Always, and hopefully we can answer all your questions. Let's start with the quarter. As we anticipated, we started a little bit slower in the beginning of the year. We ended up with EUR 52.2 million in revenue and an EBIT % of 11. Overall, being an EMS company, I think it's a good result, especially taking into account that the market is slow and very hesitant currently due to the different kind of tariffs and trade war prospects that are on the world market currently. We still believe that these things will settle and we will see a stronger second half of the year and believe in the development in that sense.
Overall, we are happy with the result in the current conditions and look forward here to the coming quarters of the year. We kept on investing in our facilities and we have done several investments during the quarter, both in the U.S. and India. We invested in SMT technology. Our U.K. team also installed a new second SMT line that now is fully operating and implemented also vertical storage in their facilities to store PCB assembly materials. In Slovakia, we also upgraded our PCB washing technology and enhanced some complementation removal capabilities and worked with process automation and sustainability in general. Also in Estonia, we did investments and have now a brand new X-ray system to enhance our testing and control capabilities in Estonia.
Overall, we keep on investing. We believe in having the latest technology and good technology level in the factories are important for us. If we're going to produce the latest and best electronics, then we should also have a good equipment to do so. That is our philosophy. Sustainability, of course, is as always a big topic for us. We now published our first CSRD-compliant report here in April. I think we're proud of the work and the work that the team has done with that reporting. We have 50 people in Incap involved in our sustainability work and we do not have anybody, of course, full time employed only dealing with the reporting, but alongside their other work.
I think we have a good and interesting report and I encourage people, all of you, to read it. It's not just something that we produce that nobody has an interest for. I think it's good reading and it's a core of very much of our values and how we work. Take the opportunity to read the report. Of course, we need to emphasize as always our fantastic people in Incap. Without them, anything that we do wouldn't be possible. I think, as I said, we are happy with the result, even if it's a little bit slower one as anticipated. It's due in these market conditions. I think still it's a solid result doing well in double digit EBIT and keeping developing the business.
We couldn't do that without our great people that we have in the different units. Always hat off to our guys and girls in the different units. They are the ones that are doing the magic and bringing home the bacon to all of Incap's shareholders. Antti, want to take it away and do a little bit numbers tracking for us?
Absolutely. Yes. If you move on to the next one, please. Here basically Otto already summarized, so I'm not going to repeat the same KPIs, but the EBIT in millions of euros was EUR 5.7. On the top line, I just want to highlight that there was still a growth, 1.6% growth versus Q1 2024. Of course, it's not like crazy much, but we take that one. Could have been worse, even lower than year before, as we have seen some other EMSs revealing their Q1 report. We take that one still. On this one, obviously we summarize and put together these revenue figures and also the profitability. Solid 11% double digit still, of course, when the revenues are a little bit down. It's always put some pressure on maintaining profitability.
I think we were also able to scale down some of the variable expenses nicely. We were focusing on that part of course when the volumes are a little bit down. Yeah, still a good performance from there, I would say in Q1. We also like invested in some of the units for increasing material levels. We have some companies and some customers with a good prospect still for the rest of the year. We went back for investing indeed in material levels that also showed actually in our operational cash flow in Q1. In end of March Q1, we had almost EUR 65 million of inventory levels.
Of course, if we look compared to the Q1 and 2024, it went down this number, but the previous measurement point was end of 2024 and there was indeed slight increase. I would say other items here, interesting bearing net debt, very solid, very strong, minus 31. Keep in mind that our cash levels are far higher than what we have in interest bearing debt elements such as the loans and things like that. Yeah, we are financially in very good position there. On the personnel side, 2,554 is described here in the pie chart as well. Overall, I would say it was as anticipated by Otto and our team that the year will start a bit slower, then picking up gradually towards the end of the year.
If you look at the outlook, we have remained unchanged. We still believe that we are going to be larger than or higher than in 2024. As we said, a little bit cautious in the beginning of the year, but we anticipate once these tariffs and different other geopolitical like tariffs and taxes and trade wars and so we'll settle them, then when the market knows what are the rules of the game, then we believe that we will see growth in the second half of the year. That remains. We all have the steering unchanged. Perhaps a little like side note for you guys as well.
Incap, as you know, are engaged in different social activities and we are proud that we are now launching our first e-sport event together with some of our partners and partner colleges in both here in Estonia, but also in the U.K. and we will have an e-sport event on the 10th of May. There is still chance for you guys to register. I will be registering with one team. You have a chance to shoot the CEO of Incap if you can find me or fast enough, of course. Take the opportunity. There is good prizes and tell your kids 16 plus and onwards are welcome to join. We are looking forward to see all of you guys on the battlefield with us on the 10th.
