Good day, welcome to Incap's Financial Statements Release 2022 webcast. Today, I have here with me CEO Otto Pukk and the CFO Antti Pynnönen. You can post your questions on the chat below, and our speakers will answer to them later at this webcast. Without the further ado, I would like to give the stage to Otto Pukk.
Thank you very much, Rosa, and hello and welcome to all viewers from me as well. It's always a pleasure to connect with our investors in one way or another. Like normally, we have prepared a short presentation with Antti regarding the result, a little bit on the outlook, and then we're happy to take on questions and so for you guys. I'll start with the presentation from my side. As normally, we have myself and Antti here answering the questions for you. If you look at the main milestones in 2022, I think it hasn't gone unnoticed that we did an all-time result in the year.
We had a very strong demand for our products and we managed in very difficult circumstances with component availability, shortages and so on to deliver and grow together with our customers. Also, we had a very strong order book and we kept doing investments and also earlier investments paid off for us and we could facilitate the growing demand that we faced. Overall, I think, the mega trends that are in the industry with green energy and green mobility and so fuel very much of the growth and that is something we also see that moving forward is very strong segments.
When it came to revenue, we had over 55% growth, we ended at EUR 263.8 million. I think that is an excellent result. Also the EBIT, we managed to grow almost 50% and ended at EUR 38.9 million. We're very happy of course with that result and that growth and looking forward to continue in that sense here during this year as well. Sorry, I jumped one slide. The third factory we are on schedule with in India. We are moving in and starting operations and the ramp up of the operations here in the end of next month.
The construction work have gone according to plan. Hopefully we can present some new fresh pictures from there once we are up and running. We will of course have, also have an inauguration of the factory here later this year where we hope to show it also a little bit more in action. Yeah, I can't emphasize enough in that sense on the team effort that goes in and to achieve this result.
We have fantastic professional people in our team all over the world and I have said it many times that seeing is believing and I think really coming into one of our factories, you will rather have like this startup feeling with very entrepreneurial people taking ownership of the business and driving it. W e have an exceptionally good like culture and entrepreneurial culture and the people are really amazing. Teamwork is something that is key and I think we are on a very high level with that. Also it shows that we are relatively have a very low employee turnover and that perhaps is how to say?
Proof of that it's not only us from the management side that enjoy the company culture, but also our team members in all different levels. Incap, we take very much pride in being an equal opportunity employer and try really to nurture our employees with providing them with different training possibilities and development possibilities. Also, a family-friendly atmosphere, and I think that is a key thing in many industries. It's perhaps easier to be family-friendly. You can work from home and you can be very flexible. Also us in the manufacturing industry, where we can't take the machines home all the time, I think it's important to take care of the employees and to drive these values forward.
Before I talk about the outlook of this year, I'll give the microphone over to Mr. Pynnönen. He can present some of the key figures during the quarter.
Thank you so much, Otto. Yeah, let's start with the last quarter, 2022. Fourth quarter, revenue, we increased up to EUR 78.7 million. That is almost 53% growth compared to the fourth quarter 2021. Operating profit, we recorded all-time high, EUR 12.7 million, and that is up by almost 51%. Relative from the revenue, it's 16.1%. Here we updated the fourth quarter in our charts. So the left side we measure revenue development since 2019. Very dramatic growth past years as the bars illustrate there. On the right-hand side, the profitability, on the blue bars, it's in absolute euros. In the red color we have the relative profitability. Looking the numbers here, so also the profitability is going to right direction as this is on a really great level in that sense.
Few drops there. As the previous viewers remember, there has been COVID impacts in the factories, so those were explained by that. Here are the key figures. This is similar input as what was released in the morning. Revenue, fourth quarter, and then the full year numbers on the right-hand side, and then the compared to the last year. I think those speak themselves. Of course, overall, the market activity remained, not only fourth quarter very strong, but the whole 2022 was extremely strong from the market activity perspective.
Explaining, of course, the lot of the revenue development and, of course, very, very happy from my perspective to see that it's in all the units we saw the growth, not only in India or in Estonia, but also the acquired businesses were able to grow. Yeah, if you want to go back once more, Yeah, this one. The inventory, we updated, of course, the situation end of 2022 December. Inventory value is EUR 92 million. There has been rapid growth in inventory levels. That is, of course, then impacted in our cash flow statement. That is something, of course, to improve.
