INCAP TO EXPLORE MEANS OF DIVESTING MACHINING AND PLATING OPERATIONS – IS PREPARING TO ENTER WRITEDOWNS IN THE RESULT OF 2004

Incap’s electronics and sheet-metal mechanics business developed positively in 2004, but the machining and plating were clearly unprofitable. Negotiations with potential business partners have not lead up to any satisfactory result and Incap is preparing to enter non-recurring writedowns amounting to EUR 3 – 4 million in the result of 2004, due to the structural rearrangement in machining and plating.
 
The market situation for machining and plating has significantly changed. In particular, the demand for machining has gone down clearly, due to a switch from the use of massive aluminium to cast aluminium in aluminium products, and because the suppliers of aluminium casting have begun to offer the machining needed for the casting in addition to the casting itself. Moreover, some of the customers of Incap’s machining and plating services have transferred their machining and plating operations and acquisitions to Asia.
 
Incap has attempted to improve the profitability of its machining and plating operations during 2004. In addition to increasing the efficiency of its customer recruitment, some of the machinery has been sold and machining has been concentrated onto the most efficient equipment. Incap has further sought partners with whom the operations in question could be developed using a wider customer base than at present.
 
The management of Incap is investigating, on assignment of the Board of Directors, the measures needed to divest the machining and plating operations from the Group. 
 
According to the preliminary calculations, Incap’s operating profit in 2004 was approximately 1.6 million euros excluding any possible non-recurring expenses. According to a preliminary evaluation, the entire Group’s net turnover in 2004 was about 75 million euros.
 
The structural rearrangements in machining and plating will have only minor effect on the turnover of Incap Corporation in 2005, but they are aimed at improving the profitability already during 2005.
 
Incap’s financial statement bulletin for 2004 will be published on 22 February 2005.
 
INCAP CORPORATION
 
Juhani Hanninen
President and CEO