Incap Corporation
Stock Exchange Release
Business Review Q3 2020
Incap Group’s Business Review for January–September 2020: Back on track with good growth and profitability
July–September 2020 highlights
- The revenue of the third quarter amounted to
EUR 28.1 million , showing an increase of 59.9% (7– 9/2019:EUR 17.6 million ). - Excluding revenue from
AWS Electronics Group acquired inJanuary 2020 , the revenue increased organically by 10.7%. - Adjusted EBIT was
EUR 3.6 million (EUR 2.4 million ), corresponding to 12.9% of revenue (13.7%). AWS Electronics Group acquisition related purchase price allocation (PPA) amortisation amounted toEUR 0.4 million (EUR 0.0 million ) and non-recurring costs wereEUR 0.0 million (EUR 0.2 million ).
- Operating profit (EBIT) was
EUR 3.3 million (EUR 2.2 million ), an increase of 46.0%, corresponding to 11.6% of revenue (12.7%). - Net profit for the period was
EUR 2.4 million (EUR 1.8 million ), an increase of 33.7%. - In
November 2020 , Incap’s rights issue was completed successfully with gross proceeds of approximatelyEUR 10.9 million . - In
November 2020 Incap revised its outlook for 2020. Incap estimates that the revenue for 2020 will be significantly higher than in 2019 and the operating profit (EBIT) in 2020 will be higher than in 2019. The Group specifies that the estimated revenue in 2020 will be approximately EUR 105–107 million and the operating profit (EBIT) approximatelyEUR 10 .5–11.5 million.
January–September 2020 highlights
- The closure of the factory in
India and other effects of the COVID-19 pandemic had a negative impact on the organic revenue growth and the profitability in April–June 2020. Incap Group revenue amounted toEUR 74.9 million , up 36.8% on the corresponding period of the previous year (EUR 54.8 million ).- Excluding revenue from
AWS Electronics Group , the revenue decreased organically by 12.9%. - Adjusted EBIT was
EUR 9.1 million (EUR 8.2 million ), corresponding to 12.1% of revenue (14.9%). AWS Electronics Group acquisition related purchase price allocation (PPA) amortisation amounted toEUR 1.5 million (EUR 0.0 million ) and non-recurring costs wereEUR 0.1 million (EUR 0.2 million ).- The Group’s operating profit (EBIT) amounted to
EUR 7.5 million (EUR 8.0 million ), down 5,9%, corresponding to 10.0% of revenue (14.6%). - Net profit for the period amounted to
EUR 5.1 million , down 16.6% on the corresponding period (EUR 6.1 million ). - Acquisition of
AWS Electronics Group with production facilities in theUK andSlovakia was completed inJanuary 2020 .
The information in this business review concerns the development of
Key figures
EUR million | 7–9/2020 | 7–9/2019 | Change | 1–9/2020 | 1–9/2019 | Change | 2019 |
Revenue | 28.1 | 17.6 | 59.9% | 74.9 | 54.8 | 36.8% | 71.0 |
Operating profit (EBIT) | 3.3 | 2.2 | 46.0% | 7.5 | 8.0 | -5.9% | 10.1 |
EBIT, % of revenue | 11.6% | 12.7% | 10.0% | 14.6% | 14.2% | ||
Adjusted EBIT* | 3.6 | 2.4 | 50.5% | 9.1 | 8.2 | 11.2% | 10.8 |
Adjusted EBIT*, % of revenue | 12.9% | 13.7% | 12.1% | 14.9% | 15.2% | ||
Net profit for the period | 2.4 | 1.8 | 33.7% | 5.1 | 6.1 | -16.6% | 6.3 |
*Adjusted EBIT is an alternative performance measure. Adjusted EBIT excludes the non-recurring items and the purchase price allocation amortisation. Adjusted EBIT provides comparable information between different financial years on operating profit adjusted for acquisition-related expenses.
Outlook for 2020
Due to better visibility for the full-year performance, Incap revised its outlook for 2020 on
The increase in the estimated operating profit (EBIT) is based on good development primarily at the Indian factory. After the COVID-19 pandemic related closure of the Indian factory, the backlog has been cleared and the demand from some existing customers has increased more than previously estimated. The estimated revenue growth is mainly driven by the
In 2019, Incap’s revenue amounted to
The estimates are given provided that there are no major negative changes in the COVID-19 pandemic situation, currency exchange rates or in component availability and they are based both on Incap’s customers' forecasts and the company's own assessments of the business development.
Incap’s outlook for 2020 as published on
“Due to better visibility for the full-year performance, Incap revises its outlook for 2020. Incap estimates that the revenue for 2020 will be significantly higher than in 2019 and the operating profit (EBIT) in 2020 will be higher than in 2019. The previous outlook published in the half-year financial report estimated that the revenue for 2020 will be significantly higher than in 2019 and operating profit (EBIT) in 2020 will be approximately on the same level as in 2019.”
Following a tough second quarter that was affected by the negative consequences of the COVID-19 pandemic the business recovered during the third quarter. Our revenue grew organically over 10 percent, as we cleared our backlog in our Indian factory while at the same time the demand from existing customers increased more than previously estimated. COVID-19 pandemic delayed our growth plans for 2020, but we are happy that we are now back on track and were able to announce an improved outlook for our operating profit, which we estimate will be higher than in 2019.
As a consequence of the good demand from existing and new customers, we announced in August that we are further expanding our factory in
The EMS sector remains highly fragmented and we see no shortage of opportunity for growth through consolidation, as well. We want to be an active player in the sector, and to prepare ourselves for consolidation, we successfully completed our rights issue of
The integration of
As we publish this report, the COVID-19 pandemic continues to have a negative impact on societies in all our markets. Despite the growing number of cases and concerns about the health of our personnel, we have managed to keep our factories up and running. The markets are expected to remain uncertain due to the pandemic. Nevertheless, we are today more confident as we are learning to operate with the presence of the pandemic and related uncertainties.
I would like to express my sincere gratitude to all our employees who yet again have showed outstanding resilience and flexibility as we adapt to changes and uncertainties in our operating environment. We continue to take strict measures to protect our personnel from the spread of the virus. This continues to require special efforts from all our employees. At the same time the good growth and profitability achieved during the third quarter is an indication that we are doing the right things and stand on a solid basis to achieve our targets for this year and beyond.
Financial performance
Incap’s financial performance developed well in July–September, primarily due to the high activity level at the Indian factory. The revenue growth was mainly related to the
In July–September 2020, revenue improved by 59.9 percent compared to the corresponding period a year ago and amounted to
July–September operating profit (EBIT) was
The increase in the operating profit (EBIT) for the third quarter of 2020 was related to clearing of the backlog at Incap’s Indian factory and increasing demand from existing customers. The purchase price allocation amortisation relating to the AWS acquisition and the acquisition related non-recurring costs amounted to
January–September 2020 operating profit (EBIT) was
The company’s financial position remained strong. The equity ratio decreased and was at 35.4% (57.4%) at the end of
Financial reporting in 2021
Incap will publish the financial statement bulletin for January–December 2020 on
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