Here are Anttiâs comments on how the Norwegian contract manufacturer raised its guidance.
âŠFurthermore, we consider it possible that the Western defense industryâs very strong growth outlook and the need to increase production also open up growth opportunities for Scanfil and Incap.
Incap US has invested approximately 2 million dollars (1.82 million euros) in advanced SMT (Surface-Mount Technology) production equipment to increase its production capacity. The speed and feeding capacity of the new equipment will enable production to be increased by approximately 110 percent. The energy efficiency of the equipment supports the companyâs sustainability goals.
https://incapcorp.com/fi/mfn_news/incap-us-investoi-edistykselliseen-smt-teknologiaan/
There are apparently positive expectations in the US.
At least locally and temporarily, there may be strong demand for Incapâs US capacity in the near future, but I would still be cautious about concluding that the prevailing turmoil would be net positive news for Incap, considering the dynamic effects. Incapâs demand is investment-driven, and increasing uncertainty, as well as a probable slowdown in economic growth or at least a postponement of recovery, is a brake on demand for investment goods. Furthermore, the USA is, to my understanding, a reasonably sized market for Victron Energy (approximately 15% of revenue), although it is not known for certain whether Incapâs Indian factoryâs Victron deliveries will end up specifically in the US.
Indeed. Hardly anyone is a net beneficiary in these uncertainty-fueling situations.
In my opinion, Incap has many ways to be one of the âwinnersâ in this game where the winners are not yet known.
For example, the significant production pressure in the USA, which you just mentioned, to block the impact of possible tariffs, Europeâs large investments, falling interest rates and, consequently, perhaps growing household investments (electric cars, chargers, solar panelsâŠ?) well, all of this is already known.
Although, in my opinion, we will once again get through this orange Monday mess with chuckles, lies, and excuses, it did once again awaken Europe, India, and the rest of the global world to invest in their own production and, as it were, supply security.
The last time such an awakening occurred was when Chinaâs true face was revealed, and it was realized how much knowledge, skill, and technology had been inadvertently given up, and this time, a little more will be learned.
Humans are slow to learn, but piece by piece, we are moving in the right direction. Perhaps?
Incap Groupâs Business Review for January-March 2025 will be published on Friday, April 25, 2025, at approximately 9:00 a.m. The reporting materials in Finnish and English will then be available on the companyâs website at Raportit ja esitykset - Incap Oyj
The company will organize an English-language webcast event on Friday, April 25, 2025, starting at 11:00 a.m. The results will be presented by Incap Plcâs CEO Otto Pukk and CFO Antti Pynnönen.
The live webcast can be followed at
During the event, questions can be submitted via the Q&A function of the webcast platform at the aforementioned address. A recording of the broadcast will be available on the companyâs website at Raportit ja esitykset - Incap Oyj later on the same day.
Questions can also be submitted to CEO Otto Pukk and CFO Antti Pynnönen here in the Inderes discussion forum. The answers will be published on the companyâs own website and in this thread.
Incapâs annual report has now been published and can be read here
The customer distribution (i.e., customer risk) naturally had to be checked immediately. The largest customerâs share of Incapâs revenue last year was 41%. This was well in line with our estimate of 40-45% (see previous report). The largest customerâs revenue decreased by 9% last year. Another customer also apparently rose to a revenue share of slightly over 10% last year. The very good development of the second largest customer seems to have played a significant role in the entire groupâs revenue growth last year.
Viljakainen is anticipating, as Incap will publish its Q1 results on Friday. 
Incap is facing significantly strained comparison figures due to the inventory adjustment phase of its largest customer, but on the other hand, the company already warned in connection with its February financial statement release that geopolitical uncertainty and even just the threat of tariffs had limited demand in the early part of the year. Therefore, we expect the company to have achieved moderate revenue-driven earnings growth in year-on-year comparison. In our assessment, Incap will reiterate its guidance for the current year of higher revenue and operating profit than last year. Due to the tightening global trade situation, the forecasts are predominantly associated with negative risks, even though the company has one production facility in the USA, and thus, according to our assessment, US tariffs do not directly affect Incap.
Forecasts were missed.
Highlights for JanuaryâMarch 2025
- Revenue for the first quarter of 2025 was EUR 52.2 million (1â3/2024: EUR 51.4 million). Revenue increased by 1.6%.
- Adjusted operating profit (EBIT) was EUR 5.9 million (EUR 6.2 million), or 11.2% of revenue (12.1%).
