TIDMTTG
RNS Number : 1654P
TT Electronics PLC
08 June 2020
8 June 2020
TT Electronics plc
Trading Update
TT Electronics plc ("TT", "the Group"), a global provider of
engineered electronics for performance critical applications,
publishes the following Trading Update on the Group's performance
in the five months to May 2020.
Our employees and business operations
Through this period of unprecedented uncertainty, TT has
executed the plans and actions set out in the announcement of 3
April 2020 to protect the safety and wellbeing(2) of our people and
wider communities, as well as our customers and partners, at the
same time as reducing our costs and protecting our cash flows.
As anticipated in the 3 April 2020 announcement, "essential"
business status has enabled TT to remain largely operational
through the period and delivering to customer requirements.
However, the Group has operated at lower capacity in April and May
as a result of both the temporary closure of sites in Mexico,
Malaysia, Barbados and Tunisia, in compliance with local government
requirements, and employee shielding and self-isolation. The
overall situation is now improving as government restrictions ease,
with all TT facilities open, and the number of employees in
self-isolation reducing.
Trading performance
Group revenues in the first quarter were 11% lower than the
prior year on an organic(3) basis and for the five months to May
were 14% lower organically, reflecting both reduced economic and
industrial output globally and the direct impact of COVID-19
related restrictions. The peak of the disruption was experienced in
April (21% organic reduction) and some sequential recovery in
revenue was already evident in May. The order book at the end of
May remained broadly in line with the prior year on a like-for-like
basis.
The organic revenue reduction within the Sensors and Specialist
Components and Power and Connectivity divisions in the year-to-date
has been slightly higher than the Group average due to the impact
of demand and site closures primarily affecting these divisions.
Performance in Global Manufacturing Solutions has been better than
the Group average, in part helped by the ramp up of some new
contracts that were won in 2019.
Mitigating actions and financial position
TT entered this unprecedented period with a strong balance sheet
and significant liquidity. The Group has preserved this position
with actions in the past two months to reduce costs and protect
cash flows. We are now progressing the self-help projects announced
at our full year results in March 2020 and have expanded them to
take account of the reduction in demand. In total the cash cost of
these projects is expected to be circa GBP18 million, comprising
restructuring costs and capital expenditure, of which approximately
half is expected to be spent in 2020. Full year run rate benefits
from these projects will be GBP11-12 million in 2023, with initial
benefits in 2020 and 2021 helping to mitigate the demand slowdown
in certain end markets and protect the Group's margin improvement
plans.
Acquisition integration and strategy
The integration of the newly acquired power supply business in
Covina, California into TT Power Solutions North America has now
been completed. The Covina business is performing well and already
winning new business under TT's ownership. In addition, Power
Solutions North America has also won a significant new multi-year
order from a US defence prime, and it is being actively considered
for other new projects, giving confidence that this strategy is
working well. The Group is continuing to develop its acquisition
pipeline, and is reviewing opportunities that will add
complementary capabilities, customers and market access.
Commenting Richard Tyson, Chief Executive Officer said:
"TT has responded quickly and effectively to manage the
COVID-related disruption to our business and continue supplying our
customers.
Our strategy to reposition the Group over the last five years
has improved the Group's resilience. This, coupled with our early
action on costs and cash flow, has enabled us to retain a strong
financial position, and to progress our self-help projects which
will improve efficiency, reduce costs and help protect our margin
improvement plans.
TT is in robust shape and well placed to pursue the
opportunities that are presenting themselves and to create value
for all of our stakeholders."
For further information please
contact:
TT Electronics plc Tel: +44 (0)1932 827 779
Richard Tyson, Chief Executive Officer
Mark Hoad, Chief Financial Officer
Julian Wais, Head of Investor Relations and Communications
MHP Tel: +44 (0)20 3128 8100
Tim Rowntree / Rachel Mann
(1)
Notes:
1. TT will announce its interim results on 6 August 2020.
2. TT's COVID Secure Work Principles and Risk Management Plan are available for viewing on www.ttelectronics.com/coronavirus .
3. Organic growth is stated at constant currency and is
calculated by comparing current year actual results to prior year
results retranslated at current year actual exchange rates. Organic
revenue excludes the impact of acquisitions and disposals.
About TT Electronics
TT Electronics is a global provider of engineered electronics
for performance critical applications.
The company operates in industries where there are structural
growth drivers, working with market-leading customers primarily in
the industrial, medical, aerospace and defence sectors. Products
designed and manufactured include sensors, power management devices
and connectivity solutions. TT has design and manufacturing
facilities in the UK, US, Sweden and Asia.
The company has three divisions. The Power and Connectivity
division designs and manufactures power application products and
connectivity devices which enable the capture and wireless transfer
of data. We collaborate with our customers to develop innovative
solutions to optimise their electronic systems. The Global
Manufacturing Solutions division provides manufacturing services
and engineering solutions for our product divisions and to
customers that often require a lower volume and higher mix of
different products. We manufacture complex integrated product
assemblies for our customers and provide engineering services
including designing testing solutions and value-engineering. The
Sensors and Specialist Components division works with customers to
develop standard and customised solutions including sensors and
power management devices. Our solutions improve the precision,
speed and reliability of critical aspects of our customers'
applications.
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 inf ormation,
future events or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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