I must say good luck from my side and let's shoot over to the Q&A session. Thank you.
Thank you, Otto and Antti. I don't think, Otto, anybody wants to shoot you. I think the tariffs are one of the most important questions at the moment in general and for Incap also. What was the main reason for the slow start of the year? You mentioned the tariffs. Was that the only one? You also mentioned that the impact, especially the European units, are they impacting also the other units? How do you see the overall situation now with the tariffs from Incap's perspective?
Yeah, the European units were a little bit slower and so, but I would say that the impact is global. Everybody is waiting for the tariffs and also what will be the game rules currently. There's a lot of talks and it looks like the Trump administration throws up a lot of dust in the air and let's see where it set us. Now negotiations are ongoing and there is tariffs in place now as well. I think that the market is hesitant because they don't know exactly what the rules are of the market. Once the rules are settled, there will be always a way for business and a way to move forward. I don't think it's specific on the European units.
We export to U.S., we have U.S. factories, and also our customers for export to U.S.. There is, of course, an impact indirectly and directly, but it's not unique for Incap. It's something that is similar to everybody on the market. As I said, let the dust settle, then we know. One thing is the rhetorics and the other thing is what eventually comes into law. Now we have a few months or, yeah, break in that sense that we got this negotiation time. Let's see what our politicians and so do in EU and in other markets, and I'm quite sure it will settle.
Yeah. In general, of course, if I a little bit reflect on this topic, it's so that during COVID times and the material availability times when China was locked down, there was a lot of companies who had used Chinese EMSs and, for example, it was common for U.S. corporations to buy those services from China. They obviously started to consider other options as well and moving production out from China, and some went back to U.S. and most went nearshoring countries like Mexico and things like that. I think now they are getting hit by these tariffs in, for example, Mexico or things like that.
There are a lot of customers that we hear asking offers from our Pittsburgh site that Incap has a unit in Pennsylvania. I think there's just a lot of hesitation. As Otto mentioned, there are no clear rules on the market at the moment and prices tend to change and some of these tariffs are put on hold and then again they are increased and this is just making it very difficult. Like Otto also mentioned, end of the day, customers and customers are paying the bill on these increases. That is a negative cycle. The prices tend to increase, inflation goes up. We have seen interest rates coming down.
Yeah, it's just a hesitation overall, which is also impacting our businesses here in Incap as well, that companies are a little bit waiting on what's really the geographical fit for our customers, where they should manufacture as they're also optimizing. Also, let's keep in mind that many of the components still come from China. No matter where you manufacture, you're still buying those from China. If you want to get your products to the U.S., you still end up, of course, paying those tariffs. Hopefully we see a little bit more clarity on this topic, and we believe that this will not take forever, of course. That's why we also believe in gradual, you know, clarity on the market towards the second half and towards year end latest.
Thank you. There is a question about the share of your largest customer and the growth excluding the share of the largest customer, and that was not provided in the Q1 report. Is it possible to give that number?
Sorry, which number was exactly?
The share of the largest customer.
Yeah, that's the thing. We don't disclose that. It would be unfair to reveal it just on this forum as well because it's not publicly disclosed. Overall, not too big difference what it was in the annual level 2024, just to give some kind of idea.
Looking at the year end, 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?
No, as I said, I think the assumption, of course, is based on our forecast and the input we have from our customers. I think that as I said, there is a hesitation in the market. I think once that settles, then we will see a more normal development in that sense.
There is a demand, but people are a little bit waiting what kind of supply chain, how to say, they're going to use into, for example, the U.S. market. When it comes to bigger orders, let's see once things settle, then we see a possible increase in the market and that we have said already with our last release. We have the same message here. We believe in a stronger second half of the year.
All right. You mentioned also the three factories and strong position in India as one of your opportunities and maybe also relating to the tariff situation now, are there further opportunities for India and the U.S. due to this? Could you elaborate a little bit more on that opportunity?
Yeah, sure. No, I think always that India having factories in India, I think that gives us a great opportunity. India and the market itself is growing and also India is the world's biggest democracy and that sets it apart from many other countries in Asia that are not enjoying the democracy. I think there's a difference having manufacturing in India compared to many other Asian countries by default. Also if you look now in the tariff, now it's early, of course, India is also negotiating. Trump administration flagged some 26% or so. So tariffs are, if I recall it correctly, on India as well that is also now negotiated on some kind of whole pattern. That is several times lower than Chinese one.
I think there is a chance for a better deal out of India than we have out of China or perhaps some other markets that are hit with very low or high tariffs. It is early. Let's not jump to any conclusions. I think long term it is great to have our manufacturing in India and I think for sure that will be in whatever different kind of situations or crisis or whatnot. It is a great place to be and we look forward to keep on moving. As Antti said, when it came to the U.S., the second part of the question is of course having manufacturing inside the U.S. in a situation like this is not bad in that sense.