- Operating profit (EBIT) was EUR 5.7 million (EUR 6.0 million), or 11.0% of revenue (11.7%).
- Profit for the period was EUR 3.8 million (EUR 4.9 million).
- Earnings per share were EUR 0.13 (EUR 0.17).
A moderate performance in this market. Otto already commented in Q4 that there would only be moderate growth in the early part of the year and risks are elevated. Considering that, in my opinion, itâs a good performance once again from Incap.
It will be interesting to get Ottoâs outlook for the rest of the year. How protected are we from the trade war? The US factory helps, but doesnât save from rising raw material prices.
Yep, Q1 turned out weak, even though it was warned about during the financial report. Ottoâs interview is coming later today. You can send question suggestions to this thread or as a private message if you have something more specific in mind!
Regarding European development, one could at least ask for more details, e.g., whether sales to existing customers faltered, or new ones were not acquired, or both. As the defense industry was a hot topic in Q1 in Europe, one could have expected some small successes in new customer acquisition from this side.
From Rapsa:
The webcast stated that customers would be cautious due to tariffs, preferring to sell goods from stock rather than ordering more. In this regard, the CFO speculated that overcoming the market situation might be followed by a small demand peak once inventory levels are normalized.
I believe it was mentioned regarding the largest customer that sales to them have developed somewhat steadily on an annual basis.
Antti and @Otto_Pukk discussed, among other things, Incapâs Q1 and the companyâs outlook.
Topics:
00:00 Introduction
00:16 Q1 Figures
03:52 Product Mix
04:45 Confidence for the second half of the year
08:24 Factory in the United States
11:43 Second largest customer
13:53 Defense sector
Yet another case of profit-driven incentives without concern for return on capital or earnings per share. Fortunately, in Incapâs case, one can still trust management to make smart decisions, but to my taste, one-sided profit targets can encourage, for example, growing absolute profit through expensive acquisitions.
"The earning period of the new incentive scheme is 2025â2027, and the earning criterion is the Groupâs cumulative operating profit (EBIT). The rewards to be paid based on the 2025â2027 earning period correspond to a total value of a maximum of 139,188 Incap Oyj shares, including the portion payable in cash."
Here is a fresh company report from Antti at Incap.
We lower our target price for Incap to 12.00 euros (previously 13.00 âŹ) and our recommendation to add (previously buy). Incapâs start to the year was even slower than expected, which, considering the uncertainty related to the prevailing operating environment, already raises questions about achieving the guidance, even though the company was confident about H2. In light of our lowered forecasts, the companyâs earnings growth will be modest this year, but thanks to the upside potential of the low EV-based valuation and the positive M&A option, we believe the return expectation is sufficient even in a 12-month horizon.
Quoted from the report:
Acquisitions are a positive option
Our forecast naturally does not include acquisitions, which, based on comments in the report, may be coming soon. Following two very successful acquisitions (AWS in 2020 and Pennatronics in 2023), we believe M&A is a positive option for value creation, especially considering that the company has ample cash to put to work.
@Antti_Viljakainen: it seems things went a bit wrong with the placement of the DCF modelâs cash flow distribution - the DCF value gets hidden 
Hello Everyone here at Incap forum!
As always, thank you for the interest in Incap, excellent questions during the Q1 Webcast and the activity here! It is my pleasure to post summary of Incap related Q&A here:
Q: What was the main reason for the slow start of the year? Was the impact based solely on tariffs, and does it impact all units or especially European units?
A: In the European units the start was a bit slower, but I would still say that the impact is global. Currently, there is a lot of uncertainty in the air due to the US administration and tariffs. The political negotiations are ongoing, and the tariffs are in place, and everybody in the market is waiting to see how things will settle after that. I donât think the tariffs will impact only the European units.
There is a lot of hesitation because there are no clear rules on the market at the moment, which is affecting Incapâs business as well. Both Incap and our customers have operations in and exports to the US and therefore the situation will affect us both directly and indirectly. Companies are now considering what is the optimal geographical location for manufacturing regarding their customers, as they are also optimizing. We need to also keep in mind that many of the components still come from China, so the tariffs will affect the product export to US regardless of the manufacturing location.
However, the situation is not unique for Incap but affects other parties in the market as well. We will have to wait and see what eventually comes to law after the negotiations. We believe that this situation wonât last forever and there will be more clarity on the market towards the end of the second half of the year.
