INTERIM REPORT JANUARY-SEPTEMBER 2001

  • Incap Corporation’s net turnover grew by 9 % from last year, being EUR 70.2 million in January-September
  • The Group improved its profitability compared to the corresponding period last year: the comparable operating profit was EUR 2.4 million
  • The net turnover of the electronics sector grew further. The net turnover of the furniture sector declined compared to that of last year due to the fire at the Kärsämäki production facility.



    Group’s financial development

    Incap Group’s net turnover in January-September grew by 9 %, being EUR 70.2 million (EUR 64.4 million in the reference period of January-September 2000). The Group’s comparable operating profit was EUR 2.4 million (EUR 1.2 million), which is approximately 3.4 % (2 %) of the net turnover.

    The operating profit of EUR 8.9 million shown in the profit and loss account includes EUR 6.5 million in such insurance refunds for fixed asset items destroyed in the fire at Kärsämäki that exceed the previous balance sheet values.

    The Group’s comparable profit before extraordinary items was EUR 1.86 million (EUR 0.84 million), and the profit shown in the profit and loss account was EUR 8.4 million. The comparable profit for the reporting period was EUR 1.3 million (EUR 0.58 million), and the profit shown in the profit and loss account EUR 6.0 million.

    The comparable earning per share was EUR 0.38 (EUR 0.17) and the profit in the profit and loss account EUR 1.70. The balance sheet total was EUR 64.1 million (EUR 42.1 million).

    Investments

    The Group’s total investments during the reporting period were EUR 12.9 million (EUR 7.0 million), or approximately 18.4 % (10.8 %) of net turnover. The investments of Incap Electronics were directed at improving efficiency and included the facility extension at Vuokatti, the change in the lay-out done in connection with the extension and the new FMS-manufacturing line in the Vaasa unit. Half the total investments were building and machinery acquisitions related to the re-building of Incap Furniture’s production facility at Kärsämäki. Of the capital invested, EUR 2.3 million (EUR 4.9 million) was acquired by leasing arrangements.

    Financing

    Quick ratio, which reflects the company’s financial status, was 0.8 (1.0) and current ratio 1.7 (1.8). Net debt amounted to EUR 18.5 million (EUR 8.0 million). The Group’s solvency ratio was 39.2 % (46 %).

    Personnel

    At the end of the reporting period, the Group was employing 812 (843) persons, which was less by 23 than at the turn of the year.

    Shares and shareholders

    The market price of Incap Corporation’s shares varied between EUR 3.70 and 6.00 during the reporting period. The company has a total of 3,510,110 shares, of which 3.6 % changed hands during the reporting period. At the end of the period, the company had 497 shareholders. Altogether 0.75 % of the shares were in administrative registers. The company’s market value was EUR 13.0 million at the end of the reporting period.

    Business sectors

    Incap Electronics

    The net turnover of Incap Electronics grew by 24 % in January-September compared to the reference period, being EUR 44.2 million (EUR 35.5 million). Of the increase in net turnover, 3.3 % was organic growth, and the rest resulted from shifting full responsibility for materials from customers to Incap Electronics. Operating profit was EUR 0.5 million (EUR 1.0 million), or approximately 1.1 % (3 %) of net turnover.

    The net turnover of the electronics sector in the third quarter was EUR 14.6 million (EUR 12.3 million), or 19 % higher than during the corresponding period last year. The comparable turnover without shifted responsibility for materials was, however, lower by 16 % than during the corresponding period last year and lower by 21 % than during the second quarter of the current year. The demand in various customer sectors, e.g. the telecommunications and power industry, declined, and customers postponed their orders.

    The profitability during January-September was lower than that of last year. This was due to the low utilization rate of the capacity during the third quarter, which was a result of the rapid decline in the markets. The already started efforts towards lower fixed costs and better operative efficiency were continued, but the impact of the efforts could not yet be seen in the profit of the third quarter.

    The operation of the Estonian unit continued as positive with regards to both net turnover and profit.

    Incap Electronics and its Estonian subsidiary were employing 562 (599) people at the end of the reporting period.

    Incap Furniture

    The net turnover of Incap Furniture was EUR 26.0 million (EUR 28.9 million), or less by 10 % than during the corresponding period last year. The comparable operating profit was EUR 2.0 million (EUR 0.93 million), which is 7.7 % (3 %) of net turnover.

    Substitutive production was flexibly launched after the fire at the Kärsämäki production facility mainly with the help of the domestic network of subcontractors.

    Construction of the new production facility at Kärsämäki is proceeding as anticipated. It is estimated that production can be started during the spring of 2002.

    Incap Furniture Ltd was employing 245 (237) people at the end of the reporting period.

    Future prospects

    Incap Electronics

    The rapid decrease in the demand for contract manufacturing in the electronics industry in July-September will have an effect on the annual profit of Incap Electronics, which will likely be lower than that of last year. Intensified measures to adjust capacity and costs have already been launched. Besides arrangements for working hours at the Helsinki unit and adjusting measures affecting 9 persons at the Vaasa unit, employee negotiations have been started at the Vuokatti unit. Eventual lay-offs or reductions of personnel will affect about 50 people in Vuokatti.

    The markets are expected to improve during the last quarter in comparison with the third quarter. However, it is expected that the markets will remain quieter than usual at least during the first quarter of 2002. The delays in the third generation network investments, decline in building and infrastructure investments and the lower-than-budgeted investments in measurement and processing industries will have an effect on the profit of Incap Electronics, which will remain at a lower level than expected during the last quarter of the year. The adjustment measures that have been started will, however, alleviate the effects of declined demand in the near future. Therefore, the annual profit of Incap Electronics will be positive.

    Based on customer forecasts, it is expected that the demand in both the telecommunications and other customer sectors will become more active during the second half of the year 2002. Incap will be able to quickly react to the increasing demand in the future thanks to, among other things, the facility extension at Vuokatti.

    Incap Furniture

    The net turnover of Incap Furniture will be lower than that of the previous year due to the fire at the Kärsämäki production facility. However, the volume of orders received has remained at a good level. Despite the exceptional situation caused by the fire at Kärsämäki, product development projects have advanced as usual, and there are new products in the next year’s production plan for the main customers.

    The new production facility at Kärsämäki will be ready to start production during the spring of 2002. The facility will concentrate on manufacturing board products, and the production of beds will be transferred to the town of Haapamäki to facilities that already house some substitutive production from the production facility of Kärsämäki.

    Negotiations to differentiate the furniture sector are continued, and the differentiation is expected to take place not later than in the spring of 2002.

    The full report including tables can be downloaded from the enclosed link.


    Annual accounts of 2001 will be published on 14 February 2002.

    Espoo, 6 November 2001

    INCAP CORPORATION
    Board of Directors


    Kari Saarinen
    President and CEO

    Further information:
    Kari Saarinen, President and CEO, tel. +358 40 830 5689 or
    Eija Jansson-Tervonen, Vice President, Finance & Administration tel. +358 40 557 5749.