Incap Group Business Review for January-September 2017: Revenue growth 33%, Operating Profit growth 12%

Incap Corporation                                            
Interim report                       14 November 2017 at 3.15 p.m. (EET)                                        

INCAP GROUP BUSINESS REVIEW FOR JANUARY-SEPTEMBER 2017: REVENUE GROWTH 33%, OPERATING PROFIT GROWTH 12%

The information in this business review concerns the development of Incap Group in January-September 2017 and in the corresponding period of 2016, unless otherwise stated. The figures are unaudited.

Key figures in January-September 2017

• The Group's revenue amounted to EUR 37.1 million, up 32.8% on the corresponding period of previous year (Jan-Sep 2016: EUR 27.9 million).
• The Group's operating profit (EBIT) amounted to EUR 3.6 million, up 11.5% on the corresponding period (EUR 3.3 million).
• Net profit for the period amounted to EUR 2.6 million, up 26.3% on the corresponding period (EUR 2.0 million).
• The company repeats its previous outlook for full year 2017 provided there is no need to write off inventory discrepancy from 2016 and early 2017, which is under analysis

Key events of the period

Incap Group's revenue for January-September 2017 developed favourably both in India and in Estonia, growing by 32.8% on the comparison period. Increased production capacity in India and new customers' ramp-ups in Estonia are the major reasons for revenue growth. The cost control programs to fight against increasing component prices are working well.

The operating profit (EBIT) amounted to EUR 3.6 million, increasing by 11.5% on the comparison period last year. Higher revenue with decreased fixed costs is resulting in good profit performance. Earnings per share were EUR 0.59. The operating profit margin stood at 9.8%, which can be considered as an excellent level for electronics manufacturing services business.

The strengthening of Indian Rupee had an increasing effect on the revenue by approximately EUR 0.7 million and on the operating profit by EUR 0.07 million on the corresponding period last year.

The financing position of the company remained good and the equity ratio on 30 September 2017 was 40.4% (30 September 2016: 34.6%).

Outlook for 2017

Incap's estimates for future business development are based both on its customers' forecasts and on the company's own assessments.

The company has detected a possible discrepancy in inventory valuation from 2016 and early 2017. There might be a need for a write-off of approximately EUR 0.5 million from the inventory from this time period.  In case a write-off is needed and taken in to the accounts for 2017, the Group's operating profit (EBIT) for the full year 2017, including this extraordinary cost from the past, would be somewhat lower than in 2016.

The company continues to estimate that that the Group's revenue in 2017 will be approximately EUR 45-50 million and that the operating profit (EBIT) in 2017 is somewhat higher than in 2016, provided that there are no major changes in exchange rates and without the possible write-off of inventory value.

The Group's revenue in 2016 was EUR 38.6 million and the operating profit (EBIT) EUR 4.4 million.

Incap will publish its financial statement release for January-December 2017 in accordance with IAS 34 on Tuesday, 13 February 2018.  

Vesa Mäkelä President and CEO of Incap Group:

"Our business has grown throughout the year according to our expectations and especially the second and third quarter of the year was very good both in terms of revenue and the operating profit. Equity keeps improving which can be seen in equity ratio. Inventory and other current assets increased relatively modestly compared to the increase in revenue. The financing position of the company has remained good.

Performance in the Indian operations continued strong. This year the business unit in Tumkur has been a part of the Incap Group since 10 years and it has had a significant role in the internationalization and development of Incap's operations. The extension of the factory was taken successfully into use during the second quarter. The increased capacity is in place just-in-time to support the organic growth in business.

Operations in the Estonian factory are on the track of profitable growth. Operational   development continues to focus on overall agility, quality and Lean processes.  

The pressure from customers on the price reduction and the increased costs for raw-materials at the same time are challenging us also in future. Continuous improvement and lean operational model are important tools to keep the operations agile and ensuring that profitability and quality remain at the good level. The market outlook is good at the moment and our active operations aimed at realizing organic growth have produced successful growth."

INCAP CORPORATION
Board of Directors

For additional information, please contact:
Vesa Mäkelä, President and CEO, tel. +358 40 835 4495

Distribution:
Nasdaq Helsinki Ltd
Principal media
The company's home page www.incapcorp.com

INCAP IN BRIEF
Incap Corporation is an international contract manufacturer. Incap's customers are leading suppliers of high-technology equipment in their own business segments, and Incap increases their competitiveness as a strategic partner. Incap has operations in Finland, Estonia, India and China, and the company currently employs approximately 570 people. Incap's share is listed on the Nasdaq Helsinki Ltd. as from 1997. Additional information: www.incapcorp.com.