If you have checked our first half report 2022, we were able to already improve a little bit the cash flow there, but that's definitely will remain the extremely key focus area for us and improving the net working capital and cash flow and inventory turnover. We have a good action plan with the units in order to do so. Next slide, please. Here we have collected the full year numbers. Otto's already explained the full year revenue development that is illustrated in the pie chart, in the bar chart on the left-hand side and then of course the profitability here. Maybe additional information is always like making so huge growth almost EUR 100 million in round number top line.
Remaining and keeping the profitability on the same level as in the past is actually extremely good performance. Usually, this kind of huge revenue dilutes also the percentage profitability. That is quite strong performance from that angle.
Yes. Thank you very much, Antti. Little bit about the outlook and perhaps the market situation as we see it currently. Of course, going into 2023, there's a lot of uncertainty still on the market. We have the geopolitical situation in Europe with the war in Ukraine and Taiwan and China having tensions. The material situation is improving, but they're still not solved in that sense. Also the COVID pandemic in China was blooming up here during the end of the last year. There is still uncertainties on the market.
If you look at focus a little bit on the positive that the component availability i s improving and we see clearly that the lead times and delivery times and lead times for the components are getting down. There's still some problem areas but in general. Then with that, we also expect that the visibility that we have had during the past year will decrease somewhat. We have had. Our customers have needed to place orders here the past years very much in advance and show forecast very much in advance. As this is not needed anymore, then we expect them to go back to a little bit more normal patterns when it comes to that.
Also, with the component availability on the market now being better, then we expect that if you look at our and our customer success, of course, the past years has been that we have been able to deliver. If components now are available for more market players, then we expect perhaps that in some segments our customers will face more competition. How that exactly will play out, that is perhaps early to say, and we want to flag that there is not only positives coming out of the component one, but there can be also some uncertainties coming out once now components get more available.
Long term, I think EMS business is still the place to be and we see a good potential for growth in the long term. Especially when we look at different mega trends that with green energy and green mobility and 5G just rolling out in many markets, so long term that has not changed. Even if short term, we see some uncertainties that we want to flag now in the beginning of the year. We still expect growth this year and perhaps a little bit more modest than we have had the previous years. Of course, we come from a very high bar with the big increases over 50% year-on-year.
I think the bigger we get, the more normalized we will get in our growth in that sense, at least percentage-wise. We believe that still this year we will be higher than both in revenue and in EBIT than last year. Yeah, more modest growth levels. We keep on investing in our business, and that is something we want to continue with now as well and develop the business and accept the possibility to keep on the organic growth and also getting more synergies out to the business between the units.
Of course, with perhaps a little bit more slower organic growth rate, we now want to continue our growth strategy and the focus on M&A activities will increase due to or thanks to that. Yeah, in short, we're looking at still growth, a little bit more modest paced. There's some uncertainties on the market, but overall, electronics is a good place to be in. With that, I think, Rosa, we are ready for the questions from the viewers.
Yes. Actually, we have quite a lot of questions coming through. Thank you for those, and you can still send your questions via the chat. Let's start with acquisitions. I think this has been the question that has been asked most, so I will now put a couple of questions together regarding acquisitions. What is the current situation regarding possible acquisitions you have been looking at and, especially people wanted to know in 2023?
No, I think if you look at the acquisitions in general, or the market in general for acquisitions, I think that the high valuation levels that we saw here the past year or so, they have come down. I think there is still good opportunity on the market. We have a team that we work with and that we have in place and evaluating different cases all the time. Me and Antti, of course, we are all very much involved in this process and spent most of January on the road looking at different targets and then so we are very active in it.
That said, still we predict some organic growth and we don't have a, I would say, a gun to our head that we really need to do an acquisition to facilitate growth. Culture fit, that we really create value for our shareholder making a deal and also that it brings something to the table, perhaps strategically like geographic expansion or so is key. What I have said before is still in place. Yeah, we are a little bit intensifying the work now as we have the possibility.
