Tag: SNR

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, will announce its Results for the year ended 31 December 2024 on Monday 3 March 2025 at 7.00 a.m. and will be holding a presentation starting at 9.15 a.m. for its investors and analysts.

Following the full year Results presentation, Senior will be holding an Investor Event from 10.15 a.m. to 11.45 a.m.  This will focus on delivery of strategy, Aerospace Fluid Systems performance and prospects, and new Group financial targets.

Both sessions will take place in the Deutsche Numis auditorium at 45 Gresham Street, London, EC2V 7BF.  Registration details will be published in due course on our website.

Senior plc (LON:SNR) has announced its interim results for the half-year ended 30 June 2024.

FINANCIAL HIGHLIGHTS	Half-year to 30 June			change	change (constant currency)	(4)
		2024		2023
REVENUE		£501.4m		£482.3m	+4%	+7%
OPERATING PROFIT		£20.6m		£20.8m	-1%	+2%
ADJUSTED OPERATING PROFIT (1)		£25.1m		£22.9m	+10%	+13%
ADJUSTED OPERATING MARGIN (1)		5.0%		4.7%	+30 bps	+30 bps
PROFIT BEFORE TAX		£13.2m		£13.5m	-2%	+1%
ADJUSTED PROFIT BEFORE TAX (1)		£18.4m		£17.6m	+5%	+8%
BASIC EARNINGS PER SHARE		2.63p		2.80p	-6%
ADJUSTED EARNINGS PER SHARE (1)		3.55p		3.53p	+1%
INTERIM DIVIDEND PER SHARE		0.75p		0.60p	+25%
FREE CASH FLOW (2)		£3.0m		£(11.8)m	+125%
NET DEBT EXCLUDING CAPITALISED LEASES (2)– 30 June 2024 / 31 December 2023		£156.1m		£132.0m	£24m increase
ROCE (3)		7.3%		6.3%	+100bps

Highlights

●	Robust trading performance with sales up 7%(4) and adjusted operating profit up 13%(4)
●	Continued growth in order book, book-to-bill of 1.15
●	Notable contract wins in both Aerospace and Flexonics divisions
●	Full-year outlook unchanged with good growth anticipated for the full-year
●	Interim dividend increased by 25% to 0.75p

Commenting on the results, David Squires, Group Chief Executive Officer of Senior plc, said:

“Senior has delivered a robust set of results that are in line with our expectations.

Our Aerospace revenue and profits have grown strongly notwithstanding 737 MAX volumes being subdued as a consequence of the ongoing situation at Boeing.

Our Flexonics Division continued to perform well, maintaining double digit margins, albeit revenues and profits were lower as land vehicle markets started to normalise and upstream oil & gas customers reduced inventory levels.

For the full-year we still expect to maintain good performance in Flexonics with H1 slightly higher than H2 due to a return to more typical levels of land vehicle demand.

The Group’s diversified position across key civil and defence aircraft platforms, strong order intake and increasing aircraft build rates are expected to drive good growth in Aerospace for the full-year.  Higher volumes, operational efficiency benefits and improved pricing are expected to result in H2 performance being higher than H1.

Overall, the Board’s expectations of good growth for the Group in 2024 are unchanged.”

Notes

This Release, together with other information on Senior plc, can be found at: www.seniorplc.com

(1)	Adjusted operating profit and adjusted profit before tax are stated before £0.8m amortisation of intangible assets from acquisitions (H1 2023 – £1.1m), £nil net restructuring costs (H1 2023 – £0.9m), £nil US pension settlement costs (H1 2023 – £0.1m), £2.6m site relocation costs (H1 2023 – £nil) and £1.1m US class action lawsuit (H1 2023 – £nil).  Adjusted profit before tax is also stated before costs associated with corporate undertakings of £0.7m (H1 2023 – £2.0m).  A reconciliation of adjusted operating profit to operating profit is shown in Note 4.  Adjusted operating margin is the ratio of adjusted operating profit to revenue.
(2)	See Note 12b and 12c for derivation of free cash flow and of net debt, respectively.
(3)	Return on capital employed (“ROCE”) is derived from annual adjusted operating profit (as defined in Note 4) divided by the average of the capital employed at the start and end of that twelve-month period, capital employed being total equity plus net debt (as derived in Note 12c).
(4)	Constant currency is H1 2023 results translated using H1 2024 average exchange rates.

