Released: 8 August 2024

 

TI Fluid Systems plc

Half Year Results 2024

Strong execution amidst a flat market

Adjusted EBIT margin up 40 basis points, 15% Adjusted EPS growth

Improved full year margin outlook despite weaker market forecasts

TI Fluid Systems plc (TIFS), a global industry leader in highly engineered automotive fluid storage, carrying and delivery systems and thermal management products and systems, announces its results for the six months ended 30 June 2024 (the 'period').

€millions

Adjusted Measures*	H1 2024	H1 2023	Change	Constant currency change
Revenue	1,719.4	1,768.1	(2.8)%	(1.4)%
Adjusted EBIT	135.5	131.9	+2.7%	+4.8%
Adjusted EBIT Margin %	7.9	7.5	+40bps
Adjusted Net Income	70.6	62.5	+13.0%
Adjusted Basic Earnings per Share (€ cents)	13.9	12.1	+14.6%
Adjusted Free Cash Flow	(14.4)	2.3
Statutory Measures	H1 2024	H1 2023	Change
Revenue	1,719.4	1,768.1	(2.8)%
Operating Profit / EBIT	95.8	95.0	+0.8%
Profit for the period	40.2	33.3	+20.7%
Basic Earnings per Share (€ cents)	7.9	6.4	+22.5%
Dividend per Share (€ cents)	2.40	2.30	+4.3%

*Adjusted measures are non-IFRS, reconciled in Note 3, defined in Note 18

 

H1 2024 financial performance

·      Revenue declined 1.4% at constant currency in the period

o  EMEA revenue increased 4.4% including a circa 250 basis points contribution from last year's acquisition of Cascade

o  Revenue in Asia Pacific reduced by 7.1% with lower revenue in China in line with the reduction in Global OEM production

o  Americas revenue was 3.4% lower with a circa 480 basis points headwind from the previously announced exit of an unprofitable product line

·      Continued Adjusted EBIT margin expansion, up 40 basis points, driven by ongoing execution of our productivity and efficiency initiatives as well as continuing commercial activities

·      Adjusted Basic EPS 14.6% higher due to increased profitability and a lower effective tax rate

·      Adjusted Free Cash Flow reflects modest inventory build as a result of recent production schedule volatility and timing of payments. We remain on track for our full year cash conversion target

·      Adjusted ROCE of 25.4% (H1 2023: 21.7%), demonstrating our ability to deploy capital effectively

·      Interim dividend increased 4.3% to 2.40 € cents per share

Progressing our strategy for sustainable and profitable growth

·      Bookings demonstrate the benefits of our propulsion agnostic portfolio, with total bookings increasing 11% to €1.5 billion including €0.6 billion of EV awards

·      Continued progress in China including five new awards with the largest Chinese OEM and 40 launches, half with local OEMs

·      Fifth and final e-Mobility Innovation Centre opened in North America

·      Further footprint optimisation, with two facilities closed and others downsized to adapt to customer needs and support progress towards our mid-term, double-digit Adjusted EBIT margin target

·      Capital allocation policy delivering: €12.0 million interim dividend, 13.3 million shares acquired in the period for €22.5 million and net leverage of 1.7x Adjusted EBITDA (H1 2023: 1.8x)

Full year outlook - higher Adjusted EBIT margin expectation despite weaker market forecasts

The productivity and efficiency measures implemented in late 2023 and early 2024 are on track and reaffirm our confidence in expanding our Adjusted EBIT margin. As a result, we are increasing our full year Adjusted EBIT margin expectation to above 7.6% notwithstanding a slight decline in revenue at constant currency due to the recent softening of the 2024 industry outlook.

We continue to expect Adjusted Free Cash Flow conversion of approximately 30% of Adjusted EBITDA.

Comment from Hans Dieltjens, CEO & President:

"Our first half performance demonstrates strong operational execution, successful strategic delivery and the resilience of our propulsion agnostic portfolio. Through our productivity and efficiency measures, we have once again improved our Adjusted EBIT margin, making progress towards our mid-term double-digit target.

We have a strong pipeline of productivity initiatives and are agile to respond to changing market conditions. As a result, we have raised our full year Adjusted EBIT margin expectation to above 7.6% in a market with a slightly softer near-term outlook.

