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First half results lead to earnings downgrades

TI Fluid Systems (TIFS) 157p

Loss to date: -24.1%

Original entry price: Buy at 207p, 9 May 2019

Sometimes it doesn’t matter how good a company is if the market it operates in is struggling and this was evident in first half results from specialist automotive firm TI Fluid Systems (TIFS) on 8 August.

Domestic and international data points for the car industry have been universally negative and the company pointed to a ‘challenging’ environment as it posted a drop in both earnings and revenue. The subsequent collapse in the share price has left the stock teetering on the edge of our 150p stop loss.

Revenue fell to €1.7bn in the six months to 30 June 2019, from €1.8bn a year earlier while adjusted earnings slumped 4.1% to €245.9m.

The company said it would maintain its 2019 interim dividend at its 2018 level, or 3.02 euro cents per share.

And while the company said it expected revenue to continue to outperform global light vehicle production volume levels, excluding the impact of currency movements, it anticipated this revenue outperformance for the year to be lower than the prior year. Numis cut its 2019 earnings forecast by 12%.

SHARES SAYS: The shares continue to look cheap, even on the reduced forecasts they trade on a forward price to earnings ratio of 6.4 times. Hold tight for now.

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