Interim Management Statement

RNS Number : 4867G

TT electronics PLC

23 October 2008

 



TT electronics plc

Interim Management Statement

TT electronics plc, a world leader in sensor and electronic component technology, issues this Interim Management Statement in accordance with the UK Listing Authority's Disclosure and Transparency Rules. It covers the period from 1 July 2008 to 22 October 2008, and is based on the trading results for the nine months ended 30 September 2008.

Current Trading

The Group's operating profit for the nine months to 30 September 2008 was lower than the comparable period in 2007 due to a decline in both the sensors and electronic systems and the electronic components businesses.  Trading in recent weeks has deteriorated significantly, predominantly in the automotive sector, and this is expected to continue in the fourth quarter.  The decline was caused by sharply reduced demand  following announcements by the automotive industry of lower production, closure of facilities and reduction in stocks.  This has been particularly severe in Germany.  Demand has suffered to a lesser extent from the slow-down in other industries in the USA and across Europe.  Cost increases in raw materials, commodities and electricity have also had a negative impact on margins.  

The electronic manufacturing services and secure power and industrial businesses continue to perform well,  each trading in line with expectations. The electronic manufacturing services business is having a successful year, serving a global market from its facilities in China, Malaysia, UK and USA. The secure power operations in Mexico and the UK have performed well, with the extension to the facility in Mexico now complete. The interconnection systems business, which operates from a global manufacturing base supplying the defence, aerospace and traction markets, has also continued to perform well and has recently won contracts covering the next five years.

Integration of the Semelab business which was acquired in August 2008 has proceeded to plan and the business performance is in line with expectations. The business provides a good fit with our existing presence in the military, aerospace and medical sectors.

Financial Position

The financial position of the Group remains strong, with a robust balance sheet.  Net debt at 30 September 2008 was £99.1m and reflected the completion of the Semelab acquisition for £9.8m in August 2008.  The Group's banking facilities include significant committed facilities extending to 2011 and its current level of borrowings is comfortably below the facilities available.

Outlook

Whilst we anticipate that trading in the electronic manufacturing services and secure power and industrial businesses will remain in line with expectations, trading conditions for the automotive-related businesses within the rest of the Group are expected to remain very difficult for the rest of 2008.  In addition, we expect to charge £5.3m in the last quarter of 2008 as a result of the closure of the climate control facility in South Wales announced in July and in relation to the proposed relocation of the manufacturing facility at AB Electronic Romford, UK, to our lower cost facilities in China and India.  Other actions to mitigate the impact of the downturn are being taken but, as a consequence of the above factors, we expect the Group's results for 2008 to be materially below market expectations.

As announced in August, the Board has commenced a Strategic Review of its businesses including its dividend policy. Good progress has been made and we anticipate announcing the outcome of the review in January 2009.  

For further information, please contact:

TT electronics plc                                                            Tel:    [phone]

Geraint Anderson, Group Chief Executive

Shatish Dasani, Group Finance Director

Biddicks                                                                           Tel:    [phone]

Zoë Biddick

Notes to Editors

TT electronics is a technology based group with a leading position in sensors and electronic components and a significant presence in electronic manufacturing services and secure power systems in global markets.

 

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