Components manufacturer TT Electronics has moved to reduce costs as it faces lower demand for its products as a result of destocking.
The London-listed firm said in a trading update on Friday the destocking it had experienced recently was now expected to normalise in the second half of 2024, which was affecting TT’s shorter-cycle component products, mainly in North America.
As a result of the firm taking cost action to offset the lower demand, it expected the profit weighting in the second half of the year “to be more pronounced than normal”.
TT said its board’s expectations for the full year remained unchanged and that the firm was still on track to post a 10 per cent adjusted operating margin in 2024.
Meanwhile, the firm reported that its revenue in the four months to 30 April was two per cent lower than the same period in 2023, excluding the impact of exchange rates, acquisitions and disposals.
This figure was one per cent higher when excluding the impact of pass-through revenues that TT said continued to fall during the period.
Its book-to-bill ratio, measuring the rate of orders received to units shipped and billed, remained positive at 102 per cent, which it said was helped by steady performance in Europe and Asia.
Chief executive Peter France commented: “Whilst there is continuing global macro-economic uncertainty, the outlook for our markets remains good.
“The significant orderbook coverage and our prompt actions across the business underpin the board’s confidence in an unchanged outlook for the year and the delivery of the 10 per cent operating margin target.”
TT’s shares fell 1.2 per cent in early trading on Friday.