Global manufacturer of automotive fuel storage and delivery systems TI Fluid Systems (TIFS) re-introduced full-year guidance and made a commitment to resume annual dividend payments after reporting continuing recovery in the third-quarter.
A key performance indicator for the company is to outperform global light vehicle production volumes which it bettered by 2.2% in the quarter. That helped revenues to recover from the 30.7% fall in the first-half, posting only the merest 1.3% reverse in constant currencies.
That sent the share price soaring 6.7% to 206.72p, the stock's highest since before the pandemic.
At the nine month stage revenues of €1.9 billion were 21.5% lower than the prior year in constant currencies which compares with a 23.2% fall in global light vehicle production, driven by a solid performance in the Asia Pacific region which benefitted from new business launches.
ELECTRIFICATION OPPORTUNITY
The company continued to make progress in the battery electric vehicle (BEV) market and launched a new range of products for thermal fluid management on Volkswagen’s new ID.3 and ID.4 BEV’s.
The transition to electrification is being accompanied by increasing ‘awarded value per vehicle’ which has increased from an average of €120 per vehicle to €135 over the last two-years. The group continues to win new business awards for BEV programs with a wide range of vehicle manufacturers across the globe.
Strong performance during the quarter has provided increased visibility and prompted management to re-introduce full-year guidance. Extensive cost reduction and cash preservation measures are expected to make the business more competitive at lower production levels.
STAYING FLEXIBLE ON COSTS
Increased operating flexibility means the company is expected to deliver fill-year earnings before interest (EBIT) margins in the mid-single digit range and adjusted free cash flow in the high double-digit millions, helping to reduce net debt from the 2019 level of €738 million.
The group expects to repay furlough payments by the end of the year. The board intends to recommend a final dividend for 2020 subject to markets not deteriorating significantly, equal to 30% of adjusted net income. It also anticipates being able to declare an interim dividend in the first quarter of 2021.
