Strictly speaking, TI Fluid Systems (TIFS) isn’t inaccurate when it says revenues in the first half of 2020 “continued to outperform global light vehicle production”. But it’s worth noting that light vehicle production – the fluid-carrying component manufacturer’s key driver of business – dropped 33.2 per cent to 30.1m in the period.
As such, a top-line decline of 30.7 per cent doesn’t feel like ‘outperformance’, particularly when adjusted losses were ultimately higher than analysts’ consensus forecasts at 7.61¢ per share.
A cost reduction programme – to address a “potential prolonged reduction” in vehicle output, and the company’s “long-term viability”, no less – is expected to save €94m (£85m) by the end of 2022, for an outlay of €47m. But the scars of the depressed outlook are visible in the balance sheet, where a €305m non-cash charge of goodwill, intangible and fixed assets has knocked shareholder equity 30 per cent to €818m.
Though this carries a €29.2m deferred tax benefit, this has pushed TI Fluid’s net debt to 2.4 times; trailing adjusted cash profits once lease liabilities are included. Reassuringly for investors, debt covenant breaches are not expected even in the event of a 'severe' downside scenario, say directors.
FactSet-compiled consensus analyst estimates are for earnings of 5¢ per share this year, rising to 21¢ in 2020.
| TI FLUID SYSTEMS (TIFS) | ||||
| ORD PRICE: | 179p | MARKET VALUE: | £931m | |
| TOUCH: | 178-180p | 12-MONTH HIGH: | 282p | LOW: 118p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | NA | |
| NET ASSET VALUE: | 157¢* | NET DEBT: | 104% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 1.71 | 93.4 | 11.3 | 3.02 |
| 2020 | 1.18 | -353 | -61.7 | nil |
| % change | -31 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=€1.11, *Includes intangible assets of €922m, or 177¢ a share. | ||||