The following measures are used for the purpose of assessing covenant compliance for the Group’s borrowing facilities:

●	EBITDA is adjusted profit before tax and before interest, depreciation, amortisation and profit or loss on sale of property, plant and equipment.  It also excludes EBITDA from businesses which have been disposed and includes EBITDA for businesses acquired and it is based on frozen GAAP (pre-IFRS 16).  EBITDA for the 12-month period ending June 2024 was £85.8m.
●	Net debt is defined in Note 12c.  It is based on frozen GAAP (pre-IFRS 16) and as required by the covenant definition, it is restated using 12-month average exchange rates.
●	Interest is adjusted finance costs and finance income before net finance income of retirement benefits.  It also excludes interest from businesses which have been disposed and it is based on frozen GAAP (pre-IFRS 16).
●	The definition of adjusted items in the Condensed Consolidated Income Statement is included in Note 4.

The Group’s principal foreign exchange translation exposure is to the US Dollar.  The average rate applied in the translation of Income Statement and cash flow items for H1 2024 was $1.26 (H1 2023 – $1.23) and the rate applied in the translation of balance sheet items at 30 June 2024 was $1.26 (30 June 2023 – $1.27; 31 December 2023 – $1.27).  Our current assumption is that the average US Dollar to Pound Sterling exchange rate for the full-year 2024 is $1.27.

Webcast

There will be a presentation on Monday 5 August 2024 at 09:30am BST accessible via a live webcast on Senior’s website at www.seniorplc.com/investors.  The webcast will be made available on the website for subsequent viewing.

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, has announced that it has been awarded a life of programme contract by the German original equipment manufacturer Deutsche Aircraft GmbH for the design, development and manufacture of the Bleed Air System and the Engine Build Up (EBU) system for the D328eco aircraft.  The Senior Aerospace EBU system will interface between the PW127XT‑S engines and the aircraft.

The D328eco will be the most advanced, energy efficient and cost-effective new 40-seater regional turboprop making it a new benchmark in aviation.  Based on the D328^® turboprop aircraft, it will have advanced flight deck capabilities, a SAF-compatible airframe, and highly efficient engines.

The D238eco’s reduced carbon footprint demonstrates that Senior and Deutsche Aircraft have an important role to play in the decarbonisation of the aerospace industry, with both businesses committed to achieving Net Zero sustainability goals.  Senior has been given an “A” rating by CDP for its 2022 and 2023 work on climate disclosure / action and has also received an “A” rating for Supplier Engagement in 2022 and 2023.  Deutsche Aircraft is designing the first 100% carbon neutral aircraft Final Assembly Line in the industry.

Design is being undertaken at the Senior Aerospace SSP facility in Burbank, California, USA while manufacturing of the system will be undertaken at the Senior Aerospace Bird Bellows facility in Congleton, Cheshire, UK.  Deutsche Aircraft’s production of the D328eco aircraft will take place at Leipzig / Halle Airport, Germany.

Commenting from the Farnborough International Air Show, Launie Fleming, CEO of Senior Aerospace, said: “We are delighted to be awarded this contract from Deutsche Aircraft for the advanced, sustainable D328eco platform which is a tangible example of our purpose in action – helping to engineer the transition to a sustainable world for the benefit of all our stakeholders.  We look forward to collaboratively supporting DAG through the development of this exciting new aircraft.”

Dave Jackson, CEO of Deutsche Aircraft, commented on this new partnership, stating: “We are looking forward to our collaboration with Senior, a manufacturer of high technology components and systems provider that will support the EBU for the innovative new turboprop, the D328eco.”

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, has announced that it has been awarded a 5-year contract by Rolls-Royce for the supply of aerofoils for the Pearl engine family.  The Pearl engine family is the power plant of choice on multiple in-production and upcoming ultra-long range business jet platforms.

Manufacturing will be undertaken at Senior Aerospace Thailand (SAT), Chonburi.  SAT was recognised by Rolls-Royce as a class leading supplier in 2021, and since 2022 has been a member of the Rolls-Royce High Performance Supplier Group whose membership is strictly limited to the company’s highest performing suppliers.

