Global economic uncertainty and the non-recurrence of bulky one-off orders were mainly to blame for a 26 per cent fall in operating profit for TT Electronics (TTG) in 2015. But that didn't seem to phase investors, who were already aware of these issues and would have instead been gratified to learn that management's major strategic overhaul is now in full effect.
"We're in much better shape now than we were 12 months ago," says chief Richard Tyson, reflecting on a time when the electronic component maker was still known for "lacklustre performances". Since joining he's been determined to fulfil customers' wishes, invest in new products, drive efficiencies and instil financial discipline.
Based on this showing, some of those measures are obviously starting to pay off. Aside from finally completing the long-winded transfer of production facilities to cheaper Romania and Mexico, the group also managed to diversify away from the big three German automotive makers by bagging big contracts in China. And adjusted cash conversion of 136 per cent, up from just 3 per cent in 2014, suggests that better discipline across the group is generating the required results - a point borne out by debtor days in the low 40s. With many of the reforms now in place, management is confident that the new-look company can comfortably hold its own this year despite a tough economic environment.
Broker Numis largely shares its optimism, with analysts there expecting adjusted pre-tax profit to climb to £21m, giving EPS of 9.8p (from £19.2m and 8.8p in 2015).
| TT ELECTRONICS (TTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 158p | MARKET VALUE: | £256m | |
| TOUCH: | 155-158p | 12-MONTH HIGH: | 168p | LOW: 114p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 114p* | NET DEBT: | 30% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 591 | 31.8 | 15.8 | 4.4 |
| 2012 | 477 | 22.0 | 10.3 | 5.0 |
| 2013 | 532 | 18.3 | 8.8 | 5.4 |
| 2014 | 524 | -5.9 | -6.6 | 5.5 |
| 2015 | 510 | 13.8 | 6.5 | 5.5 |
| % change | -3 | - | - | - |
Ex-div: 19 May Payment: 2 Jun *Includes intangible assets of £131.5m, or 81p a share | ||||
