Pre-Close Trading Update

RNS Number : 3354X

TT electronics PLC

10 January 2014

 



10 January 2014

TT electronics plc

Pre-close Trading Update and Planned Restructuring at AB Werne, Germany

TT electronics plc ("TT" or "the Group"), a global provider of performance critical technology solutions to leading manufacturers, today issues the following pre-close trading update and announces that it plans to restructure its business in Werne, Germany.

Pre-close trading update

Trading in the last two months of 2013 was in line with the Board's expectations and, as anticipated, sales for the year ended December 2013 were ahead of prior year by approximately 5% on an underlying basis excluding foreign exchange movements and the acquisition of ACW Technology. Full year results are anticipated to be in line with market expectations. Order bookings in the period continued to show a positive trend and we go into 2014 with a good order book providing encouragement for further progress.

Strong cash generation and improved working capital flows in the last quarter resulted in a net cash position of approximately £26 million at 31 December 2013. The balance sheet strength will be deployed to invest organically in the business and on selected acquisitions.

Annual results for the financial year ended 31 December 2013 will be announced on 13 March 2014.

Planned restructuring at AB Werne, Germany

As part of TT's Operational Improvement Plan announced in June 2013 and in line with the strategy to further improve operational efficiency, the Group is planning to relocate manufacturing operations from Werne to its facilities in better cost regions.  The proposed restructuring is similar to actions taken by other major corporations in the European automotive industry. Consultation with the workforce representatives has commenced.

At the same time, TT is increasing investment in its Centre of Excellence for Research & Development and New Product Innovation in Werne, and its global sales capabilities building on established engineering expertise and strong customer relationships. Success with major global customers continues to gather momentum.

As previously indicated, the Operational Improvement Plan will have an overall exceptional cost of approximately £30 million, with efficiency benefits of approximately £8 million per annum from the second half of 2015.  To ensure the smooth implementation of the Plan, one-off operational inefficiencies will arise during 2014 due to the phased transfer of production, higher inventory build and doubling up of production costs for a period of time. Whilst overall profitability is anticipated to improve, these operational inefficiencies will impact reported operating profit and hold back margin progression of Sensing and Control in the current year.

Commenting on the Plan, Geraint Anderson, Group Chief Executive said:

"The increased investment in product innovation and sales in Germany and the relocation of manufacturing from Werne to our better cost facilities are key steps in our broader strategy to drive growth and make TT more competitive.  Whilst they will take time to implement, this announcement represents a significant step forward for the Group and, combined with our strong order book, provides confidence as we enter 2014"

Enquiries:

TT electronics plc Geraint Anderson, Group Chief Executive Shatish Dasani, Group Finance Director	Tel:  [phone]
Hudson Sandler Andrew Hayes/Wendy Baker/Katie Matthews	Tel:  [phone]

Note:

This statement contains certain forward-looking statements.  Such statements are made by the Directors in good faith based on the information available to them at the time of the announcement and they should be treated with caution due to the inherent uncertainties underlying any such forward-looking information.

 

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