TT Electronics reported first-half profit that exceeded analyst forecasts as its operational turnaround gathered pace, with adjusted EBITA up 37% year-over-year to £18.5 million against a £16.5 million consensus. Pretax profit reached £15.8 million, while earnings per share came in at 5.7p, surpassing the 4.0p estimate.
Revenue for the six months totaled £228 million, in line with Jefferies’ consensus estimate. On an organic constant-currency basis, sales declined 2.7%, though growth of 4% was recorded when excluding the impact of the Plano site closure and an EMS customer transfer. Adjusted EBITA margin expanded by 230 basis points to 8.1%, supported by operational improvements across divisions.
The Power Division generated sales of £97.3 million and EBITA of £13.8 million, with organic constant-currency revenue flat year-over-year. Margins contracted by 120 basis points to 14.2% due to delays in finalizing key customer agreements, though orders are now expected to materialize in the second half. The EMS Division reported sales of £94.1 million and EBITA of £7.4 million, with organic constant-currency revenue down 8.3% but up roughly 7% excluding customer transfers. Margins improved by 390 basis points to 7.9%, aided by the transfer of a customer from Suzhou to Kuantan and operational enhancements at Cleveland. The Components Division posted sales of £36.7 million and EBITA of £1.0 million, with organic constant-currency revenue up 5.8% and margins expanding by 820 basis points to 2.7% on higher volumes and the Plano site closure.
Net debt stood at £52 million before IFRS 16, with a net debt-to-EBITDA ratio of 1.1 times. Cash conversion fell to 42% from 135% a year earlier due to an inventory build, while the book-to-bill ratio improved to 1.12 times as the sales transformation program took effect.
TT Electronics completed most of its cost-reduction initiatives in the first half, with benefits expected to weigh toward the second half. Expected savings are projected to reach around £3 million in fiscal 2026, scaling to annualized benefits of approximately £6 million from fiscal 2027 onward.
The board is evaluating a potential divestment of the Components business following a strategic review, having received preliminary expressions of interest. A final decision remains contingent on valuation.
For the full year, management expects EBITA to exceed current market expectations, with constant-currency consensus at £35.0 million. Revenue is anticipated to return to organic constant-currency growth in the second half, while full-year cash conversion is projected between 70% and 80%, an improvement from the first half.
Jefferies noted that TT Electronics’ update should be well received, citing a 6% ahead-of-consensus first-half EBITA, progress on key issues, and an expected return to growth in the second half. The brokerage also highlighted the ongoing Components sale process and suggested outlook comments could translate into a higher-than-seeded upgrade to consensus EBITA.
