TI Fluid Systems PLC (LON:TIFS) shares rose after it said free cash flow generation last year was “well ahead” of expectations.
The board of the automotive components manufacturer has declared an interim dividend of 6.74 euro cents per share, intends to return to its former annual dividend policy for the 2021 financial year and said net debt should be down to €0.6bn from €0.74bn over the year.
Full-year revenues for 2020 are anticipated to be €2.8bn, down 18% on the previous year, roughly in line with the fall in global light vehicle production volumes, while underlying profit margins are expected to be “slightly better” than the mid-single-digit guidance it had previously given.
“Positive momentum” was also reported in the FTSE 250-listed group’s push into electric vehicles (EVs), with volume production having now begun for a range of products for thermal fluid management on Volkswagen's ID.3 and ID.4 battery EVs.
As well as supplying Volkswagen with various thermal coolant assemblies, TI said it will also be the sole supplier of the CO2 heat pump valve unit to provide ‘cabin comfort’ for these two models, “an exciting new technology which delivers increased operating efficiency and supports extended electric vehicle driving range over that of a traditional refrigeration based cabin comfort system”.
Production has also begun of coolant fluid carrying systems for eight different Hyundai vehicle platforms across Hyundai, Kia and Genesis EV brands, starting with the NE EV, a new compact crossover based on the Hyundai's "45" concept vehicle.
Shares in the company rose 6% to 248.65p on Monday morning.
Broker Peel Hunt said TIFS had made "tremendous progress" and upped its forecast for EBITDA to €335mln.
"As we have said many times, TIFS consistently delivers what it promises – to perform in line or beat global light vehicle production, generate strong free cash flow and a premium EBIT margin."
Driven by its new forecast numbers, the broker increased its target price from 300p to 385p.
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