HELSINKI – Incap reported revenue of €50 million ($52.9 million) for the third quarter, a decrease of 29% compared to the €70.6 million ($74.7 million) in revenue for 2022's third quarter.

For the first nine months of the year, the company's revenue decreased 3% to total €179.2 million ($189.5 million).

"I am happy to note that our sales to most of our customers but the largest one increased in the third quarter," said CEO Otto Pukk. "This is the result of a great team effort and success in new customer acquisition and growing existing accounts, supported with the good EMS market demand. As communicated earlier, the decrease in our revenue is related to our largest customer's need to reduce their inventories. We continue to work closely with our customer to help them reduce their inventory levels; however, the destocking is taking longer than expected. We expect to see the full impact of the decreased volumes during the fourth quarter. With the growth of other customers’ business and the recent acquisition of Pennatronics Inc., our dependency on the largest customer has significantly reduced.

"Our revenue in the third quarter of the year was €50 million, 29% below last year’s third quarter, but excluding the impact of our largest customer, our revenue grew over 30%. Despite the lower revenue, our relative profitability stayed on a healthy level: EBIT in the third quarter was €5.7 million or 11.4% of revenue. Thanks to our flexible operational model, we have been able to efficiently reduce our variable costs. In order to adjust to the lower volume level, we have taken hard measures and reduced workforce by 1,136 people at our factories in India. This has been tough for everyone involved, and I would like to thank the team for their efforts and commitment during this tough adjustment period.

"Our recent acquisition of Pennatronics, now known as Incap Electronics US, Inc., creates a foothold for further expansion in the U.S. and broadens our customer base. The integration of Incap US is proceeding very well. We are already visiting customers jointly and exploring cross-selling opportunities. We are seeing growing interest in Europe and India from customers on the other side of the Atlantic and vice versa.

"We are continuing the good dialogue with our customers and organise different customer events for them. In Slovakia, we had the factory’s 20-year jubilee, and in Estonia, we will organise our yearly Customer Day event later in October.

"With the growing demand, we have made investments in our factories. In Estonia, a new SMT line was commissioned, increasing the capacity by 50%. In Slovakia, the factory expansion project was finalised, and the plant now has 1,200 additional square metres for production. In India, production in the third factory has started.

"Our estimate for 2023 is that our revenue will be E€210–220 million and EBIT €24–28 million, including Incap US. While component availability is continuing to improve, we still see some price pressure on the market. However, with a more global and balanced customer base, tight cost control and our committed team, we believe that we will be able to continue to grow organically and to keep a good relative profitability level. We will also continue to focus on pursuing M&A, concentrating in companies with a strong cultural fit and good profitability."

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