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 30 October 2021.
Strong Demand
The strength in the Group’s performance has continued with year-to-date organic1 revenue growth of 10 per cent, as expected. Revenue in the four months to October is 11 per cent higher than the previous year on a constant currency basis and 8 per cent higher on an organic basis.
Our order intake continues to run well ahead of strongly growing revenue with book to bill of 140% and we have delivered additional contract wins in the period. As a result, the Group’s order book is at record levels and provides excellent visibility into 2022, underpinning our growth expectations.
Second Half Cost Pressures & Progress on Self-Help
Global supply chain constraints have continued in the second half and in some areas have tightened, principally impacting Power and Connectivity. The increased material and freight costs are being broadly offset by efficiencies and price management and supported by the self-help programme which continues to progress well and we remain on track to deliver the anticipated run-rate benefits of £11-12m in 2023.
Virolens
Positive dialogue continues with regulators in a number of jurisdictions. The product line is established to meet potential demand but as yet no further orders have been received.
Balance sheet
The ongoing strength of demand and supply chain constraints mean that we continue to hold higher levels of inventory. Despite this, we expect the year end leverage position to improve compared to leverage at the half year.
Outlook
Given the strong growth in our revenues, we expect to deliver adjusted operating profit of circa £35m for the current financial year, despite the significant cost headwinds referred to above.
The orderbook strength, customer wins and benefits of our self-help programme position us well for 2022.
Richard Tyson, TT Chief Executive Officer commented:
“I’m really pleased with the trading performance in the business. Customer demand and order intake has been very strong in the period, across all our divisions reflecting customer wins and market demand for our design-led solutions across structural growth markets. I am proud of how our people are managing the supply chain challenges and increased cost headwinds.
We expect to deliver further margin improvement this year as we continue on our path to double digit margins.”
Notes:
1. Organic growth is stated at constant currency and is calculated by comparing current year actual results to prior year results retranslated at current year actual exchange rates. Organic revenue excludes the impact of acquisitions and disposals.
2. Analyst consensus expectations for 2021 adjusted operating profit are £35.0m to £37.0m.
3. TT Electronics will announce its full year results on 9 March 2022.
