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(Sharecast News) - Electrical engineer TT Electronics posted a statutory operating loss for the first half of its financial year, despite strong cash generation and a solid performance in Europe.
TT Electronics said revenue for the six months to 30 June fell 6.0% organically to 237.9m, with adjusted operating profit down 29.7% at 13.0m, yielding a margin of 5.5%, down 180 basis points.
Statutory operating loss came in at 5.1m, a marked difference when compared to the prior year's 11.9m operating profit, impacted by 18.1m of adjusting items, including restructuring costs tied to the closure of the Plano site and turnaround efforts at Cleveland. Basic earnings per share swung to a loss of 5.8p from a profit of 1.6p a year earlier.
TT said European operations delivered strong growth, particularly in aerospace and defence, but this was offset by volume declines and operational challenges in North America and order delays in Asia.
Cash conversion improved sharply to 135%, helping reduce net debt, excluding leases, to 73.3m from 80.1m. However, leverage ticked up slightly to 1.9x. TT also opted to maintain its dividend pause amid ongoing macro uncertainty.
Chief executive Eric Lakin said: "Our European region continues to perform well, driven by strong Aerospace & Defence markets and our positioning on long-term programmes. Overall progress has been offset by the two site-specific challenges in North America, at Cleveland and Plano, and order delays for our Asian business due to geopolitical-related uncertainties.
"We have made the difficult decision to close our Plano site and have launched a strategic review of our components business. Our Cleveland improvement plan is on track and delivering improved performance. These improvement actions in North America, further progress in Europe and a resilient contribution from Asia are expected to underpin the step up in second half profitability. The Board therefore expects full year adjusted operating profit to be in line with market expectations."
As of 1140 BST, TT shares were down 0.93% at 107p.
Reporting by Iain Gilbert at Sharecast.com
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