"In 28 years in business I have never seen anything like the extent of destocking that took place in the first quarter" said TT Electronics' chief executive Geraint Anderson, after the sensor and electronic component group reported a huge drop in sales and profits. Stripping out a boost from foreign exchange, sales slumped by 29 per cent.
But at least the worst appears to be behind the group. Mr Anderson said that although there was still precious little evidence of a sustained recovery in demand, trading had now stabilised. And the scale of the downturn meant TT's new management team could accelerate a brutal cost reduction programme that's already seen 1,668 positions cut. "In normal times we would have found it a bit more difficult to make as much change as we have done in the space of time that we have done," said Mr Anderson. The programme will save an annualised £30.5m, and most of the £14m restructuring costs have already been incurred.
More importantly, TT has been able to close unprofitable lines - such as its automotive climate control unit - and introduce more disciplined sales and cash management processes throughout the group that leaves it in good shape for when recovery eventually comes.
House broker KBC Peel Hunt expects full-year pre-tax profits of £0.5m and a loss per share of 1p (2008: £21.1m/9.2p).
| TT ELECTRONICS (TTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 44p | MARKET VALUE: | £68.6m | |
| TOUCH: | 44-45p | 12-MONTH HIGH: | 118p | LOW: 16p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 108p* | NET DEBT: | 60% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 292 | 15.0 | 7.2 | 3.69 |
| 2009 | 237 | -14.5 | -9.9 | nil |
| % change | -19 | -197 | -238 | -100 |
*Includes intangible assets of £87.1m, or 56p a share | ||||
