TI Fluid Systems confident in outlook after first-half growth

The FTSE 250 company said its margin for the six months ended 30 June was 8.4%, up from 2.3% in the first half of 2020.

Its board announced an interim dividend of 1.93 euro cents per share, which it noted could represent a full year pay-out in line with its 30% of adjusted net income dividend policy.

TI described its adjusted free cash flow generation as “significant” in the period, at €46.3m, up from €34.9m, with net cash generated from operating activities coming in at €98.8m.

Its balance sheet and liquidity was also described as “strong”, with the company having a cash position of €469.4m as at 30 June.

The firm issued a €600m bond repayable in 2029 during the period, with the proceeds being used to reduce its term loan facilities, as its term loans were extended to 2026 from 2024.

Its fixed cost reduction programme, which started last year, was still being executed, as was its organic growth strategy and strategic focus on battery-electric and hybrid-electric vehicles, with around 50% of first half total new business wins being on those two platforms.

The group estimated to have its product content on more than half of 94 key battery-electric vehicles recently identified to come to market in Europe and North America between 2020 and 2028, with around 40% of those vehicles also having ‘TIFS’ thermal product content.

It was awarded a high-volume pressure-resistant fuel tank programme with a Japanese supplier in the Asia-Pacific geography in the first half, and successfully launched hybrid-electric and battery-electric vehicle programmes with European, North American and Asian original equipment manufacturers (OEMs) across all major light vehicle production regions.

“The first six months of 2021 saw the continued recovery of global light vehicle production volumes from the impacts of the 2020 Covid-19 pandemic,” said chief executive officer and president William Kozyra.

“We continued to deliver strong revenue outperformance, robust profit and significant positive free cash flow generation despite headwinds from volatile production schedules caused by supply side shortages of microchips for our OEM customers.

“Our balance sheet, liquidity and cash positions remain strong. In addition to having received the London Stock Exchange Green Economy Mark which recognises the group's strong revenue generation from the supply of products that contribute to the green economy by helping make vehicles cleaner, we are also pleased to announce our updated goal to reduce our greenhouse gas (GHG) emissions significantly by 2039 which represents our ongoing effort to do our part to make the world a better place to live.”

Kozyra said the company was making “steady progress” in its growth strategy for fluid systems, and continued to win significant hybrid-electric and battery-electric vehicle programmes with multiple customers across all major production regions.

“We are well positioned on battery-electric vehicles launching in the market today, and over 2021-2028 we have a leading share of new thermal product content on key battery-electric vehicle programmes coming to market.

“We continue to win new business awards with our advanced pressure resistant plastic fuel tank technology and continue with new collaboration projects with key customers, including in China, to reduce weight, and maximise efficiency in the vehicle through integrated thermal products and systems.”

The group remained “well-positioned” for the automotive “megatrends” of reduced emissions and electrification, William Kozyra quipped.

“The group continued to demonstrate its ability to outperform global light vehicle production in the first half of 2021.

“We remain confident in our strategy, business model resilience, operating flexibility and strength in our ability to generate positive profit and positive free cash flow.”

At 0810 BST, shares in TI Fluid Systems were down 1.74% at 310p.