It gives possibilities and we see that with the quoting activity and so it's very active currently in our U.S. unit and yeah in other units as well because there is, as I mentioned, the customers are looking at different kind of routes or supply chain to satisfy their needs. I think Incap, it's all good. We have manufacturing in Europe, in the European Union and outside European Union. We have in U.S., outside U.S., we have in Asia, in India and so on. We're quite well situated in any situation.
Also, like customer feedback, some of them have clearly expressed to Incap that because of these uncertainties on the market, they are actually at the moment selling directly from their warehouse and stock levels. Of course, that will bounce back at some stage when the stock levels are too low for the customer that again they need to start ordering much more to fill them up and be on the safe side. There could be some cyclical bounce back coming up in the near future as well for these kind of customers that have expressed what they're doing.
All right. There is a question about order intake, which is a number that you do not publish, but can you comment somehow on how did the order intake develop in the first quarter?
Yeah, we do not disclose our order intake number, but of course what to comment, our order intake, it supports that what we believe in that sense is that we will have a stronger second quarter and we have no reason not to keep our steering and keep on believing in how we see the future. Order intake and the numbers of course support what we are talking about here today. Otherwise we would not be talking about it.
Otto Pukk, this question, visibility of the market at the moment, have you seen lately developing in some direction when it comes to that one?
No, I think visibility is similar to what we had last year. I think after the component crisis here, visibility windows shrunk a little bit. We've been talking with investors about that in the past that this is what we also expected because our customers are smart. There is no need if there is no need to have long visibility, like too long visibility, they won't have. It's the same now. I wouldn't say that visibility has changed. We have quite good visibility when it comes to the coming months and the, I would say, the coming year. This kind of crazy long visibilities like we had during the component prices, like 24 months or even longer at some point.
Those days are over, I think for everybody in the industry.
Maybe moving on to a question about the inventories. Is that a signal to seeing growth that your inventories are growing? Maybe a related question also to Antti about the cash flow situation a little bit in Q1. Could you explain a little bit about that?
Yeah, I a little bit opened already this topic that we have acquired more materials in Q1 and then obviously materials are first needed in order to get the future turnover and revenue and of course those products ready for the customers. Yes, in this market situation, I agree it's a signal of future volumes. That is something. Also, of course, that then impacts on the operational cash flow that we also reported here in the Q1 report. There was the impact of course on the other networking capital items as well, mainly coming also some negative impacts on the payable side. We reduced the levels of mainly supplier invoices and that payable number went down and that impacted.
It's just normal business fluctuation and nothing special there in my opinion.
Thank you. How about the M&A market? How does that look like? Are the valuations on a supportive level? Do you have any geographical focus at the moment?
No, we have the same geographical focus that we have had here. We are still looking actively, of course, on the U.S. market. I think, as I said many times, we have our foot in there now, but there is plenty of room on the North American market. That of course remains one of our focus markets, but we also look in Europe and South East Asia and in general. It is not so that we exclude. What we can say is that the market is more active. There are more cases out there that we are evaluating. Of course, the more cases there are, the bigger probability is perhaps to strike a deal. Valuations are still, it takes two to tango, as I have said many times.
We are quite sure and steadfast with what we believe is appropriate to pay for companies when we are evaluating them and using our financial models to evaluate them. There is always two sides of it and a lot of emotions as well sometimes when it's privately owned companies. Let's see. I'm still hopeful we have a good pipeline. We have an excellent team working on it. We have in the past years landed two great acquisitions and I'm able to integrate those very successfully. I'm quite sure that we continue to do that and that we do it in the future as well without stressing, without going into this bad decision making just for the sake of making an acquisition. It's not about that.
It's about creating value for the shareholders. That is a key, not to buy something just for the sake of buying.
Thank you, Otto. I believe all the questions have been now addressed. Thank you from my side to everyone for good questions and being active. Otto, would you like to summarize still once more?
Yes, that I will. Once again, thank you everybody here for listening in to this webcast and thank you for the interest in Incap. We're always happy to speak to investors and analysts when, of course, we're not in the silent period. Otherwise, reach out to us if you want to have a discussion. We're always happy to do so. As we say many times, come visit our facilities and look at what we're doing. We're always proud to show that. Most important, the 10th of May, Incap Legends. We expect at least one investor team to participate.
Please sign up and have a chance to challenge us in both in management, but then of course there will be a lot of kids or young players there that are more or less professional that will do the best of both of us in that sense. Take the opportunity. Once more, thank you very much everybody for the interest in Incap and looking forward to speaking to you again here with the next quarter release.