Thank you. There is a follow-up question regarding the similar kind of acquisition theme. How would you describe the market of EMS acquisitions? Looks like all the EMS companies are looking the same kind of lean and profitable acquisitions in Germany or in USA. What are your strengths in this competition?
I think it of course depends on what the seller side is in it, but Incap taking over for operation or acquiring company, we don't want to slaughter that company and try to centralize it and drive some kind of those kind of synergies in it. We want it to remain operating and I would say add it only into our decentralized operational model. I think that is very attractive when it comes to for employees and perhaps private owners if they have been involved in the business, that we will take care of the company and keep it in that sense.
So I think that Incap is a good buyer from that perspective on what is our intent and so with the company for the future. That perhaps sets us a little bit off with other buyers that are more, yeah, have different view on how they want to integrate the business they acquire.
Okay. Thank you. A question from John Smith. Could you be more specific with the 2023 guidance?
Yeah. I don't know how much more specific we can get, but we expect 2023 to be higher in both revenue and in EBIT. That is as specific as it gets. I gave also perhaps the underlying logic behind that. I perhaps ask back to be more specific with the question.
Okay. Let's go to India. Mauri is asking, third factory in India is getting ready during Q1, when will it be fully up and running?
Yeah, we will start, as I have mentioned before, talking about the project. We will start, moving in and the ramp up here in the end of this quarter. We will gradually ramp up the activity over the year. Fully, of course, I also mentioned we always calculate with a little bit extra capacity. Fully utilized, I think the factory will be, perhaps not this year but the coming years in that sense, as we have some spare capacity. Already this year we are calculating to have, how to say, full action in the factory.
Yes. We have a question from Alexander. Can you give me color on the production ramp up in your third factory in India? For example, will the factory contribute to material impact on the financials during 2023? Can you elaborate about how the activity has been during the start of 2023? Have you recognized any new trends among your customers given the current macroeconomic conditions?
Yeah, as I mentioned before on the visibility, that clearly is have come down. Our customers see that they don't need to. When you hear perhaps the last year and the year before needed to place orders in advance for a very long time, then the windows go down. We have many component lines back to, how to say, normal 12 weeks lead time and so on. This impacts I think and will impact even furthermore the visibility that there is no need to risk and to place orders so long long in advance.
Also with that, of course, we have built up our inventory levels to cope with the component availability. I expect our inventory that we are able to take that down towards more normalized levels here during the year. Of course, that will make Antti happy as that improves the cash flow as well and is a key thing. I think that visibility is somewhat shrinking and I think that is normal. I think we mentioned that during the Capital Markets Day as well that we expect it to be so, and now we see that in place as well.
Okay. Little bit more to India. How much more capacity the new India factory will provide when looking total productivity capacity in all factories? As a group, how much more can be produced?
That's a very relative question I would say because it all depends on what kind of product mix we are running in the factory and so as capacity can. Do we value it in pieces or do we value it in euro or Indian rupees or whatever. In principle, if we very much simplify and say that we run a very similar product mix that we do today, then of course the third factory in India, we'll add on one factory to other. It is in that proportion it will increase our capacity as well.
That is, I would say it all depends on what we are running in the factory, exactly what kind of product mix, if it will be more than that or in that level.
Okay. Philip's question. This is quite a long one. If you need to, for me to ask the questions again, just let me know. How has your order book and order intake developed during the quarter? Regarding the expected competition to increase in many segments, do you mean that you see increased competition existing customers or new customers? Do you see any increased competition on existing customers? Do you see that your major customers want to reduce their inventory levels during 2023 given that inventory levels have been high during the component crisis? Can we expect the same EBIT margins on your new factory in India as the old one? If not, when do you expect to reach the similar level?
As I mentioned with the visibility that we see that order book is somewhat smaller than it was here in Q3. That is due to that visibility shrinking as we understand it and in discussion with our customers. The visibility is shrinking and that affects the order book. When it comes to the competition, perhaps I should clarify a little bit there. What I mean there is that the competition for our customers will be intensified. We have been facilitating our customers with being able to deliver their goods.