Bookings are up 11% year-on-year, highlighting the advantages of a product portfolio catering to all propulsions and the benefits of growing demand for hybrid vehicles. I am confident that our market-leading positions and ability to adapt to changing market conditions will continue to underpin the execution of our Taking-the-Turn strategy and achievement of our mid-term targets."

Results presentation

TI Fluid Systems plc will host a webcast and audio conference for investors and analysts at 11.00 am UK time on 8 August 2024.

Webcast Link: https://webcast.openbriefing.com/tifs_h1/

Conference Call Dial-In Details:

United Kingdom (local):	+44 20 3936 2999
United States (local):	+1 646 787 9445
All other locations:	Global Dial-In Numbers
Conference Code:	861950

Should you wish to pre-register for the audio conference call, please use this link to receive a unique PIN to dial directly into the call.

The presentation will be available at 11:00 am UK time from www.tifluidsystems.com. An audio recording will be available on our website following the event.

Enquiries

TI Fluid Systems plc	Headland Consultancy
Kellie McAvoy	Matthew Denham
Investor Relations	Chloe Francklin
Tel: +44 7354 846374	Tel: +44 20 3805 4822

 

Chief Executive Officer's Review - operational execution delivering further Adjusted EBIT margin expansion

Our performance in the first six months of 2024 demonstrates strong operational execution and the resilience of our propulsion agnostic portfolio. In a flat market environment and with a continued mix shift towards local Chinese OEMs, we improved Adjusted EBIT margin and took another important step on the journey back to a double-digit margin. Adjusted EPS increased by 14.6%, reflecting our financial discipline. Bookings were up 11% to €1.5 billion, as we adapted to a changing market environment with relatively higher combustion engine vehicle opportunities. Our Taking-the-Turn strategy is on track.

Financial performance

Group revenue reflects a strong performance in Europe, good underlying growth in the Americas excluding a planned product line exit and continued mix effects in China. Group revenue declined 1.4% at constant currency.

·      EMEA revenue increased 4.4%, well ahead of the market.  Cascade, acquired last year, contributed circa 250 basis points and is performing well. The region benefited from growth in fuel tanks and delivery systems, including on plug-in hybrid ("PHEV") platforms, partially offset by lower volumes for thermal products for EVs.

·      Revenue in Asia Pacific reduced by 7.1% due to lower revenue in China, partially offset by strength in Japan and India. In China, we experienced continued mix effects with production declining 13% for the global OEMs ("GOEMs") compared to 18% growth for the local OEMs ("LOEMs").

·      America's revenue was 3.4% lower as expected due to a circa 480 basis points headwind from the planned exit of an unprofitable product line. Excluding this, the region grew well including in fuel tanks and brake lines.

Adjusted EBIT margin increased to 7.9% (H1 2023: 7.5%) despite the headwinds of lower revenue and labour inflation. Productivity contributed circa 150 basis points to the Adjusted EBIT margin. This is testament to efforts of the team to implement operational productivity initiatives whilst continuing our commercial activities.

In addition, we converted a 2.7% increase in Adjusted EBIT into 14.6% growth in Adjusted EPS through disciplined financial execution across the P&L.

First half Adjusted Free Cash Flow performance reflected some short-term timing differences, with a €14.4 million outflow (H1 2023: €2.3 million inflow). These are expected to reverse in the second half, and we are on track for full year cash conversion of circa 30% of Adjusted EBITDA. Net leverage of 1.7x was below the 1.8x reported for H1 2023. Our capital allocation policy continues to deliver attractive returns with a total cash outflow of €45.3 million on the 2023 final dividend and share buyback.

Our industry

The automotive market is now in a demand-driven cycle. Overall volumes remained at a healthy level, with global light vehicle production ("GLVP") reducing marginally, down 0.2% to 43.6 million units (H1 2023: 43.7 million).

The short-term volume outlook for the industry has softened in recent weeks. Some markets also experienced short-term destocking in June. S&P has lowered its 2024 GLVP outlook and now expects a 2.0% year on year reduction^[1], with lower volumes in most regions as OEMs increase their focus on inventory management.

