TT Electronics announces German efficiency drive, FY in line

10th Jan 2014 09:59

After confirming 2013 trading remained in line with expectations, TT Electronics has announced an investment plan for its German operations that will hit profits for the coming year. The German restructuring, including relocation of German manufacturing operations to its other facilities in lower-cost regions and increasing investment in its research and development facility and global sales team, is expected to cut £8m of costs per year from the second half of 2015, but will have an overall exceptional cost of approximately £30m.Chief Executive Geraint Anderson said this was a "key step" in TT's broader strategy to drive growth and become 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."TT, whose markets include defence, automotive, medical and aerospace, said full year results were anticipated to be in line with market expectations as sales for the calendar year were ahead of prior year by approximately 5% on an underlying basis excluding foreign exchange movements and the acquisition of ACW Technology. House broker Numis said the German plans prompted a trimming of its 2014 profits forecasts by 9% but had maintained 2015 forecasts given the cost benefit recovery expected from these actions. "We remain positive on TT as we believe that it can still achieve its margin target range next year and have a leaner cost base to drive higher margins from 2016 and beyond."Shares in TT were down 1.2% to 192.5p at 10:05 on Friday. OH