LONDON (ShareCast) - (Sharecast News) - TI Fluid Systems reported a 30.7% fall in revenue at constant currency in its first half on Tuesday, to €1.18bn (£1.07bn), although that still outperformed global light vehicle production in the period by 2.5%.
The FTSE 250 company said its adjusted EBIT fell €145.5m to €27.6m, as its margin narrowed by 7.8 percentage points to 2.3% for the six months ended 30 June.

It swung to an adjusted net loss of €39.7m, from income of €64.5m a year earlier, although its adjusted free cash flow was €15.7m higher than the prior year at €34.9m.

A non-cash charge of €304.6m impacting goodwill, intangibles and fixed assets, primarily relating to the 2015 Bain purchase of TI Automotive, resulted in the company's reported loss for the period.

The board declared no dividend for the period, down from 3.02 euro cents for the first half of 2019.

TI Fluid Systems said it implemented a "significant" cost savings and "aggressive" cash preservation programme during the period, to ensure the sustainability of its near-term viability.

It said it had made decent savings in both cost and cash areas, with actions taken across manufacturing, staff labour, purchasing, fixed and corporate costs.

A structural fixed cost reduction programme was initiated in the first half to address the firm's long-term viability as well, resulting from a potential prolonged reduction of global light vehicle production amid the Covid-19 pandemic.

TI said it was expecting to reduce its workforce by around 1,000 staff, with six full plant closures and two partial closures.

Cumulative cash expenditures across 2020 and 2021 would total around €47m, with cumulative cash savings across 2020 through 2022 expected to be about €94m.

TI said it was continuing to execute its organic growth strategy and strategic focus on battery and hybrid electric vehicles in light of the "significant" challenges in the first half.

The company started production of thermal products for the two major battery electric vehicle awards, announced in 2018, and won additional battery electric vehicle programmes.

It was estimated to have its product content on more than two thirds of 46 key battery electric vehicles identified to come to market between 2020 and 2022, with around 50% of those vehicles to have TIFS thermal product content.

The firm was also awarded a new pressure-resistant fuel tank programme for a large hybrid electric vehicle platform in Europe with a European customer during the first half, using its 'Integrated Transfer System' (ITS) process technology.

"The first six months of 2020 saw the impacts of an unprecedented global economic downturn resulting from the widening of the Covid-19 pandemic," said president and chief executive officer William Kozyra.

"The group acted quickly beginning in March to initiate both humanitarian safeguards for our employees, cost savings and cash preservation measures to protect the health of the company.

"Our actions were early and meaningful and these cost reduction and cash preservation measures encompassed nearly every aspect of our business."

Kozyra said the company still delivered "solid" revenue outperformance, positive profit and positive free cash flow generation, despite those headwinds.

"Our balance sheet, liquidity and cash positions remain strong.

"These actions and initiatives are significant and will assist the Group's financial performance in 2020 and beyond.

"We are pleased to have been awarded the London Stock Exchange's Green Economy Mark as further recognition of the environmental impact our product technologies are providing to help make cars greener."

Environmental, social and governance was "central" to TI's strategy and company purpose Kozyra said, adding that it was also making "steady progress" in its strategy for fluid systems, winning regional battery electric vehicle programmes with multiple customers and gaining share in hybrid electric vehicle fuel tanks with the award of the high-volume pressure-resistant fuel tank programme in Europe.

"We are well positioned on battery electric vehicles launching in the market today, and over 2020-2022 have a solid share of new thermal product content on key battery electric vehicle programs coming to market.

"We 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 remains well positioned for the automotive megatrends of reduced emissions and electrification."

William Kozyra said the group demonstrated its ability to outperform global light vehicle production in the first half, during the biggest declines the global automotive market had faced in modern history.

"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 in the first half of 2020."

At 0822 BST, shares in TI Fluid Systems were up 0.57% at 177.2p.

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