The key feature of our industry today is rising uncertainty as to the shape and speed of the EV transition.  BEV growth has slowed, while forecast demand for hybrids has increased. The latest industry forecasts expect 14% growth in BEV production volumes in 2024^[2], which compares with 38% 12 months ago^[3].  Alongside this, there are signs that HEVs and PHEVs may play a larger role in the transition than previously anticipated, with many OEMs announcing new hybrid models and some moving towards flexible architectures utilising all powertrains. Industry forecasts also indicate increasing demand for range extender BEVs which utilise a small combustion engine for battery charging as well as a slower pace of near-term decline in ICE production volumes.

Looking through these short-term fluctuations, the mid- to longer-term outlook remains positive, with GLVP expected to grow at circa 1-2% on average.

On track with our strategy for long-term, profitable growth

Our Taking-the-Turn strategy is designed to capitalise on the opportunities of electrification and maximise the strengths of our conventional portfolio.

·      Revenue growth: 2026 target of €3.8-4.2 billion; 2030 target of >€4.5 billion.

·      Return to double-digit Adjusted EBIT margins in the mid-term.

·      Attractive shareholder value creation: targeting Adjusted Free Cash Flow Conversion of 30% and leverage of 1.5x to underpin returns, including a progressive dividend.

·      A more sustainable business: 2030 targets for a 50% reduction in Scope 1 & 2 carbon emissions, and a 30% reduction in Scope 3 as compared with a 2021 baseline.

Sustainable, long-term revenue growth

Bookings underpin our future growth and in H1 2024 total bookings increased 11% to €1.5 billion (2023: €1.4 billion). These include €0.6 billion of EV awards (H1 2023: €0.9 billion). Additional bookings secured with the largest Chinese OEM represent a significant achievement and demonstrate strategic progress in China.

We completed launches across a broad mix of product lines, customers and powertrains in all regions which will drive future growth.

Our e-Mobility Innovation Centres ("eMICs") bring critical design, engineering and testing capabilities under one roof to drive innovation and enable more effective collaboration with customers. Towards the end of the period, we opened our fifth and final eMIC in the US.

In China, we continued to enhance our position with the LOEMs, leveraging our long history of operating in China and strong market positions with GOEMs. Over half of the 40 launches in the period were with LOEMs. We also made further progress with the largest LOEM, with five additional awards for brake lines and tanks for BEV and PHEV platforms. This progress has yet to be fully reflected in revenue, but we are confident that bookings and launches are the foundations for future growth.

Recent market forecasts have reduced the expected pace of decline of ICE vehicle production. In addition, we see customers shifting to flexible architectures utilising all powertrains. TI is ideally positioned to capitalise on these opportunities to maximise our conventional products for ICE. During the period, we benefited from good growth in tanks for ICE and hybrid vehicles, and over half our bookings related to ICE platforms as customers extended existing and launched new ICE programmes.

Returning to double-digit Adjusted EBIT margins

The Group's 40 basis points Adjusted EBIT margin expansion was primarily driven by self-help initiatives, which more than compensated for lower volumes and labour inflation.

Productivity and efficiency have always been part of the Group's DNA, and we entered 2024 with a clear focus on productivity and many actions underway. Initiatives implemented in 2023 also contributed positively. We continued to optimise our footprint, closing two facilities and downsizing other locations. Our best cost locations in Mexico and Morocco are running at increasing levels of efficiency, fixed cost savings from regional synergies and headcount reduction are being realised and we are seeing increasing benefits from our purchasing programme. We invested €14.1 million (H1 2023: €6.8 million) in restructuring, largely related to headcount and footprint optimisation.

Capital allocation delivering returns for shareholders

During the first half of 2024, we returned €22.8 million in respect of the 2023 final dividend and spent €22.5 million on buying back shares. The €40 million share buyback programme announced in August last year is now around three quarters complete. In-line with our progressive dividend policy, the Board has approved a 2024 interim dividend of 2.40 € cents per share, which represents a 4.3% increase on a per share basis over the interim dividend of 2.30 € cents per share declared on 8 August 2023.

