TT Electronics plc

Revenue for 2025 was GBP 481.4 million, down 2.7% organically. Adjusted operating profit increased 2.2% to GBP 37.2 million, and adjusted operating margin expanded 30 basis points to 7.7%. Adjusted profit before tax rose 5.5% to GBP 28.7 million. Adjusted EPS was 6.9p, down 37.3% year on year, reflecting a 57% effective tax rate; on a normalized basis, adjusted EPS would have been 12p and the tax rate 25.4%. Free cash flow increased 7.9% to GBP 29.9 million, cash conversion was 150% versus 117% last year, net debt fell to GBP 50.3 million, and leverage declined to 1.1x from 1.8x. For 2026, management expects revenue and adjusted operating profit to be in line with current market consensus. They also expect approximately GBP 3 million of net benefit from the cost reset in 2026, with annualized savings roughly double that amount in future years.

Eric Lakin framed 2025 as a transition year in which the company took swift action to restore operational control, strengthen the balance sheet, and stabilize underperforming sites. He emphasized that Cleveland is now stabilized, Plano has been closed, and the business is shifting to a more coherent divisional structure to improve accountability and speed of decision-making. His tone was constructive and cautious: while he highlighted stronger customer relationships, new business wins, and better execution, he repeatedly noted there is still work to do and external uncertainty remains.

Richard Webb highlighted the main financial positives: adjusted operating profit of GBP 37.2 million, margin expansion to 7.7%, adjusted PBT of GBP 28.7 million, free cash flow of GBP 29.9 million, and leverage down to 1.1x after net debt fell by almost GBP 30 million to GBP 50.3 million. He said inventory reduction was the key working-capital driver, contributing GBP 14.8 million to cash flow, and noted the company had extended its revolving credit facility to June 2028 while reducing it from GBP 162 million to GBP 105 million, with only GBP 10 million drawn and expected to be undrawn in the next few months. He also quantified the Plano contribution at about GBP 1 million to group adjusted operating profit for the year and said the China-to-Malaysia transfer cost around GBP 1 million of OpEx plus limited CapEx.

Analysts pressed on the new divisional structure, the sales investment, pricing discipline, Cleveland productivity, dividend policy, and 2026 moving parts. Management said the new divisions are broadly similar to the old setup but more coherent, with smaller divisional teams and more responsibility pushed to site leaders; they also said the sales build-out will add only a modest net cost and should pay for itself. On pricing, Eric Lakin said the company reviewed nearly 100 Cleveland contracts, found some low or negative margin business, and has already won two significant price renegotiations in aerospace and defense. On 2026 guidance, management said EMS softness, some Europe mix normalization, and broader geopolitical/inflation uncertainty offset the benefits from Plano’s closure and North America improvement; the dividend was described as something the Board will keep under review.