Incap H1 2026 webcast on 30 July 2026 at 11:00 EEST

Q: In addition to the Lacon impact on revenue, organic growth picked up in Q2. What is driving it and how do you see it moving ahead?

A: Our main focus is now on driving organic growth. The key is to create value for our customers and owners. We have also considered inorganic growth, and it remains as an option, but the current market is challenging with very high valuations when looking at different kind of M&A targets. Responsible capital allocation is always essential for us, and with our current multiple levels, organic growth is where we are focusing on, and we have a strong basis for driving that. We are now well positioned with our new service offering and the strong team of larger Incap. It is expected that our efforts will continue to yield results. Our organic growth increased 20 percent from quarter-to-quarter, and that is already a good indication of the direction we are moving to.

The development in Incap’s traditionally strong business areas, such as power electronics, has been quite stable. But when we look into new sectors such as defence sector, that already played a big role on the second quarter’s four percent organic growth year-on-year. We have recently had good success stories in the defence sector.

Q: Could you elaborate on the situation in India and the increased competition that was mentioned? Are these the certain market segments which were mentioned in the profit warning?

A: India is a very important part of our company, and we have a great team there. The EMS market in India is currently very hot, with a lot of competition emerging. EMS companies on the Mumbai Stock Exchange have very high valuations and a lot of investments are flowing into the market. This brings new players into the market and increases competition compared with a few years ago, or even further back, when Incap was among the first international EMS companies in India. We see more competition and more players on the market in general. I would not say that it is in any particular segment, instead it is more geographical. Many OEMs are moving their manufacturing and R&D facilities to India. India is an attractive place to be, especially around Bangalore. We operate in Tumkur, just outside Bangalore, in an area referred to as the Silicon Valley of India. It is a hot market that offers opportunities, but with more competition than before.

Q: How about the competition and the decreased headcount in India? Have you lost some business in India and what is the status of production in India currently?

A: The headcount fluctuates depending on the product mix and the type of business we are driving. In terms of volume, we have increased the business in India. It all depends on the product mix and how it turns out in the revenue numbers. Overall, we are attracting new accounts and ramping up larger new customers, as Murthy Munipalli, Incap India’s Managing Director, also mentioned in an interview during the quarter. There is a lot of positive development in India, and we have not lost any customer accounts. However, the increased competition creates pressure, and we need to manage with it. At the same time, India as a market is growing, and there are many opportunities. We are working together with many multinational companies in India. I remain very positive about our presence in India and the possibilities we are pursuing there.

Q: Why is India such an attractive market, and what is the root cause of the strong EMS market development there?

A: Every year, around 1.5 million engineers graduate in India. They are all English-speaking, and India has great engineering schools. I see the availability of engineers as the key driver. In Europe, the US and many other parts of the world, there is a shortage of engineers. In India, engineers are available, and that drives many companies to invest in the country, especially into R&D and utilising the engineering power. India is also a democracy and one of the few democracies in Asia where companies can run manufacturing. There is a huge difference between doing business here compared to some of the more totalitarian states in the region. Several factors therefore support India, but the availability of engineers is the main factor. India is also a growing market itself, which is very attractive for many companies, also for Incap.

Q: Do you see margin pressure intensifying also in other units than India? How would you describe the business in other parts of Incap’s operations?

A: Of course, there is always margin pressure in the manufacturing business. Price, quality, and on-time delivery are some kind of hygiene factors that you need to deal with on the market. But we do not currently see increased competition and that kind of margin pressure in other units than in India.

Q: You have not published figures about Lacon’s business. Is there something to comment on Lacon’s financial development during 2026?

A: There has been positive development, and we have had a great order intake. There have been some delays in the start-up of defence projects resulting in the accumulation of materials which has increased our inventories. The high order intake during the first quarter has continued in the second quarter, and Lacon in general has performed well. There are still good opportunities once we get the projects to start more in scale, and the numbers will then show it as well.

A key thing is that we are still in a very early phase of the integration which has gone very well, and we are now moving into the phase that focuses on harvesting the synergies. Incap’s and Lacon’s sales teams are collaborating, sharing the leads and doing the cross-efforts on boosting sales, and we believe the figures will be picking up. As the second quarter was the first full quarter, we are still at the very beginning of this journey, but it has gone better than expected in terms of all streams of the integration. In the second half of the year, we expect to start seeing increasing financials as well. The order intake was all-time high for the large defence customers, and those orders start to impact the figures in the near future.

Q: What strategic options are you considering? Are you expecting a new acquisition before the year-end?

A: We are currently focusing on organic growth. When we make acquisitions, it must be value-creating – and if you look at the current multiples that deals are being done with and compare those to our trading multiples, it is hard to make value creating acquisitions due to metrics. Of course, there might be strategic alternatives, for example bolt-on acquisitions where we acquire some customers, but that I would more count as organic growth. Our key focus is now on developing our current operations and driving organic growth.

Q: Regarding organic growth; are you focusing on existing customers or new customers?

A: We are focusing on both existing and new customers. We are always trying to increase our offering to the customers we have as that is perhaps the easiest way to drive organic growth. New customer acquisition, of course, is always welcome, and that is something we work strongly with the team to achieve.

Q: Why have the personnel costs doubled in Q2? Is there anything else but Lacon and the accruals which would explain this increase, and do you expect similar personnel cost level in the coming quarters?

A: When comparing the quarters year-on-year, almost EUR 900,000 difference in personnel-related accruals can be classified as a one-time cost, partly explains the increase, and the rest is mainly driven by the Lacon acquisition as this was the first full-quarter contribution from the acquired business. These two elements explain majority of the increase. Going forward, at least in Q3 and Q4, this one-time cost will obviously not materialise anymore.