Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Incap Oyj (OHEL:ICP1V, Financial) reported a strong EBIT of EUR 20.6 million for the period from January to September, with a revenue of EUR 170 million and an EBIT margin of 12.1%.
- The company achieved a 23.4% year-on-year increase in revenue for Q3, reaching EUR 61.8 million.
- Profitability remained robust with a Q3 EBIT of EUR 7.9 million, equating to a 12.8% margin, up from 11.4% year-on-year.
- Incap Oyj continues to invest in its production facilities, ensuring they are equipped with the latest technology to meet customer needs.
- The company is actively working on sustainability initiatives, with over 50 employees involved in ESG reporting and analysis, driven by grassroots efforts within the organization.
Negative Points
- Net profit growth was only 11% despite a 37% increase in EBIT, primarily due to currency fluctuations affecting the valuation of an internal loan related to a US acquisition.
- There is ongoing price pressure in the industry, which could impact margins on new business.
- The market outlook remains challenging with geopolitical uncertainties and potential impacts from upcoming US elections.
- Inventory levels have been a concern, with efforts ongoing to normalize them after previous overstocking by customers.
- While the company is exploring M&A opportunities, finding suitable targets and valuations remains a challenge, and there is no immediate pressure to execute deals.
Q & A Highlights
Q: Why did EBIT increase by 37% while net profit only rose by 11%?
A: Antti Pynnonen, CFO, explained that the discrepancy was due to currency fluctuations affecting the valuation of an internal loan related to a US acquisition. This resulted in translation differences that negatively impacted the net result for the quarter.
Q: Can you elaborate on the cross-selling opportunities following the US acquisition?
A: Otto Pukk, CEO, noted that the acquisition has enhanced Incap's global presence, leading to increased quotation opportunities from US customers interested in their units in Europe or Asia, and vice versa.
Q: Are there any ongoing M&A opportunities, and how does the market look?
A: Otto Pukk, CEO, confirmed that Incap has a dedicated team exploring M&A opportunities with a strong pipeline. The market still offers good opportunities, and while they are not in a rush, they are open to making strategic deals.
Q: Is there price pressure in the industry affecting new business margins?
A: Otto Pukk, CEO, acknowledged ongoing price pressure but stated that new business does not necessarily come with lower margins. Incap focuses on maintaining market rates and achieving higher EBIT through cost efficiencies.
Q: How is the inventory situation with your largest customer, and what is the demand outlook?
A: Otto Pukk, CEO, mentioned that they have been working to normalize inventory levels with their largest customer. While some products have returned to normal levels, others are still being adjusted. The overall demand outlook appears stable with potential for positive development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