Commenting on the award, Launie Fleming, CEO of Senior Aerospace, said: “Senior is proud to be recognised as a High-Performance Supplier to Rolls-Royce, and, with the award of this contract, delighted to have the opportunity to continue to provide our leading levels of quality, manufacturing expertise, and on-time delivery performance”.  

Senior plc (LON:SNR), an international manufacturer of high-technology components and systems, with operations in 12 countries, has announced the appointment of Zoe Clements as a non-executive Director with effect from 1 September 2024.

Zoe Clements is an investment, private equity and finance professional with over 15 years of board experience, and over 25 years of executive experience, notably in a private equity context.  She has previously sat on a range of consumer, retail, leisure, healthcare and professional services boards as a non-executive Director.

She is a current non-executive Director of Pantheon International Plc and of JPMorgan Emerging Markets Investment Trust plc, and is also a Member of the Social Investment Advisory Committee of the Growth Impact Fund and a Trustee of the Money and Mental Health Policy Institute.  She qualified as a Chartered Accountant with PwC.

Senior plc Chairman, Ian King said: “We are very pleased that Zoe has agreed to join the Board.  Zoe’s direct experience in complex investment, private equity and finance roles across a variety of industries will complement the current Board and prove invaluable to Senior’s continued development.”

Other than her roles as non-executive Director of Pantheon International Plc and of JPMorgan Emerging Markets Investment Trust plc, Zoe Clements does not hold, or has not held in the past 5 years any position where she is or was acting in the capacity of a director of a publicly quoted company.

As a Director of Senior plc, she will also be a member of the Company’s Audit, Remuneration and Nominations Committees.

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, has announced that it has been awarded various multi-year production contracts by Collins Aerospace for the supply of precision formed and machined thrust reverser structural components for Boeing 787, Airbus A320neo and Airbus A220 aircraft.  Deliveries commenced in January 2024 for Boeing and will commence January 2025 for Airbus.  The total value of contracts is approximately $80m over a 10-year period. 

Manufacturing is being undertaken at Senior Aerospace’s Jet Products facility near San Diego, California, USA.

Commenting on the awards, Launie Fleming, CEO of Senior Aerospace, said: “We are delighted to have been awarded these new long-term contracts from Collins Aerospace for complex structural components across Airbus and Boeing platforms.  The awards are another great example of how our customers value Senior Aerospace’s manufacturing expertise, quality and on-time delivery, and they will help to deliver further growth for Senior Aerospace’s structures businesses over coming years.

Ahead of its Annual General Meeting on Friday 26 April 2024, Senior plc (LON:SNR), an international manufacturer of high technology components and systems, principally for the worldwide aerospace & defence, land vehicle and power & energy markets, has issued this Trading Update for the three months ended March 2024.

Key points

●	Trading in the Period in line with expectations
●	Strong growth in commercial aerospace
●	Outlook for the year remains unchanged; Board anticipates good growth for the Group in 2024 in line with its expectations

Trading Update

Overall, trading in the Period has been in line with expectations with Group revenue growing 7% year-on-year on a constant currency basis.  Aerospace revenue grew by 12% year-on-year driven by growth in commercial aerospace.  In Flexonics we had good growth in downstream oil & gas and nuclear with land vehicle sales remaining resilient.  As stated in our Full Year results in March, we were anticipating a rebalancing of inventory by our upstream oil & gas customers in 2024.  Overall, this has led to Flexonics revenue reducing 2% year-on-year.

Outlook

Overall, the Board anticipates good growth for the Group in 2024 in line with its expectations.

Senior’s diversified position across key civil and defence aircraft platforms and increasing aircraft build rates is expected to drive good growth in Aerospace Division revenue through 2024.  Regarding the 737 MAX, we have agreed sensible schedules with Boeing and other customers that take into account ongoing production demand, and current customer inventory levels.  We have mitigated the impact of lower 737 MAX production with growth in other business.

For the full year we still expect to maintain good performance in Flexonics.  Robust demand in our downstream oil & gas business is helping to offset the ongoing rebalancing of inventory by our upstream oil & gas customers and the normalisation to more typical levels of land vehicle market demand.

