(Alliance News) - TI Fluid Systems PLC on Tuesday reported a drop interim profit due to inflation and cost pressures, as it expects margins to recover in the second half of 2022.
The FTSE 250 company, which makes products including brake fluids and fuel tanks for cars and trucks, said revenue in the six months that ended on June 30 rose by 2.4% to EUR1.56 billion from EUR1.52 billion a year earlier. Revenue was down 2.4% at constant currency rates, however.
Pretax profit fell 56% to EUR19.8 million from EUR44.5 million, as distribution costs rose by 16% to EUR53.3 million from EUR46.1 million a year earlier.
The company noted that global light vehicle production volumes decreased by 1.8% during the first six months of 2022 to 38.7 million vehicles.
Adjusted earnings before interest and tax amounted to EUR83.7 million with a margin of 5.4%, compared to EUR127.8 million with a margin of 8.4% a year earlier.
"The decrease in margin is directly related to the conversion of lower volumes as well as ongoing inflationary and cost pressures which have increased our operating costs," TI Fluid explained.
Chief Executive Officer Hans Dieltjens said: "The first half of 2022 has been marked by several challenges in the automotive industry. The shortage of microchips and other supplies, the Russian invasion of Ukraine and the Covid lockdowns in China have significantly hindered OEM [original equipment manufacturer] production."
TI Fluid systems declared an interim dividend of 1.00 euro cents, down 48% from 1.93 euro cents the year prior.
Looking ahead, the company said it expects full year production volumes to be at or slightly above 2021 levels as microchip availability gradually improves. It expects its margin to recover during the second half of the year.
Shares were down 0.3% at 173.50 pence each on Tuesday morning in London.
By Xindi Wei; xindiwei@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
TI Fluid Systems (TIFS)