Since posting a stinging profit warning at the end of 2014, TT Electronics (TTG) has been busy embarking on a clean-up mission. Given all the shake-ups, including the ousting of the chief executive and finance director as part of a strategic overhaul, these first-half numbers aren't too bad.
Underlying operating profit slid 21 per cent to £10m as the electrical component maker was hit by price cuts, the end of a lucrative contract, a weaker product mix in its electronic manufacturing division and a higher research and development bill. But cost reductions, volume growth and robust demand for industrial sensing and control after-market products helped stem the decline.
Also encouraging was news that nine of the 10 production lines moving from Germany to lower-cost Romania have now been transferred. One more is expected to move this year, while a further six should find a new, more cost-effective home in 2016. Management says the operational improvement plan should be complete in the first half of 2017, generating £5.5m in annual savings from 2018. Meanwhile, tighter control of capital expenditure and working capital triggered better cash conversion.
Broker Numis expects adjusted pre-tax profit of £19m for the year to December, giving adjusted EPS of 8.9p (from £27.6m and 12.9p in 2014).
| TT ELECTRONICS (TTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 154p | MARKET VALUE: | £245m | |
| TOUCH: | 153-154p | 12-MONTH HIGH: | 180p | LOW: 96p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | NA | |
| NET ASSET VALUE: | 109p* | NET DEBT: | 14% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 261 | -0.4 | -2.1 | 1.7 |
| 2015 | 264 | 6.3 | 2.6 | 1.7 |
| % change | +1 | - | - | - |
Ex-div: 15 Oct Payment: 29 Oct *Includes intangible assets of £88m, or 55p a share | ||||
