Review by President and CEO

Demand for Incap’s services developed favourably both in Europe and Asia during 2011, and demand increased at a steady rate in both business areas of the company. The growth in revenue was slowed down to some extent by the global shortage of semiconductor components that had already emerged the previous year but the situation stabilised during the second half of the year.

We secured new customer accounts in the growth industries pursuant to our strategy. We began cooperation in the manufacture of welding equipment, bright light headset, sauna heater control systems, intelligent electricity network equipment, solar panel applications and small-scale back-up wind power plants, among other areas. The share of revenue for products combining electronics and mechanics increased in line with our objectives.

The profitability developed favourably in the right direction and the result from actual operations was for the second half of the year positive in line with our expectations. Even though the revenue was lower in the fourth quarter of the year compared with the third quarter, the result for actual operations was on the same level. Contributing to the full-year performance were the growth in revenue, as well as the changes made in production structure in 2010 and adjustments to customer prices. However, increased expenses in raw material and production due to the global shortage of components weighed down the result.

We will continue the determined implementation of our strategy. We focus on manufacturing of equipment related to energy efficiency and well-being, whose markets offer good growth prospects thanks to the global mega trends. We help our customers to create successful products by offering them diverse, flexible and high-quality total manufacturing services for the full life-cycle of the product.  Our operations in Europe and Asia offer good opportunities for supporting customers locally in their main market areas.

In the development of our services, we are investing particularly in product design, which helps to deepen the cooperation with our customers further. We complement our in-house competence in product design by networking with design firms when necessary. In our own product development, we focus especially on the development of products for production, storage and distribution of energy, in which we have gained already a lot of experience and competence.

We expect that the structural changes that we have implemented and our other streamlining measures will be visible in our performance in 2012. I believe that our operations will return to a steady track of profitable growth after these challenging years.

Helsinki, February 2012

Sami Mykkänen
President and CEO