They have been able to deliver their goods in their market, in the markets that they are operating in. Now with the increased component availability, when everybody has components in the market in that sense, then we expect that there might be happening something with the competitive situation for our end customers', products short term in that sense. As more components get available, more market players get in. That is what I mean. I don't mean that the competition for us will be like impacted so much of this, but rather the competition of our end customer, perhaps then impacting our demand in the short term. That was. It was many questions here.
Inventory levels that I mentioned, the inventory levels we built up here during the past two years. We have had excess inventory, both voluntary in that sense, that we have increased the different kind of buffers, and so to be able to deliver when due to the component shortages. Also involuntary sometimes, where you have the golden screw missing in one order and over the closing we kept inventory because we couldn't deliver out. This we expect clearly to improve that over the year. The component situation, even if I say that it's getting better, it's gradually getting better. It's not like it's fixed today. It's gradually getting better.
Gradually we also expect our inventory level to come down and our cashflow to continue. Then I think last question was regarding the EBIT margin in the new factory. Of course, as we have commented before, that is also very much depending on what product mix there is. We are not in current stage, we are not aware of that we would dramatically change our product mix that we are producing. What we have been producing, similar products we will keep on producing the coming periods. I would expect the EBIT level more or less to be the same as we have today.
Okay, one more question regarding India. What is going to be the amount of employees in the new Indian unit, in next summer and year end 2023?
I think we updated the amount of employees now in the, in the report as well, wasn't it so, Antti?
Yes. We have that information there.
Going to M&A valuations. M&A valuations have increased from last year. If so, how much? Is it likely that the window is soon closed? Do you have funds for M&A as interest rates for debt financing are increasing?
No, I think, of course, I can't comment directly on the pipeline, but we have very solid finances and I think there is, of course, a lot of alternatives to, depending on the size of the acquisition, and so to finance that. I don't see financing as any hurdle in the M&A pipeline. We can both get more classic financing through some kind of loans and so from banks and so on. We can raise capital as we have done before and there is, we can play with our own shares and there's a lot of different elements. It depends on the case and.
I don't see that is any harder. Back to the question about the employees. Roughly we have some 2,500 employees today, and we expect that to increase somewhat here. Of course, we have already taken in employees for new factory as well, and have been training them, we expect to increase a few hundred on that as well. That is business as normal. It depends on the products we are running and the different projects, what the need is on that. To answer on that question as well.
Yeah. Probably there was this valuation topic as well. Basically, in Europe we have seen last year like 8x, 9x EBITDA , and now we have seen on a discussion between 7x and 8x, so it's in that magnitude going down.
Okay. We have a couple more questions. Probably you partly answered some of these already, but there are questions how come you ended up in the low end of your Q4 forecast? What were the main factor reasons in Q4 that EBIT percent was lower than 2021 Q4?
Yeah, of course, making this scale is always tricky. When we were overshooting the scale some years ago, then that was not good either. We try to do realistic range and we hit more or less in the middle of that. A little bit on the lower range, it depends on how you see it. We are quite happy with that estimate. It's not always so simple to make it spot on. What was the other question on?
I think it was about the EBIT percentage.
What were the main factors and reasons, in Q4 that the EBIT percent was lower than 2021 Q4?
Yeah. We talked about like very small difference, 16.1% we had EBIT percent in Q4 this year, last year. Comparison year it was 16.3%. There is no any major difference first of all there. Of course this, we have discussing earlier as well per quarter our material price levels that we call as PPVs or purchase price variance. We pass on the price increases to end customer, but without a markup, so there will be just the revenue without any margin. That of course dilutes little bit the percentage. Of course, absolute euros, that's a neutral transaction, from the percentage-wise, that plays a bit role there as well.
Yeah, also, as always, the product mix that we are producing a t the given time, that there are variations in that. Yes, as Antti says that it's very small differences. We have seen before, I think we should keep in mind that profitability can vary 1%-2% up and down depending on the product mix. We have explained that in the post as well that it's how all the products are not don't have the same value added and the same profitability.
Okay. Rasmus Persson is asking, "You mentioned that you expect competition to increase for customers. Are you seeing this already, and is it with both current and new customers that you see the competition increasing?