A more sustainable business

Sustainability starts with our products and a focus on new, cleaner technologies to support customers in producing EVs. Our revenue mix remains broadly in-line with the industry.  We continue to focus on improving our own environmental footprint and made good progress with initiatives that will increase our energy efficiency in the period. Development of our life cycle analysis and mapping of product carbon footprint in the period will also help us to define Scope 3 carbon emission reduction actions.  We remain on track with our carbon reduction targets.

Continuous improvement of health & safety is another focus area.  Having already rolled out our ISO 45001 Occupational Health & Safety Management System to manufacturing sites, we are now undertaking the same process for our eMICs, test centres and selected warehouses.

Summary and outlook

Our first half performance demonstrates TI's fundamental strengths. Our propulsion agnostic portfolio and geographic and customer diversification underpin our resilience. Our ability to deliver further margin expansion despite volume and labour inflation headwinds reaffirms our confidence in returning to a double-digit Adjusted EBIT margin in the mid-term.

The productivity and efficiency measures implemented in late 2023 and early 2024 are on track and reaffirm our confidence in expanding our Adjusted EBIT margin. As a result, we are increasing our full year Adjusted EBIT margin expectation to above 7.6% notwithstanding a slight decline in revenue at constant currency due to the recent softening of the 2024 industry outlook.

We continue to expect Adjusted Free Cash Flow conversion of approximately 30% of Adjusted EBITDA.

Beyond, 2024, our market-leading positions and ability to adapt to changing market conditions will continue to support the execution of our Taking-the-Turn strategy.

 

Chief Financial Officer's Review

Our first half financial performance was strong despite modestly lower industry volumes, with our Adjusted EBIT margin expanding to 7.9%. Our capital allocation policy is delivering improved returns for shareholders and a 4.3% increase in the interim dividend to €2.40 cents translates into a cash return of €12.0 million. We spent a further €22.5 million to repurchase 13.3 million shares in the period. Adjusted return on capital employed increased to 25.4%, demonstrating our discipline in deploying capital to create value.

Key financial highlights

	Adjusted				Statutory
	H1 2024	H1 2023	Change	Constant currency change	H1 2024	H1 2023	Change
Revenue	1,719.4	1,768.1	(2.8)%	(1.4)%	1,719.4	1,768.1	(2.8)%
EBITDA	202.6	198.6	+2.0%	+3.9%
EBIT / Operating profit	135.5	131.9	+2.7%	+4.8%	95.8	95.0	+0.8%
EBIT margin	7.9	7.5	+40bps		5.6	5.4	+20bps
Net Income	70.6	62.5	+13.0%		40.2	33.3	+20.7%
Basic EPS	13.9	12.1	+14.6%		7.9	6.4	+22.5%
Dividend per share	2.40	2.30	+4.3%
Free Cash Flow	(14.4)	2.3			(22.8)	(7.5)

Group revenue declined 1.4% at constant currency to €1,719.4 million (H1 2023: €1,768.1 million). The Cascade acquisition made a 100 basis point positive contribution to group constant currency growth, while the planned product line exit in the Americas was a circa 140 basis point headwind. Reported revenue declined 2.8%, largely due to foreign exchange headwinds from the stronger Euro against the Chinese Renminbi and Korean Won.

H1 2024 revenue by region

	H1 2024	H1 2023	Change	Constant currency change	GLVP growth
EMEA	733.3	702.8	+4.3%	+4.4%	(2.7)%
Asia Pacific	480.5	540.3	(11.1)%	(7.1)%	+0.7%
Americas	505.6	525.0	(3.7)%	(3.4)%	0.3%
Total	1,719.4	1,768.1	(2.8)%	(1.4)%	(0.2)%

Our Adjusted EBIT margin improvement was driven mainly by our operational efficiency and productivity initiatives as well as our continuing commercial activities. This 40 basis points expansion reflects higher margins in EMEA and the Americas (up 220 and 60 basis points respectively) driven by growth in EMEA and a strong productivity focus in both regions. This was partially offset by Asia Pacific (down 180 basis points) due to lower volumes in China, only partially offset by productivity actions.

Statutory Operating Profit was €95.8m (H1 2023: €95.0 million). The key adjusting items are set out below. This includes a €14.1 million restructuring cost (H1 2023: €6.8 million) related to activity to drive efficiency, optimise our footprint and adjust our workforce. The increase in restructuring costs compared to 2023 relates to elevated activity in response to the recent softening of industry volume forecasts.

