CEO’S MESSAGE

Q3/2020

Otto Pukk Incap CEO and PresidentIncap Group President and CEO Otto Pukk

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 India. We expect the original factory expansion to be finalised early 2021 and the further expansion is expected to be completed by the end of 2021.

ceo message

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 10,9 million euros in November. With the rights issue we will be able to strengthen our capital structure, balance sheet and financial position and thus create conditions for the implementation of our growth strategy. The oversubscribed offering indicates indeed a strong confidence in our growth strategy. I would like to warmly thank all those who took part in the offering for their interest to make Incap a more significant player in our field.

The integration of AWS Electronics Group in the UK, which was acquired in January, is progressing according to plan despite e.g. travel restrictions related to the pandemic. As we are approaching 2021 and the UK’s exit from the EU, we are preparing for a transformation period and securing availability of certain critical components by increasing stock levels for these parts.

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.

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