No, what we see is that the visibility is shrinking a little bit, and we see some reshuffling where in the order pipeline. We see tendencies of this, but exactly how it will play out, we don't know. It's, I would say, an uncertainty that we are flagging here in the beginning of the year, that there is not only upsides in the increased component availability, but there is potential downsides on that as well, and we want to flag that.
We give a straightforward picture to the investors that might not be so, I would say, familiar with all the nuances in our business.
Okay. Continuing with Rasmus, "Other contract manufacturers have indicated how much of the revenue is generated by abnormal spot purchases. Can you give some clarity if Incap have been affected by this, and by how much?
Yeah. Yes, you know, Incap of course also have been affected. Antti, do we have any figures to share on that?
No, we don't have any number to share.
Yeah. Of course we have seen that as well. As Antti described that when we are doing spot purchases and forwarding this, we call it PPVs, so purchase price variances to our customers, we don't add on any additional margin on that. So that dilutes our EBIT somewhat. But if you look at the past quarters, we have seen that it's less and less of these activities. Also we expect here moving forward that as the component availability is getting better, that we will see less need for doing these kind of spot market purchases.
Okay. Mauri is asking, "How binding is your order book? Do you see a risk for cancellations or postponing, especially if there will be a recession?
No, yeah. I don't think in that sense that if we have firm orders, those are binding and in many cases also the forecast are binding in that sense. We work very closely with our customers in that sense that if there's a need for rescheduling or canceling some demand, so of course we work together with them and try to facilitate what the need is in that sense for our customers. Yeah, legally is one thing, practically, of course, we try to. It's a partnership. In that sense, if you look at our bigger, biggest customers they have.. We are their manufacturing in that sense.
Of course we try to work very closely with them to, if that scenario like that would happen.
A follow-up question, "How defensive are your customers if there will be a longer or deeper recession?
I don't think that we don't have any signals on from any customers on that there is, you know, deep or long-term recession coming. There might be some reshuffling in short-term where we have seen and signals from. As I flagged it also that we also expect perhaps some to be with the component availability getting bigger and the competitive situation on the market and so get down. Overall, I would say that if you look at the mega trends our customers are in, these are still, I would say, growing trend and also long-term. I would say that the outlook is long-term.
It's still very positive for the, for the, for the industry. Electronics is an amazing place to do business in.
Okay. Haapsaari is asking, "Hi, what kind of cost are you included in the non-recurring items? Can you break down the EUR 600,000 non-recurring items?
Sure. Incap reports, some acquisition-related costs as a non-recurring cost. Then there has been some restructuring costs and layoff costs included there. Then there was one off regarding even the Red Cross donation to support Ukraine. Red Cross there. These kind of topics combined are behind this EUR 600,000.
Okay. We have quite many questions still. If you have answered some of these, then just tell me. Because there has been so many questions. George Pal is asking, "Is increased inventories mainly related to stocking components rather than increased inventory or finished products being shipped to customers? And when do you expect that to normalize?
Could you ask the question once more? I missed the first part of it.
Is increased inventories mainly related to stocking components rather than increased inventory of finished products being shipped to customers? When do you expect that.
Yeah, I understand the question. No, i n general, the increase as in inventory we did was in components, not in finished goods. Yeah, with a few exceptions as always. We increased the warehouse sale of, how to say, buffer stocks and so on some critical components during the year. When it comes to finished goods, that is, we normally don't stock if we don't have then an agreement in place where we sell that as a service that we are, how to say, in. Yeah, sell that as a service for the customers.
We expect this as to here during this year. Especially perhaps in the second half where we forecast that the material situation will improve in a more rapid pace in that sense, that we should be able to start taking down the inventory gradually to more normal levels in that sense. To keep that in mind that we haven't bought any risk inventory or so, the inventory we have bought in correlation with our customers. When we have increased, we have had there is a demand behind our inventory, even in these higher levels that we have to date in that sense.
Yes, we expect us to be able to release some cash from the inventory as the material situation gets better.
Okay, thank you. Continuing with the inventory topic. Joonas Ilvonen is asking, "What is normalized inventory to sales level, and what is your target for 2023 on that ratio?
