12th Mar 2015 08:40
LONDON (Alliance News) - TT Electronics PLC Thursday said it swung to a pretax loss for 2014 and gave a cautious outlook for 2015 as it restructures its business, while saying it does not expect the benefits of its new strategic plan to be seen until 2016.
TT posted a pretax loss of GBP5.9 million,versus a pretax profit of GBP18.3 million in 2013, as revenue declined to GBP524.3 million from GBP532.2 million and it posted restructuring costs of GBP22.2 million and asset impairments of GBP9.4 million.
TT's revenue was hampered by the strength of sterling, which reduced revenue by around GBP22.6 million, it said.
The electrical component company undertook a review of the business, culminating in a restructuring programme it has dubbed 'the operational improvement plan', which it launched in 2013. It expects the cost of the programme to be around GBP24.0 million, leading to yearly cost improvements of GBP3.5 million from 2016.
Although it planned to relocate some manufacturing lines from Germany to Romania, this process was delayed during 2014 as it agreed a programme with the workers council and trade union. The transfer has now begun, TT said, with the first line transferred in January. A further ten lines are planned to be moved in 2015, and the remainder in 2016, it said.
The company also has closed sales offices in Japan, France and Italy, leading to cost savings of GBP1.3 million, although it has put the transfer of a manufacturing facility from its California site to Mexico on hold in order to complete a "significant customer order." It expects this transfer to be completed in 2015.
"The overall operational and financial performance for 2014 was disappointing. However, the group has undergone significant change during the second half of the year. We have a new management team in place and a clear strategic plan to improve the performance of the businesses. 2015 will be an important year of transition as this new plan is implemented," said Chief Executive Officer Richard Tyson in a statement.
TT said that whilst its order book is sound, its markets continue to look challenging, particularly in Europe. It expects 2015 profits to be more heavily weighted to the second half than they were in 2014.
The company proposed a dividend of 3.8 pence, taking its total dividend to 5.5 pence, up from 5.4 pence in 2013.
Shares in TT are trading down 10% at 116.30 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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