Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TI Fluid Systems PLC (FRA:TI1, Financial) achieved a 150 basis points improvement in productivity, demonstrating strong operational execution.
- The company's adjusted EBIT margin increased by 40 basis points to 7.9%, showcasing resilience in a volatile market.
- Bookings increased by 11% to EUR1.5 billion, driven by a propulsion agnostic portfolio, with significant awards in ICE and hybrids.
- The interim dividend was raised by 4.3%, reflecting a commitment to shareholder returns.
- The company maintained a strong balance sheet with net leverage reduced to 1.7 times adjusted EBITDA, indicating financial stability.
Negative Points
- Global light vehicle production declined by 4.2% in H1 2024, impacting overall market conditions.
- Revenue in Asia Pacific decreased by 7.1% at constant currency, primarily due to a 13.3% decline in China.
- BEV awards were down, aligning with a broader EV market slowdown.
- OEM destocking and market volatility presented revenue headwinds, particularly in the Americas.
- The company anticipates a slight temporary increase in restructuring expenses due to lower industry volumes.
Q & A Highlights
Q: Congratulations on the awards with BYD. Could you discuss what led to the ramp-up in awards in China and how this will convert into sales over the next few years?
A: Hans Dieltjens, CEO: In China, we focus on offering competitive technology, speed in development, and deep localization. Our eMIC facility in China helps shorten development time, crucial for the fast-paced Chinese market. We expect the conversion into sales to ramp up in H2 and more significantly next year as these programs reach full production.
Q: Regarding M&A, is there anything in the pipeline, and are there opportunities becoming more attractive given current market volatility?
A: Hans Dieltjens, CEO: We have a good pipeline of M&A opportunities, focusing on market share improvement and enhancing our current business lines. We are not shifting our strategy towards ICE opportunities despite market volatility.
Q: How should we think about the order intake around ICE and hybrid in Europe and its potential margin impact?
A: Hans Dieltjens, CEO: We see benefits from the industry's shift towards more hybrid and ICE vehicles, which could positively impact margins. We are adjusting our capacities in Europe to align with the current market size, which has decreased from around 25 million to 20 million cars.
Q: Could you elaborate on the electric coolant pump's content opportunity and competitive positioning in China?
A: Hans Dieltjens, CEO: The electric coolant pump offers a significant opportunity, especially in China, with a potential value of EUR20 to EUR30 per unit. Our design is modular and tailored for battery electric vehicles, providing energy efficiencies and competitive advantages in the market.
Q: Can you provide more details on the additional inventory due to recent volatility and the expected restructuring costs?
A: Alexander De Bock, CFO: We have about EUR30 million in additional inventory due to volatility, which we expect to normalize in H2. Restructuring costs are anticipated to be slightly above the usual EUR20 to EUR25 million range this year, aligning with market adjustments and productivity initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
