© Incap Electronics Production | May 13, 2020
Reduced operations at Incap’s factories negatively impacted the quarter
The COVID-19 pandemic had a negative impact on Incap’s performance in the first quarter of 2020 while the AWS Electronics acquisition finalised in January 2020 supported the revenue growth.
Revenue improved by 31.3% and amounted to EUR 24.3 million, compared to EUR 18.5 million during the same period last year. January–March operating profit (EBIT) was EUR 2.2 million, compared with EUR 2.8 million. The net profit for the period totalled EUR 1.6 million, down from EUR 2.2 during the same period last year. Operating profit (EBIT) decreased by 23.7% and net profit by 27.8% during the period. The operating profit (EBIT) for the first quarter of 2020 was impacted by the COVID-19 pandemic, which resulted in reduced operations especially at the company’s Indian factory due to the lockdown. The purchase price allocation amortisation relating to the AWS acquisition and the acquisition related non-recurring costs amounted to EUR 0.6 million. The company says that its financial position remained strong and that the decrease was mainly related to the AWS acquisition. “Incap’s first quarter in 2020 started well as we completed the acquisition of AWS Electronics Group, with production facilities in the UK and Slovakia. Through the acquisition we are extending our strategic foothold into the UK and Central Europe and further strengthening our position in the USA and South-East Asia. As a result of the acquisition, we are able to broaden our product offering to our existing customers and enter into new market segments,” says president and CEO Otto Pukk in a press release. He continues saying that the acquisition also widens the company’s customer portfolio both in numbers and industrial segments and in the long-term, the acquisition is expected to bring synergy benefits in terms of material purchasing and cross-selling opportunities. After the good beginning for the year, the COVID-19 outbreak and the resulting pandemic started to have an impact the company’s operating environment. “Due to the lockdown in India, Incap’s largest factory was closed at the end of March. As a result of the measures announced by the British government to contain the COVID-19 pandemic in the UK, Incap’s factory in Straffordshire continues to operate with reduced capacity. The pandemic has affected our factories in Estonia and Slovakia as well, where the operations have contracted to some extent due to the availability of employees, minor delays in the supply of materials and rescheduling of orders,” Pukk explans. “While our factory in India remains in partial lockdown, we have started preparations on a small scale to be ready to ramp up to full speed once the lockdown is lifted,” continues. Reduced operations at the EMS providers factories has had a negative impact on both organic growth and profitability. The profitability was further reduced by the AWS acquisition and the related non-recurring costs and purchase price allocation amortisation. “Considering the circumstances, we are satisfied with our EBIT-margin of 8.9 percent. Our revenue grew by 31 percent supported with the AWS acquisition. Excluding the AWS acquisition, our revenue was down by around 17 percent. However, we are seeing an increase in customer contacts and interest in moving electronics manufacturing services closer to our customers’ end-users and the electronics design teams,” Pukk states. As for most companies the visibility is still poor, and the CEO says that it is too early to estimate the impact of the pandemic on the company’s financial performance for 2020. As a result of uncertainty relating to the COVID-19 pandemic, Incap has withdrawn its current guidance for 2020.