Reconciliation of Adjusted EBIT to Statutory Operating Profit / EBIT

	H1 2024 €m	H1 2023 €m
Adjusted EBIT	135.5	131.9
Depreciation and amortisation on purchase accounting	(21.5)	(24.6)
Restructuring costs	(14.1)	(6.8)
Other	(4.1)	(5.5)
Statutory Operating Profit / EBIT	95.8	95.0

 

Net finance expense reduced to €34.6 million (H1 2023: €36.1 million). The benefits of higher interest income on short-term deposits and lower term loan interest costs due to the August 2023 repayment more than offset higher costs related to lease interest and pensions.

The Group's Adjusted Effective Tax Rate on Adjusted Profit Before Tax reduced to 29.9% (H1 2023: 34.7%) which further strengthens our confidence in a mid-term Adjusted Effective Tax Rate in the low 30%. The Group's statutory tax rate was 34.3% (H1 2023: 43.5%).

Adjusted Net Income increased 13.0% to €70.6 million (H1 2023: €62.5 million) as a result of higher Adjusted EBIT and a reduction in interest costs and effective tax rate. The growth in Adjusted EPS was slightly higher at 14.6% due to a lower number of shares as a result of our share buyback. The weighted average number of shares for the period was 508.1 million as compared with 515.5 million for H1 2023.

On a statutory basis, Group Profit for the Year was €40.2 million (H1 2023: €33.3 million), reflecting the increased profit for the period together with lower interest and tax costs. Basic Earnings per Share were 7.9 € cents (H1 2023: 6.4 € cents).

Cash Flow - short-term factors expected to unwind in the second half

Adjusted Free Cash Flow, the Group's primary measure of cash flow performance, was a €14.4 million outflow (H1 2023: €2.3 million inflow). Statutory cash flow from operating activities was €36.3 million (H1 2023: €47.6 million).

	H1 2024 €m	H1 2023 €m
Net cash generated from operating activities	36.3	47.6
Net cash used in investing activities	(59.1)	(55.1)
Free Cash Flow	(22.8)	(7.5)
Net cash spend on restructuring	8.6	8.4
Costs paid associated with business acquisitions or disposals	0.5	0.8
Other adjusting items	(0.7)	0.6
Adjusted Free Cash Flow	(14.4)	2.3

 

Net cash generated from operating activities includes a €85.8 million working capital outflow (H1 2023: €78.9 million). In addition to the usual seasonal outflow, working capital at period end reflected a modest inventory build due to recent volatility in OEM production schedules and timing differences on payments. We expect both to unwind in the second half as commercial agreements translate into cash and we reduce inventory. Group tax payments increased to €34.5 million (H1 2023: €28.6 million) due to timing.

Our capex needs remain modest, with €68.7 million invested including capitalised R&D (H1 2023: €59.6 million). A net cash outflow on restructuring of €8.6 million (H1 2023: €8.4 million) largely relates to severance payments

Cash outflows from financing were €61.0 million (H1 2023: €25.7 million), largely relating to lease principal repayments of €14.4 million (H1 2023: €15.0 million), the 2023 final dividend payment of €22.8 million (H1 2023: €8.0 million) and a €22.5 million outflow related to the ongoing €40 million share buyback programme.

Strong balance sheet maintained

The Group's strong balance sheet gives flexibility to invest in growth and provide attractive shareholder returns. Net debt at 30 June 2024 was €682.8 million (H1 2023: €668.0 million), higher than at the end of 2023 due to payment of the 2023 final dividend, the share buyback programme and a working capital outflow as discussed above. At period end, net leverage was 1.7x (30 June 2023: 1.8x).

Total available liquidity (cash plus available facilities) on 30 June 2024 was €539.5 million.

The Group excludes IFRS 16 lease liabilities from its net debt and net leverage ratio. Including IFRS 16 lease liabilities, net debt would be €853.0 million (30 June 2023: €807.1 million) and net leverage would be 2.1x Adjusted EBITDA (30 June 2023: 2.2x).

The table below shows the composition of the Group's net debt at 30 June 2024.

