TT Electronics (TTG) H2 2024 earnings summary

Executive summary

• 2024 was challenging with macroeconomic uncertainty and operational issues, but strong performances in Europe and Asia and significant cash flow improvements were achieved.

• Leadership transition occurred, with Eric Lakin as acting CEO and Mark Hoad retiring after major company transformations.

• Strategic progress included management reorganization, divestment of three sites (Project Albert), and the launch of Project Dynamo for operational improvement.

• Project Dynamo delivered £13m inventory reduction and 117% cash conversion, with leverage at 1.0x–1.8x within target range.

• Adjusted operating profit fell 17% year-over-year (13% excluding divestment), and EPS dropped 30% due to lower operating profit and higher interest and tax rates.

Financial highlights

• Revenue declined 13% year-over-year at constant currency (15% reported), or 5–7% excluding divestments; like-for-like revenue down 2%.

• Adjusted operating margin dropped 60 bps to 7.1% (7.4% ex-divestment).

• Free cash inflow of GBP 27.7 million, with cash conversion at 117% and net debt reduced by GBP 25 million to GBP 80 million.

• ROIC declined to 10.0% from 10.9% (ex-divestment: 10.3% from 12.3%).

• Dividend reduced by 67% to 2.25p, then paused for 2024.

Outlook and guidance

• Adjusted operating profit for 2025 expected in the range of GBP 32 million–GBP 40 million, reflecting market uncertainty and operational improvements.

• No final dividend for 2024 due to macroeconomic risks; focus remains on cash generation and leverage reduction.

• Medium-term margin target of 12% for 2026 is no longer expected, but substantial improvement remains possible with market recovery.

• Capex and development expenditure expected at £13–15m; modest working capital outflows anticipated.

• No revenue contribution from divestments in 2025; pass-through revenue to reduce by £5m.