Senior plc (LON:SNR) has announced its results for the year ended 31 December 2023.

FINANCIAL HIGHLIGHTS	Year ended 31 December			change	change (constant currency) (4)
	2023		2022
REVENUE	£963.5m		£848.4m	+14%	+14%
OPERATING PROFIT	£37.9m		£32.5m	+17%	+17%
ADJUSTED FOR:
AMORTISATION OF INTANGIBLE ASSETS FROM ACQUISITIONS	£2.2m		£0.2m
NET RESTRUCTURING COST/(INCOME)	£5.6m		£(4.2)m
SITE RELOCATION COST	£0.1m		£nil
ADJUSTED OPERATING PROFIT (1)	£45.8m		£28.5m	+61%	+61%
ADJUSTED OPERATING MARGIN (1)	4.8%		3.4%	+140 bps	+140 bps
PROFIT BEFORE TAX	£22.8m		£22.4m	+2%	+2%
ADJUSTED PROFIT BEFORE TAX (1)	£38.3m		£20.1m	+91%	+92%
BASIC EARNINGS PER SHARE	7.52p		4.86p	+55%
ADJUSTED EARNINGS PER SHARE (1)	10.28p		4.36p	+136%
TOTAL DIVIDEND (PAID AND PROPOSED) PER SHARE	2.30p		1.30p	+77%
FREE CASH FLOW (2)	£15.5m		£27.7m	-44%
NET DEBT EXCLUDING CAPITALISED LEASES (2)	£132.0m		£100.5m	£32m increase	Net debt / EBITDA(5)1.6x
NET DEBT (2)	£203.8m		£178.9m	£25m increase
ROCE (3)	7.1%		4.7%	+240bps

Highlights

●	Strong trading performance across the Group compared to 2022
●	Adjusted EPS of 10.28p includes benefit of 2.54p from release of provisions for uncertain tax positions
●	Continued ROCE improvement, increasing by 240 bps
●	Robust core market demand, with a healthy book-to-bill of 1.14
●	Healthy balance sheet with net debt / EBITDA(5) of 1.6x
●	Spencer Aerospace revenues increased by over 50% year-on-year
●	The Board anticipates good growth for the Group in 2024 in line with its expectations
●	Final dividend of 1.70p, bringing full year dividend to 2.30p, up 77%, reflecting improved performance and future prospects

Commenting on the results, David Squires, Group Chief Executive Officer of Senior plc, said:

“Senior has delivered a year of strong trading performance and profit growth with significant momentum across our two divisions.

Our Flexonics Division performed well in 2023 with double-digit margins and strong growth in both land vehicle and power & energy.  In 2024 we expect to maintain good performance with land vehicle market demand normalising to more typical levels and continuing robust demand in our downstream oil & gas business.

Momentum is building in our Aerospace Division.  We have achieved a diversified position across key civil and defence aircraft platforms and are benefiting from increasing aircraft build rates which we expect will lead to higher sales in 2024 and beyond.  Supply chain issues are improving as anticipated and we expect further improvement as 2024 progresses.  Beyond this, we can expect Aerospace performance to continue to improve in 2025 as production rates increase, supply chain continues to improve, and additional contractually agreed price rises take effect.

Overall, the Board anticipates good growth for the Group in 2024 in line with its expectations.

Looking further ahead, we remain on track to achieve our stated ROCE target of at least 13.5%.  Our strategy and positioning in attractive and structurally resilient core markets, active portfolio management, combined with our sector leading sustainability credentials and highly relevant technical capabilities, provides confidence of continuing performance improvements across our Aerospace and Flexonics Divisions, enhancing value for our stakeholders.”

Notes

This Release represents the Company’s dissemination announcement in accordance with the requirements of Rule 6.3.5 of the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.  The full Annual Report & Accounts 2023, together with other information on Senior plc, can be found at: www.seniorplc.com

The information contained in this Release is an extract from the Annual Report & Accounts 2023, however, some references to Notes and page numbers have been amended to reflect Notes and page numbers appropriate to this Release.

The Directors’ Responsibility Statement has been prepared in connection with the full Financial Statements and Directors’ Report as included in the Annual Report & Accounts 2023.  Therefore, certain Notes and parts of the Directors’ Report reported on are not included within this Release.