Borrowings	Currency	Interest rate exposure	Amount	€ Equivalent
Secured US term loan (2026)	USD	1 month term SOFR (incl. CSA)[4] + 3.25%	$185.0m	€172.7m
Secured Euro term loan (2026)	EUR	3 month EURIBOR + 3.25%	€256.4m	€256.4m
Unsecured Senior Notes (2029)	EUR	Fixed at 3.75%	€600.0m	€600.0m
Unamortised fees				€(11.7)m
Total gross debt drawn at period end				€1,017.4m
Cash & cash equivalents at period end				€(334.6)m
Net debt				€682.8m

Additionally, as at 30 June 2024, the Group had a Revolving Credit Facility ("RCF") of up to $225.0 million expiring in July 2026. This was largely undrawn at period end apart from €5.1 million used to issue letters of credit.

The Group operates funded and unfunded defined benefit schemes across multiple jurisdictions which are subject to periodic actuarial valuations. All major defined benefit plans are closed to new entrants, but a few allow for future accrual. As at 30 June, our net liability position decreased to €98.2 million (31 December 2023: €103.9 million) primarily due to increasing discount rates, especially in the US which was determined at 5.45% (5.05% at 31 December 2023). US pension and retiree healthcare schemes represent 43% of our net liability position at 30 June 2024 (31 December 2023: 46%).

Strong Adjusted return on capital ("ROCE") maintained

The Group's Adjusted ROCE increased to 25.4% (H1 2023: 21.7%), demonstrating our discipline in deploying capital to maximise value creation and Adjusted EBIT margin expansion.

Capital allocation policy delivering returns for shareholders

As part of the Group's revised capital allocation policy, TI adopted a progressive dividend policy in 2023.  In-line with this, the Board has approved a 4.3% increase on a per share basis in the interim dividend to 2.40 € cents per share (H1 2023: 2.30 € cents). The dividend amount of 2.40 € cents will be converted from Euro to Sterling using the London closing spot rate on the record date of Friday, 16 August 2024 and the Sterling rate will be announced on Monday, 19 August 2024. The interim dividend will be paid on Friday, 13 September 2024 to holders of ordinary shares on the register on the record date.

The Group has also made good progress with its share buyback programme, which was almost three quarters complete by period end. During H1, 13.3 million shares were bought back for a total of €22.5 million. As at 30 June 2024, the buyback was almost three quarters complete with 17.1 million shares repurchased (and subsequently cancelled) for a total of €28.8 million.

Liquidity and going concern

As at 30 June 2024, the Group's external financing arrangements comprised unsecured Senior Notes of €600.0 million (maturing on 15 April 2029), a Euro term loan of €256.4 million (repayable in instalments until 16 December 2026), a US Dollar term loan of $185.0 million (repayable on 16 December 2026) and a revolving credit facility ("RCF") of $225.0 million (maturing 16 July 2026). The amount utilised under the RCF, as of 30 June 2024, was €5.1 million, with the available undrawn amount at €204.9 million. The only covenant measure that exists applies to the RCF and is a net leverage ratio, which must be below 3.8x Adjusted EBITDA when the revolving facility is drawn over 35%.

In addition, the Group held €334.6 million of cash and cash equivalents as at 30 June 2024. Actual available liquidity, including cash and revolving facility on 30 June 2024, was, therefore, €539.5 million, which provides a strong basis for the Group's liquidity during the review period.

The Directors have reviewed the likely performance of the Group and the Company for the period to the end of 2025 by reference to the latest outlook for 2024 and approved Medium-Term Plan for 2025 as a base case scenario (volumes used: 2024 89.5 million units, 2025 90.6 million units).

A severe, yet plausible, downside scenario, mindful of developing geopolitical tensions and emerging economic challenges, was produced comprising a 10% reduction in global light vehicle production volumes during the review period against the base case (volumes used: 2024 85.0 million units, 2025 81.5 million units), a further 5% annual reduction in operating margin due to increased costs, a further 0.5% annual sales price reduction, a €8 million profit impact of business disruption from an unexpected plant closure, and an incremental annual capital expenditure of €10 million. These reflect the downside impact of principal risks facing the business in respect of global light vehicle production volumes, cost pressures (commodities, labour and energy costs), customer price reduction pressures, the impact of a business disruption and changes in technology. The downside scenario showed an availability of liquidity headroom without the use of the revolving credit facility. There were no covenant breaches under this downside scenario in the review period.