Yeah. In Incap, we have had, of course, prior the COVID, like a healthy level between 22%-23% roughly from the revenue. That is net working capital percentage from the revenue. In Incap, we have of course set up the new ambitious targets for our units and managing directors to get back on a more healthy level. I'm referring to net working capital percentage from the revenue. That is tied for the managing director's KPIs that we are keeping eye on in that sense, so.
of course we will do this in steps w e don't expect them go from levels we have currently to drop down to the pre-crisis, crisis levels in that sense. Yeah, that's what we're aiming for, to get back where we were a couple of years ago.
Okay. Villa is asking, "Do you see any reduction in customer inventories?
Of course, we don't have full visibility on our, what our customer inventories are. So we don't have any signals in that sense on if there's reductions or not. What I mentioned before is that I many of our customers have been able to grow and we have been able to grow. Due to that, we have been able to deliver. We have solved different kind of component issues and still been able to deliver them. Of course, if the market situation changes, will that mean then that some of our customers have too high inventory levels or not? That is still to see in that sense.
We are flagging that risk that, yeah, there might be something. Yeah, we don't have any signals that, inventory levels are coming down very much from our customers or so. We don't have visibility into our customers' warehouses in most cases.
Pasi Väisänen is asking, "Do you expect a seasonality in the operating profit margin during this year?
I wouldn't call it a seasonality, and there's always variation due to... depending on what product mix we're producing. It goes a little bit up and down. No clear pattern at least. Antti, do you have some crystal ball where is better than mine?
No, it's exactly like you say. Historically also there hasn't been any seasonality as such, as a topic for either for the top line or the profitability. There is no pattern unfortunately in our case. It depends on the pipeline, what kind of products we are doing and like Otto earlier has mentioned, very much depending on the product mix.
We continue with Pasi Väisänen question, "Is the sales growth guidance 2023 only a normal growth or a significant growth, under or over 20% year-over-year?
We gave the guidance that we will have higher in that sense profitability and revenue. We normally when we do the these guidance system than we use either higher, clearly higher or significantly higher. We start with higher than the previous years or the, yeah, the previous year.
Okay. Mauri is asking, "You have said that your visibility has become better during last years, but now in the report you said that customers don't need to place orders that early due to better component situation. What kind of progress in visibility are you expecting during 2023?
Yeah, I don't expect progress in visibility. I expect visibility to get shorter in that sense as the customers don't need to risk and place orders in very long in advance. We don't need to do that to the suppliers either. Hopefully in that sense, because we have been spoiled with very good visibility. When I started in the business then you saw six months ahead what you were gonna do, and then it already got very blurry. I really hope that we can keep this long-longer win-windows.
I think it's unrealistic as well to expect that the customers continue to place orders and give visibilities one, two years ahead. Perhaps a rolling 12-month visibility is something that is more realistic. Yeah, who knows if some customers even go back to their own old patterns and give more or less, very, yeah, or very short visibilities again. Let's see in that sense that there is some gains in giving visibilities as well. I think some customers have understood that.
That said, seeing this kind of, two and then even beyond years visibility, I don't think that will last in the industry for very long. I don't think that is a Incap, solely an Incap-related issue. I think that is for the industry as whole, that if there is no need, their foreword window will shrink.
Okay. Mauri is also asking, "How would you describe your customer base behind your biggest customer? Are the customers that bring more than EUR 1 million growing, and is there any potential super fast growers in your customer portfolio?
No, I think if you look at all of our customers, above 1 million have been growing, and that goes I think for most of our customers in the pipeline as well, that has been growing the past year. As an EMS company, there's always something potential big in the pipeline that can explode and grow. If we wouldn't have, then we wouldn't do our work properly. To count on that, to relate to that, I think would not be responsible either in that sense. We have a broad pipeline and there's always possibility for something to grow quickly. There's always possibility for something go down as well.