(1)	Adjusted operating profit and adjusted profit before tax are stated before £2.2m amortisation of intangible assets from acquisitions (2022 – £0.2m), £5.6m net restructuring costs (2022 – £4.2m net income) and £0.1m site relocation cost (2022 – £nil).  Adjusted profit before tax is also stated before costs associated with corporate undertakings of £7.6m (2022 – £1.7m).  A reconciliation of adjusted operating profit to operating profit is shown in Note 4.  Adjusted earnings per share includes the benefit of a release of £10.5m of provision for uncertain tax positions in the second half of 2023, of which £3.5m relates to interest (see Note 5 for further details).  Adjusted operating margin is the ratio of adjusted operating profit to revenue.
(2)	See Note 12b and 12c for derivation of free cash flow and of net debt, respectively.
(3)	Return on capital employed (“ROCE”) is derived from annual adjusted operating profit (as defined in Note 4) divided by the average of the capital employed at the start and end of that twelve-month period, capital employed being total equity plus net debt (as derived in Note 12c).
(4)	2022 results translated using 2023 average exchange rates – constant currency.
(5)	The following measures are used for the purpose of assessing covenant compliance for the Group’s borrowing facilities: ●EBITDA is adjusted profit before tax and before interest, depreciation, amortisation and profit or loss on sale of property, plant and equipment.  It also excludes EBITDA from businesses which have been disposed and includes 12 months EBITDA for businesses acquired and it is based on frozen GAAP (pre-IFRS 16).  EBITDA for 2023 was £84.1m. ●Net debt is defined in Note 12c.  It is based on frozen GAAP (pre-IFRS 16) and as required by the covenant definition, it is restated using 12-month average exchange rates. ●Interest is adjusted finance costs and finance income before net finance income of retirement benefits.  It also excludes interest from businesses which have been disposed and it is based on frozen GAAP (pre-IFRS 16). ●The definition of adjusted items in the Consolidated Income Statement is included in Note 4.

The Group’s principal exchange rate for the US Dollar applied in the translation of Income Statement and cash flow items at average 2023 rates was $1.24 (2022 – $1.24) and applied in the translation of balance sheet items at 31 December 2023 was $1.27 (31 December 2022 – $1.21).

Annual Report

The full Annual Report & Accounts 2023 is now available online at www.seniorplc.com.  Printed copies will be distributed on or soon after 15 March 2024.

Webcast

There will be a presentation on Monday 4 March 2024 at 11.00am GMT accessible via a live webcast on Senior’s website at www.seniorplc.com/investors.  The webcast will be made available on the website for subsequent viewing.

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, has announced it has been awarded two separate contracts to supply a number of complex components to Airbus SAS and Airbus Atlantic.

For Airbus, a multi-year contract extension has been agreed for the manufacture and supply of various aerostructure parts used in the Airbus A320 and A330 aircraft programs, including aluminium parts and assemblies used throughout the aircraft.  Deliveries commenced in January 2024, with manufacturing undertaken at Senior Aerospace UPECA in Malaysia and Senior Aerospace Thailand facilities.

Separately, Senior Aerospace Thailand has also been awarded a contract from Airbus Atlantic for the supply of business class seat structures to a major European airline, with production deliveries beginning in early 2024.  This contract builds on SAT’s longstanding experience in manufacturing and supplying complex seat structures and assemblies for commercial aircraft.

Commenting on the awards, Launie Fleming, CEO of Senior Aerospace, noted: “These contract awards underline Senior’s position as a trusted, long-term partner to the largest and most important original equipment manufacturers.  The contract awards build further on our existing strong relationship and we look forward to supporting Airbus with these and future contracts.”

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, has announced that it has been awarded a new contract for the supply of Boeing 787 vertical fin detail parts with the United Arab Emirates company Strata Manufacturing PJSC (Strata).  Deliveries commenced in November 2023 with series manufacturing being undertaken at Senior Aerospace’s facility in Chonburi, Thailand (SAT).

The new contract agreed with Strata is approximately $12M over the 7-year term of the award.  SAT is Boeing-approved for manufacture, treatments, and assembly.  SAT has significant experience in the manufacturing of vertical fin aluminium structures, utilising Senior’s wider engineering and technology expertise.