In addition, a reverse stress test was performed as part of the review which indicates that there would need to be a catastrophic reduction in volumes to exhaust cash and cash equivalents, which the Directors considered to be highly unlikely.

The going concern scenarios do not indicate a material uncertainty, which may cast significant doubt over the Company's and Group's ability to continue as a going concern. Based on these assessments, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, and, accordingly, have adopted the going concern basis in preparing the consolidated financial statements. This disclosure has been prepared in accordance with the UK Corporate Governance Code.

Principal risks and uncertainties

The Directors and executive management have considered the principal risks and uncertainties of the Group and have determined, on balance, that those reported in the 2023 Annual Report and Accounts remain relevant and appropriate for the remaining half of the financial year.

The challenge and uncertainty associated with the shift in technology and market dynamics impacting the automotive industry, as well as the related need to attract and retain the talent to address this shift, remains of the highest priority to executive management and the Directors, who have continued to drive a strategic evolution through the business in order to ensure continued excellence in operational and market performance.

The Group is navigating a challenging market environment characterised by volatile customer production and margin pressures. These factors are expected to persist throughout 2024 and into 2025. The Group is actively mitigating these pressures by recovering costs from customers, implementing price adjustments, and maintaining tight control over operational expenses. However, further economic and demand challenges, such as changes in tariffs and the decline of market share of the global OEMs in China, could exacerbate existing overcapacity within the industry, posing additional volume and margin pressure in the short to medium term. Management and the Board of Directors are closely monitoring the situation and exploring various risk mitigation strategies, including ongoing communication with both suppliers and customers as circumstances develop.

The Directors continue to monitor the impact of geopolitical tensions and uncertainty including conflicts within Europe and the Middle East, particularly with regards to risks related to supply chain disruptions and economic downturn in those regions. The Directors also monitor the developing risks identified in our 2023 Annual Report - climate change, sustainability and managing the transition to a low carbon economy (including uncertainty of timelines and regulatory complexity), as well as the changes in economic climate and potential data protection and labour related issues arising from the evolution of generative AI. We continue to believe that these do not represent separate new principal risks and uncertainties to the Group at present.

Details of the Group's Principal Risks and Uncertainties are available in the 2023 Annual Report and Accounts, available on our website www.tifluidsystems.com.

By order of the Board

Hans Dieltjens Chief Executive Officer & President 7 August 2024

Alexander De Bock Chief Financial Officer 7 August 2024

 

Cautionary statement

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of TI Fluid Systems plc (the "Group"). The words "believe", "expect", "anticipate", "intend", "estimate", "forecast", "project", "will", "may", "should" and similar expressions identify forward looking statements. Others can be identified from the context in which they are made. By their nature, forward-looking statements involve risks and uncertainties, and such forward-looking statements are made only as of the date of this presentation. Accordingly, no assurance can be given that the forward-looking statements will prove to be accurate and you are cautioned not to place undue reliance on forward-looking statements due to the inherent uncertainty therein. Past performance of the Company cannot be relied on as a guide to future performance. Nothing in this announcement should be construed as a profit forecast.

 

TABLE OF CONTENTS

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	Condensed Consolidated Income Statement
	Condensed Consolidated Statement of Comprehensive Income
	Condensed Consolidated Balance Sheet
	Condensed Consolidated Statement of Changes in Equity
	Condensed Consolidated Statement of Cash Flows
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	1	Summary of significant accounting policies
	2	Segment reporting
	3	Adjusting items and alternative performance measures
	4	Financial risk management
	5	Finance income and expense
	6	Income tax
	7	Earnings per share
	8	Property, plant and equipment
	9	Impairments
	10	Borrowings
	11	Fair values of financial assets and liabilities
	12	Retirement benefit obligations
	13	Provisions
	14	Cash generated from operations
	15	Acquisition
	16	Commitments and contingencies
	17	Related party transactions
	18	Glossary of terms
Independent review report
Directors' Responsibility Statement