Incap’s 2Q saw revenues go up, but profit down – CEO is satisfied

Incap’s manufacturing operations in India was closed at the end of March due to the country’s lockdown orders. The plant went back online a few months later in May. The closure of the factory, and other effects of the pandemic, had a negative impact on the organic revenue growth and the profitability, the company explains in its 2Q report. Revenue during the second quarter amounted to EUR 22.6 million, showing an increase of 21% from EUR 18.7 million during the same period last year. However, excluding revenue from the acquired AWS Electronics Group – which was acquired in January 2020 – the company’s revenue decreased 31% organically. Second quarter adjusted EBIT was EUR 2.8 million, compared with EUR 2.9 million last year, corresponding to 12.2% of revenue, and15.5% for 2Q19. Operating profit (EBIT) during the quarter was EUR 2.1 million, a decrease of 27% from EUR 2.9 million during the same quarter last year. Net profit for the period ended up at EUR 1.2 million a YoY decrease of 46% from EUR 2.1 million,. “As expected the COVID-19 pandemic had a negative impact on our operations in the second quarter of the year. Due to the lockdown and the factory close in India, our revenue decreased organically. However, I am satisfied that in the difficult circumstances the demand for our services continued on a good level and we managed to ramp up the operations at the Indian factory quickly after the lockdown was lifted. Despite our personnel working extra shifts to catch up with the backlog, part of the deliveries were delayed to the third quarter of the year,” says CEO Otto Pukk. It was not just in India that the pandemic caused issues for the manufacturer. Incap’s factory in the UK operated with somewhat reduced capacity during the second quarter. The factory in Slovakia suffered from the decline in the automotive sector while Incap’s factory in Estonia has been running at a close to normal level. According to the CEO, the overall demand for the company’s services has continued on a good level, although the pandemic has put pressure on some customer segments. “Especially the automotive sector was affected by the pandemic, but has since then started to slowly recover. We have been successful in new customer acquisition this year and have seen high activity among customers in Europe with a good number of requests for quotations,” Pukk says. Following the AWS acquisition in January this year, the number of customers has increased significantly. Incap’s four biggest customers contributed to 50.8% of revenue in the first half of 2020, while in 2019 that share was 80.6%. The investment in new manufacturing capacity in India is also back on track after the slowdown caused by the pandemic and the lockdown. The company currently expect the factory expansion to be finalised this year. “It has been a tough time and uncertainty relating to recovery from the COVID-19 pandemic still remains high. However, following the AWS acquisition, we expect our revenue for 2020 to be significantly higher than in 2019,” the CEO ends.