Normally those cases balance themselves out. There is a lot of potential in, and fast-moving trends as well in the industry. The first part of the question was regarding our biggest customer and then the customers behind that. So that I would want to comment on in that sense that. If you look at our biggest customers, they are in a very lucrative segment currently. Many of their applications are used in different green energy applications, such as solar and so on. I think this is still a very hot topic with energy crisis ongoing in Europe. Then we see a lot of infrastructure investments being planned by governments and through either direct investments or grants when it comes for private people to invest in different energy solutions.
I think they are in a very solid sector, also yeah, the long term as well, and if that answers the question.
Okay. when referring to increased competition, is this related to your largest customer?
Yeah, this is related to our largest customer as well, but this is a general statement I think related to all of our customers that have been growing the past years. We have facilitated that growth through that we have been able to deliver and to source the and purchase the needed materials on the market. So we have been very successful. On the same time that there's many companies that have not been able to get hold of all these components, we expect that when the component availability increases, that there will be more players on the market that get access to components. That logically should lead to more competition on...
for our end customers and the OEMs in that sense. We are following that and seeing how it plays out. I want to point out again that it's very early in the year. We flagged these issues as there is risks here and also to explain for the industry that component availability getting back to more normalized levels here during the year, coming years, it doesn't only have an upside, it has also, yeah, I wouldn't call it a downside, but there might be shifts in demand and so on the different markets due to that comes in.
One possible scenario for that is that there will be increased price pressure, on our end customers', markets, due to that there is more players, being able to offer their products in that sense. Let's see how it plays out. It doesn't. It's not black and white things that now components is available and everything is good from that. Short term it can have some disturbance as well. That's the point where we are taking it up.
Okay, couple more questions. Can you elaborate in percentual terms, what you mean by expect our organic growth to continue in 2023, but with a more modest pace?
Yeah. Incap has been hitting this over 50% growth from on year on year and quarter to quarter, and I think the bigger we get, the more normalized that growth will be in percentage-wise. If you look at many other companies in the industry that the average growth is well below that, even if some of the peer on the stock market have exceeded the average growths in the industry. That is what we mean that it will come back.
When it comes to the steering I gave it, and we will be higher, in that sense, just to explain that guidance that we normally give the guidance that higher is 0% up to 20%, and above 20%-40% is clearly higher, and over 40% is significantly higher. Currently we estimate here in the beginning of the year cautiously that our growth will be higher than it was the previous year.
Okay. Do you expect Q1 revenue to exceed Q4 2022?
Yeah. In that sense, I think compared to a previous Q1 as we are. I think we will exceed the Q1 on 2022 in that sense, and be higher than that, yes.
How much is the share of biggest customer in revenues 2022?
Antti, did you have that in?
Yeah. We didn't disclose that number yet in this release, when we release the full or the annual report, then you'll find the number there. The biggest four we disclosed, and it was 74%.
Yes. Can we still expect double-digit organic growth in the first half of the year based on your backlog and visibility of customers?
As I said, we expect the growth to, in that sense, to grow both revenue and EBIT and be higher than we were the previous years. Of course, I know that everybody's fishing a exact percentage number on that, but I can't give that. We haven't published that, and I will keep to my steering.
Okay. Last question for now. Does this imply that you believe your customers have been growing faster than peers because Incap has been better at sourcing components?
Yeah, I think that is a part of. I would say we share the success with our customers. We have been able to deliver. They have been able to deliver. Yeah, I think we have been successful in that, and that is, of course, a part of it. I think that goes also for all of the players on the market currently that the mass market has been able to grow that they have done an excellent job during this period and facilitate that growth for their customers and grown with them.
Okay. Thank you. That was the last questions. Quite many questions. Thank you, Antti and Otto. I give the stage to you, Otto, for the final words for this webcast.
Yes. Thank you very much. We will also, as usual, answer your questions in the interest forum and in the chat there or so. If there is in any more questions, then you can always try to put them there as well. Once again, I want to thank everybody for the interest in Incap. As I said, I think long-term electronics is a great place to be in. Also this year, we expect our growth to continue. Even if, as I mentioned, a little bit more modest than the previous year.
I'm looking forward to continue working with the team and to develop our business further. We have strong financials and we have good possibilities also to look at M&A targets, and we will intensify that work now in moving forward. So looking forward to the year and looking forward to the next webcast when we release our Q1. Thank you very much from our side.