IN Brief:
- Adjusted operating profit rose 37% organically to £18.5m as margin increased 230 basis points to 8.1%.
- Cleveland returned to profitability, while Components moved from a £1.9m adjusted operating loss to a £1.0m profit.
- Group book-to-bill reached 112%, although first-half cash conversion fell to 42% as inventory increased ahead of anticipated second-half demand.
TT Electronics has raised its full-year profit expectations after operational improvements across its electronics manufacturing and components businesses lifted first-half adjusted operating profit by 37% organically. The group reported £18.5 million of adjusted operating profit for the six months to 30 June 2026, compared with £13.5 million a year earlier, while adjusted operating margin increased by 230 basis points to 8.1%.
Revenue was less emphatic, falling 2.7% organically to £228.1 million, although the comparison includes the effects of closing the loss-making Plano operation and transferring a major electronics manufacturing customer from Suzhou in China to Kuantan in Malaysia. TT calculates that group revenue increased organically by approximately 4% when those two effects are excluded, leaving the first-half result more dependent on operational improvement than headline sales growth.
The largest change came within Electronic Manufacturing Solutions. TT says the turnaround of its Cleveland site is complete, with the operation returning to profitability following work during 2025 to improve execution and production control. EMS adjusted operating profit increased 80.5% to £7.4 million despite an 8.3% constant-currency reduction in divisional revenue to £94.1 million.
The company points to improving manufacturing efficiency at Cleveland, including reductions in scrap and rework. Those measures can have a disproportionate effect in lower-volume, higher-mix electronics manufacturing because poorly controlled rework consumes skilled labour and test capacity, while scrap can create further disruption when specialised components carry long replenishment lead times. Restoring yield and process stability can therefore improve both margin and delivery performance without requiring a large increase in factory throughput.
The transfer of a major customer programme from Suzhou to Kuantan has also been completed, with manufacturing volumes now increasing at the Malaysian site. The move depressed the first-half comparison because the customer had built inventory around the transfer, but TT says EMS sales would have increased by approximately 7% without that effect. Stronger order intake is expected to feed higher production during the second half.
Components has undergone an equally conspicuous change in profitability. Revenue increased 5.8% organically to £36.7 million, while adjusted operating profit moved from a £1.9 million loss in the first half of 2025 to a £1.0 million profit this year. Adjusted operating margin improved from -5.5% to 2.7%, helped by higher utilisation and the closure of the previously underperforming Plano site.
Order intake within Components increased 26% year on year, or 37% excluding Plano. The recovery comes while TT evaluates a potential divestment of the division following its strategic review. The company says it has received encouraging indications of interest, but any transaction remains subject to achieving acceptable value rather than forming part of a fixed disposal timetable.
The Power division was steadier. Revenue was broadly flat at £97.3 million, with aerospace and defence demand supporting activity but some customer programme timing shifting demand into the second half. The division recorded a 114% book-to-bill ratio, while work at Bedlington included further implementation of silicon carbide technology for next-generation electric aircraft systems.
Across the group, book-to-bill reached 112%, giving management greater visibility into second-half demand. TT’s cost-reduction programme is also substantially complete, with around £3 million of net savings expected during 2026 and an annualised run rate of more than £6 million from 2027. The board now expects organic revenue growth to return during the second half and full-year adjusted operating profit to exceed current market expectations.
Cash conversion provides the more cautious part of the result. First-half adjusted operating cash flow after capital expenditure was £7.7 million, equivalent to 42% cash conversion compared with 135% a year earlier. Free cash flow was negative £0.4 million as targeted inventory increases and the timing of customer receipts absorbed working capital ahead of the expected second-half production increase.
Net debt excluding lease liabilities stood at £52.0 million, down from £73.3 million a year earlier, while leverage remained at 1.1 times. TT expects working capital to unwind as activity rises and continues to target full-year cash conversion of 70% to 80%.
The stronger margin and order figures therefore arrive with a practical execution test attached. Closing an underperforming site and repairing another can produce a sharp year-on-year profit comparison, but the more durable measure will be whether Cleveland remains profitable as volumes increase, Kuantan absorbs transferred production without adding new inefficiencies, and the Components recovery survives a higher utilisation cycle. The second half will show whether TT has moved beyond fixing factories and into repeatable operating improvement.
