TT Electronics plc (LON:TTG), a global provider of engineered electronics for performance critical applications, has published the following Trading Update on the Group’s performance in the four-month period ended 24 October 2020.
Improving revenue
Momentum in the Group’s trading performance has continued as expected, with the trends in like-for-like revenue improving in the four months to October. Revenue in the period was 11 per cent lower than the previous year on a constant currency basis and 12 per cent lower on an organic1 basis. This compares to a 17 per cent organic reduction in the second quarter of 2020.
The trends previously seen in TT’s end-markets have continued. Order intake has shown signs of recovery with bookings for the four months running at 104 per cent of revenue and, as a result, the Group’s order book has now almost recovered to where it was this time last year. The recovery dynamics in organic revenue and order intake have come from across the Group.
Notwithstanding the second wave of the pandemic globally, all of our facilities remain open and are delivering to customer requirements, whilst continuing to prioritise the safety of our employees.
Margin enhancement
We are making good progress with the Group’s extended self-help programme, which commenced in the second quarter, with initial headcount reductions completed and transfer activity on schedule to support the site closure timeline. The project is on schedule to deliver the expected £11-12 million of run-rate benefits in 2023.
Virolens® update
In September we announced that TT had been appointed exclusive manufacturing partner for the commercial launch of Virolens®, a rapid COVID-19 screening device. There remains a wide range of possible outcomes but Virolens® is proceeding through regulatory approvals and devices have been shipped to initial launch customers for operational trials in a number of different jurisdictions.
We have also been working to prepare for volume production of Virolens® devices and testing cartridges at our facility in Hartlepool, UK.
Torotel acquisition completed
On 10 November the Group completed the acquisition of Torotel for an enterprise value of $43.4 million. Torotel is a Kansas, US-based designer and manufacturer of high-reliability power and electro-magnetic assemblies and components designed for harsh environments, primarily for defence markets. The acquisition broadens TT’s power electronics capabilities in the US, further increasing its scale in this important market. It adds recurring revenue streams from largely sole source positions on multi-year growth programmes and brings attractive cross-selling opportunities. Work is now underway to integrate Torotel into TT’s Power and Connectivity division.
Richard Tyson, Chief Executive Officer said:
“We are pleased that trading momentum has continued to recover during recent months, with organic revenue trends improving across the Group. We are also continuing to manage the impact of COVID-19 on our people, customers and other stakeholders with all of our facilities open and fully operational.
I am also pleased we have completed the acquisition of Torotel, which is a strong strategic fit for TT, increasing both our scale and capabilities in the important US defence market.
We are continuing our journey to double-digit margins and expect to see further improvement in trading this year.”
