to which all factory personnel only worked a four-day week in April and May. At the Vaasa plant, the temporary lay-offs that had been agreed in the co-operation negotiations were cancelled as the situation improved, and more leased employees for the summer season were hired to the plant. The number of employees in group functions I Finland has been cut to approx. Half. January-June 2013 in brief:
  • the Group's revenue was EUR 20.5 million, down approximately 39% year-on-year (Jan-June 2012: EUR 33.9 million) due to temporary transfer of the purchase of materials to customers and due to the discontinuation of manufacturing of certain well-being technology products
  • As a result of the decrease in revenue, the operating result (EBIT) declined year-on-year and was EUR -1.8 million (EUR -0.3 million)
  • After the end of the review period, Incap Corporation negotiated a comprehensive financing arrangement that significantly enhances the company's financial position improving notably equity ratio and liquidity, among others
  • The company adjusts its financial guidance and estimates that the Group's revenue in 2013 will be clearly lower than in 2012 and its full-year operating result (EBIT) will be positive.
April-June 2013 in brief:
  • Revenue for the second quarter amounted to EUR 9.9 million, down approximately 7% from the first quarter and approximately 46% year-on-year (April-June 2012: EUR 18.4 million)
  • The operating result (EBIT) for the second quarter improved from the first quarter by approximately EUR 1.0 million and was EUR -0.4 million (April-June 2012: EUR 0.01 million).
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