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

TT Electronics shares slumped on Thursday after it warned that US tariffs would hit profits and risk its ability to operate.

The London-listed manufacturer also told shareholders its chief executive Peter France had stood down with immediate effect after just 18 months in charge.

TT’s chief financial officer, Eric Lakin, has replaced him on an interim basis while the search for a successor takes place.

US President Donald Trump imposed a baseline 10 per cent tax last week on all goods entering the US, along with a 25 per cent levy on imported cars, steel, and aluminium products.

Trump also put ‘reciprocal’ tariffs on dozens of countries, which came into effect on 9 April before being suspended just hours later for 90 days.

However, he has intensified the trade war with Beijing by hiking tariffs on Chinese-made goods to a whopping 125 per cent.

China has responded with retaliatory levies of 84 per cent on all US imports, while Canada has slapped tariffs on American products including steel, aluminium and car parts.

TT said the tariffs ‘provide an uncertain and volatile macroeconomic backdrop which could have an impact beyond that assumed in the severe downside case’.

The business added that it was not certain of being compliant with its covenants in ‘certain extreme scenarios, in particular where customer reticence in placing orders against the backdrop of tariff uncertainty reduces order intake.’

Based in Woking, TT makes electronic components, such as resistors, flow sensors, and power modules, for the defence, aerospace, and healthcare sectors.

Its defence industry customers have included Lockheed Martin and BAE Systems; the latter has given TT contracts to work on the Tempest aircraft and Challenger 3 tank projects.

TT’s pre-tax profits fell by 23 per cent at constant currency rates to £27.2million last year due to troubles in its North American division.

The firm said demand in the region was impacted by ‘longer than originally expected’ distributor destocking and operational issues at its Cleveland and Kansas City sites.

This offset stronger performances in Europe and Asia, with trade in the former market benefiting from higher demand from the aerospace and defence market.

Combined with the divestment of business units in Cardiff, Hartlepool, and Dongguan, China, the group’s total revenue declined by 13 per cent to £521.1million.

TT thinks its adjusted operating profits will total between £32million and £40million in 2025, compared to £37.1million this year, owing to uncertainty resulting from the recently announced tariff measures.

Shares in the group were the FTSE All-Share Index’s second-biggest faller just before midday, having plunged 10.3 per cent to 74.6p.