TT Electronics Shares Drop; Navigates Turnaround Amidst Mixed H1 Performance

TT Electronics (LON: TTG) shares declined on Wednesday as the company's interim results for the six months ended June 30, 2025, revealed a decrease in both revenue and profit.

While the company demonstrates progress in key areas, challenges in North America and Asia temper overall performance. The stock is down more than 4% so far in today's session.

Revenue declined organically by 6.0% to £237.9 million, although excluding the Plano site, the decrease moderates to 4.3%. Adjusted operating profit saw a steeper drop, falling nearly 30% to £13.0 million, resulting in an operating margin of 5.5%. However, strong cash conversion at 135% signals underlying financial health.

Net debt decreased to £73.3 million, and the company reported free cash flow of £6.4 million, a notable improvement from the previous year’s negative £7.8 million. This enhanced liquidity provides TT Electronics with increased financial flexibility as it executes its turnaround strategy.

TT Electronics is actively addressing underperforming areas. The closure of the Plano site is underway, and the Cleveland turnaround is reportedly progressing well. A strategic review of the components business is also in progress under separate management oversight. These actions are designed to streamline operations and improve profitability.

Driver Breakdown:

• European Strength: Strong growth in the Aerospace & Defence sector drove positive performance in Europe.
• North American Challenges: Site-specific issues in Cleveland and Plano weighed on overall results.
• Asian Order Delays: Geopolitical uncertainties contributed to order delays in the Asian market.

CEO Eric Lakin stated, “Overall progress has been offset by the two site specific challenges in North America, at Cleveland and Plano, and order delays for our Asian business due to geopolitical related uncertainties… We have implemented two important strategic actions to improve our future financial performance. We have made the difficult decision to close our Plano site and have launched a strategic review of our components business,” highlighting the decisive steps being taken to address the company's challenges.

Looking ahead, the company expects full-year adjusted operating profit to be in line with market expectations. The consensus for 2025 adjusted operating profit is £33.7 million, within a range of £31.6 million to £35.6 million.

TTG expects that the improvements in North America, progress in Europe, and a resilient contribution from Asia will underpin the step up in second-half profitability needed to be in line with market expectations.