UK electronics manufacturer warns tariffs will hit profits and risk its ability to operate

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Electronics Firm TT Warns of Tariff Impact and CEO Departure

Shares in TT Electronics, a UK-based electronics manufacturer, experienced a sharp decline on Thursday after the company issued a warning that US tariffs would negatively impact its profits and potentially jeopardize its operational capabilities. Simultaneously, TT Electronics announced the immediate resignation of its Chief Executive Officer, Peter France.

Leadership Transition at TT Electronics

CEO Peter France Steps Down

Peter France has resigned from his position as chief executive of TT Electronics with immediate effect. His departure comes after a brief 18-month tenure at the helm of the organization.

Interim CEO Appointed

The company has swiftly appointed Eric Lakin, the current Chief Financial Officer, as interim chief executive. Mr. Lakin will assume leadership responsibilities while TT Electronics commences its search for a permanent successor.

Tariffs Threaten TT Electronics’ Financial Performance

US Trade Policies Create Uncertainty

The recent imposition of trade tariffs by US President Donald Trump has introduced significant uncertainty for businesses operating internationally. These measures include a baseline 10 percent tax on all goods entering the United States and a 25 percent tariff on imported vehicles, steel, and aluminum.

Retaliatory Tariffs and Trade Tensions

While some ‘reciprocal’ tariffs imposed by the US on numerous countries were temporarily suspended, trade tensions remain elevated, particularly with China. The US has escalated its trade dispute with Beijing by increasing tariffs on Chinese goods to a substantial 125 percent.

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Impact on TT Electronics’ Profitability

TT Electronics has expressed concerns that these tariffs will create an unpredictable macroeconomic environment, exceeding the risks previously considered in its most severe projections. The company cautioned that tariff-related uncertainty could diminish customer orders, potentially affecting its financial performance and profitability.

TT Electronics Business and Market Position

Specialized Electronic Components

Headquartered in Woking, UK, TT Electronics specializes in the design and manufacturing of electronic components. Its product portfolio includes resistors, flow sensors, and power modules, serving critical sectors such as defense, aerospace, and healthcare.

Key Clients in Defense and Aerospace

TT Electronics boasts an impressive client roster within the defense industry, including prominent names like Lockheed Martin and BAE Systems. BAE Systems has awarded TT Electronics contracts for involvement in major projects like the Tempest aircraft and Challenger 3 tank upgrades.

Financial Performance Review

Previous Year’s Profit Decline

TT Electronics experienced a 23 percent decrease in pre-tax profits at constant currency rates in the prior year, falling to £27.2 million. This downturn was primarily attributed to challenges within its North American division.

Challenges in North America

The company cited reduced demand in North America due to prolonged distributor destocking and operational difficulties at its Cleveland and Kansas City facilities. These factors overshadowed stronger performances observed in European and Asian markets.

Revenue Reduction

Coupled with the divestment of business operations in Cardiff, Hartlepool, and Dongguan, China, TT Electronics’ total revenue contracted by 13 percent, reaching £521.1 million.

Profit Outlook and Market Reaction

Revised Operating Profit Forecast

Due to the uncertainty introduced by the newly announced tariff measures, TT Electronics anticipates its adjusted operating profits for 2025 to range between £32 million and £40 million. This is compared to £37.1 million in the current year, reflecting the expected negative impact of the tariffs.

Stock Price Plunge

Investor concerns regarding the profit warning and CEO departure led to a significant sell-off of TT Electronics shares. The company’s stock became the second-largest decliner on the FTSE All-Share Index, plummeting 10.3 percent to 74.6 pence shortly before midday.