Q: The growth excluding the share of Incapâs largest customer wasnât provided in the Q1 report. Is it possible to share that number?
A: The number was not publicly disclosed in the Q1 report. But overall, there is not a large difference to what it was on the annual level in 2024.
Q: What are your assumptions for the situation improving in the second half of the year? Is that regardless of the tariff situation or assuming cancellations of existing tariffs?
A: The estimate is made based on Incapâs forecast and the input received from Incapâs customers. There is some hesitation in the market related to, for example US market and supply chains, but I think when things settle down then we will see more normal development. After all, there is a demand despite the hesitation. We believe that once the situation has settled, we will see an increase in the market and a stronger second half of the year.
Q: You mentioned the three factories in India as one of your opportunities and maybe that also relates to the tariff situation now. Are there further opportunities for India and the US due to this?
A: Having factories in India gives us a great opportunity since the market itself is growing. India is the worldâs biggest democracy which sets it apart from many other countries in Asia. Therefore, I think there is a difference having manufacturing in India compared to many other Asian countries.
Also, looking at the tariffs, India is also negotiating with the US administration about much lower levels compared to China and therefore I think there is a chance for a better deal than in some other markets.
Of course, having manufacturing inside the US in a situation like this is a good thing. It gives us possibilities in our US unit as well as in other units, because the customers are looking at different routes and supply chains to satisfy their needs.
Incap is in a good situation with our distributed locations. We have manufacturing in Europe both outside and inside European Union, as well as in the US and India which gives our customers different possibilities.
Due to the uncertainties in the market, some of our customers are at the moment selling directly from their warehouses and stock levels are getting low. There could be a cyclical bounce back coming at some stage.
Q: Order intake is a number that you donât publish, but can you comment somehow on the order intake in the first quarter?
A: The order intake supports our view that we will have a stronger second half of the year and we have no reason to change our steering and we keep our positive view of the future.
Q: How would you comment on the visibility in the market?
A: The visibility is similar to what we had last year. After the component crisis the visibility window shrunk a little bit, as expected. The industry agrees that the days are over for very long visibility of 24 months or longer that we had during the component crisis.
Q: Is the growth in inventories a signal that you are seeing growth and could you also explain a bit about the cash flow situation in Q1?
A: We have acquired more materials in Q1 as obviously materials are first needed in order to get the future revenue and products ready for the customer. So in this market situation, itâs a signal of future volumes. The impact on the other networking capital items was mainly coming from some negative impacts on the payables. We reduced the levels of mainly supplier invoices and therefore the payables went down. This was based on normal business fluctuation.
Q: How does the M&A market look like, are the valuations on a supportive level and do you have any geographical focus at the moment?
A: We have the same geographical focus that we have had, and we are still looking actively of course on the US market. We have our foothold there now but there is plenty of room on the North American market and therefore it remains one of our focus markets. We also look in Europe and Southeast Asia. The M&A market is more active and there are more cases out that we are evaluating. The more cases, the bigger probability to strike a deal. We are quite sure and steadfast with what we believe is appropriate to pay for companies when weâre evaluating them using our financial models. But thereâs always emotions involved as well, especially when itâs a privately owned company. Iâm hopeful, as we have a good pipeline and an excellent team working on it. We have in the past landed two great acquisitions and were able to integrate those very successfully. Iâm quite sure that we continue to do that in the future as well. I stress we do not want to take bad decisions just for the sake of making an acquisition. The acquisitions are about creating value for the shareholders.
Now itâs visible, thanks for the notice 
. Some glitch had occurred in the PDF generation.
The 2 items that really stand out for me are:
a) We have acquired more materials in Q1 as obviously materials are first needed in order to get the future revenue and products ready for the customer. So in this market situation, itâs a signal of future volumes. - This has been one of the biggest challenges in Incaps history and in the space in general as well, and this now proves that the supply chain shortage is really behind us.
b) We have the same geographical focus that we have had, and we are still looking actively of course on the US market. We have our Foothold there now but there is plenty of room on the North American market and therefore it remains one of our focus markets. - As an investor this is the approach I wanted to see Incap take, as before they have not publicly stated where exactly they are looking for M&A opportunities, and to hear that they are looking for htem specifically in the US market, where they could use more providers of EMS who actually provide quality and have the expertise, I think the fact that they are agressively looking in US is by far the most positive outcome possible.