REG - TT Electronics PLC - Trading Update

TT electronicsAnnouncement

14/11/2024 07:00

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RNS Number : 1651M  TT Electronics PLC  14 November 2024

 

 

14 November 2024

 

TT Electronics plc

 

Trading Update

 

TT Electronics plc ("TT", "the Group"), a global engineer and manufacturer of
electronic solutions for critical applications, publishes the following
trading update on the Group's performance for the four-month period ended 26
October 2024 (the "period").

 

Group revenue in the period was 1 per cent lower than the previous year on an
organic constant currency basis excluding the unwind of pass-through revenue,
with a 10 per cent increase in Europe and an 11 per cent increase in Asia more
than offset by a 16 per cent reduction in North America, which as previously
disclosed has been impacted by operational challenges and the subdued
components market.

 

There remains a significant management focus on the operational challenges
identified in the trading update on 16 September 2024 in two North American
sites. The underlying operational efficiency issues relate to an evolution of
product mix over the last couple of years in both locations, and we are now
dealing with specific productivity issues exacerbated by increased volumes and
product complexity. The action plan to bolster the management team and
significantly improve operating practices, inventory and planning management
and reduce scrap and rework is in place. This plan includes a range of
measures to support the two sites including adding specialist resource, making
site layout improvements and strengthening inventory and planning management.
This will result in increased productivity and streamlined processes and
provide an improved performance in 2025.

 

As a result of continued subdued demand in the North American components
market and the operational improvement plans only benefiting financial results
from 2025, the Board expects FY24 adjusted operating profit to be at the lower
end of our previously stated range of £37m-42m. FY24 leverage guidance is
unchanged and is expected to be around or marginally above the top end of our
stated target range of 1-2x.

 

Order intake in the period was 2 per cent higher than the previous year on an
organic constant currency basis. For the 10 months to the end of October order
intake is 10 per cent higher than in the prior year, with all regions higher
despite the continued weakness in component orders from the distribution
channels. The end of the destocking cycle and the timing of the recovery in
components remains difficult to predict, as a result, we continue to assume a
slow recovery through 2025.

 

We continue to take appropriate action, including further headcount reduction,
to mitigate the effects of the substantial market challenges impacting the
components business whilst supporting the growth in other areas of the
business. Project Dynamo, our self-help programme, is delivering significant
cost savings. The actions that we have taken over the last few months position
the company well to benefit from any volume improvement through better
operational gearing.

 

The Board continues to have confidence, assuming a reasonable recovery in the
components market, in the medium-term financial framework, including a 12%
operating margin by 2026, which is underpinned by the good momentum in our
European and Asian businesses, alongside the impact of Project Dynamo.

 

Conference call details

 

Peter France, TT Chief Executive Officer and Mark Hoad, Chief Financial
Officer will host a conference call today at 7:30am for analysts and
investors. A replay will be made available on the Company website.

 

To join the call please dial +44 (0) 33 0551 0200.

 

 For further information please contact:

 TT Electronics plc                        Tel: +44 (0)1932 827 779
 Peter France, Chief Executive Officer

 Mark Hoad, Chief Financial Officer

 Kate Moy, Head of Investor Relations and Communications

 MHP                                       Tel: +44 (0)7817 458804
 Tim Rowntree / Ollie Hoare
 ()

 ( )

Notes:

 

1.   Organic growth is calculated by excluding the impact of exchange rates,
acquisitions and disposals.

2.   TT will announce its full year results on 4 March 2025.

3.   Latest company compiled view of market expectations shows a consensus
adjusted operating profit of £38.2 million within a range of £36.9 million
to £40.0 million for the year ended December 2024.

 

About TT Electronics

 

TT Electronics is a global provider of engineered electronics for performance
critical applications.

 

TT solves technology challenges for a sustainable world. TT benefits from
enduring megatrends in structurally high-growth markets including healthcare,
aerospace, defence, electrification and automation. TT invests in R&D to
create designed-in products where reliability is mission critical. Products
designed and manufactured include sensors, power management and connectivity
solutions. TT has design and manufacturing facilities in the UK, North
America, and Asia.

Cautionary statement

This update contains forward-looking statements. These have been made by the
directors in good faith based on the information available to them up to the
time of their approval of this update. The directors can give no assurance
that these expectations will prove to have been correct. Due to the inherent
uncertainties, including both economic and business risk factors underlying
such forward-looking information, actual results may differ materially from
those expressed or implied by these forward-looking statements. The directors
undertake no obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.

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