Commenting on the award, Launie Fleming, CEO of Senior Aerospace, said: “Strata is a new customer for Senior, and we are delighted that Senior Aerospace Thailand has been selected for this important contract.  Senior is a trusted supplier to the Commercial Aerospace industry, and we look forward to executing on this and future contracts.”

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, has announced that Senior Flexonics Crumlin has secured a production order for Battery Cooling Plates with Valmet Automotive GmbH, the battery module supplier for a new electric hybrid vehicle from a prestige Italian car marque.

The cooling plates were developed at our product design and development centre in Crumlin, South Wales in the UK, in close collaboration with Valmet.  Manufacturing for the production contract will also be undertaken at Crumlin on a dedicated battery cooling production and assembly line.

Commenting on the supply contract, Mike Sheppard, CEO of Senior Flexonics, said: “Senior Flexonics is a world leader in developing high performance thermal management solutions.  Our battery cooling plates enable our customers to extend electric vehicle range, and preserve battery life, by ensuring the cells remain at their optimum working temperature through their life cycle.  We are very pleased to be supplying Valmet and our end customer with an innovative solution for this exciting opportunity.”

Senior plc (LON:SNR), an international manufacturer of high technology components and systems, has announced that its ambitious Net Zero science-based emission reduction targets have been validated by the Science Based Targets initiative (“SBTi”).  The validation highlights Senior’s status as the first company in the global Aerospace & Defence sector to have its 2025 emissions reduction targets independently verified and approved by SBTi.

Senior’s verified SBTi targets, using 2018 as a base year are:

•	Commitment to reach net-zero greenhouse gas emissions across the value chain by 2040.
•	Near-term, commitment to reduce absolute scope 1 and 2 greenhouse gas emissions 30% by 2025, and that 82% of suppliers by spend covering purchased goods and services and capital goods will have science-based targets by 2025. (2018 base year).
•	Commitment to reduce absolute scope 1,2 and 3 greenhouse gas emissions 90% by 2040 from the same base year. (2018 base year).

SBTi’s Target Validation Team assessed Senior’s scope 1 and 2 near-term and long-term target ambitions and scope 3 long-term ambition and has determined that they are in line with the Paris agreement targets to limit global warming to a 1.5°C trajectory.

In addition, SBTi commended Senior on the ambition of their overall target, which is the highest designation available through the SBTi process.

David Squires, Chief Executive of Senior plc said:

“Senior’s purpose as a business is to help engineer the transition to a sustainable world for the benefit of all our stakeholders, and the validation of Senior’s net-zero target by the SBTi is testament to the hard work across the Group to take urgent action to combat the climate crisis.

“Staying at the forefront of climate disclosure and action is a core part of our strategy as we enable our customers, who operate in the hardest-to-decarbonise sectors, to transition to low carbon and clean energy solutions.  In addition to our own actions, we are encouraging action by our suppliers, underlined by our commitment that 82% of our suppliers by spend will have science-based targets by 2025.”

About Senior

Senior plc is a FTSE 250 international engineering and manufacturing Group with operations in 12 countries.  It is listed on the main market of the London Stock Exchange (symbol SNR).  Senior’s Purpose is “we help engineer the transition to a sustainable world for the benefit of all our stakeholders”.  Senior designs and manufactures high technology components and systems for the principal original equipment producers in the worldwide aerospace & defence, land vehicle and power & energy markets.  Further information on Senior plc may be found at: www.seniorplc.com

About the Science Based Targets initiative

The Science Based Targets initiative (“SBTi”) is a global body enabling businesses to set ambitious emissions reductions targets in line with the latest climate science.  It is focused on accelerating companies across the world to halve emissions before 2030 and achieve net-zero emissions before 2050.

The initiative is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (“WRI”) and the World Wide Fund for Nature (“WWF”) and one of the We Mean Business Coalition commitments.  The SBTi defines and promotes best practice in science-based target setting, offers resources and guidance to reduce barriers to adoption, and independently assesses and approves companies’ targets.

Senior plc (LON: SNR) notes today the recent media speculation regarding its Aerostructures business. It is Senior’s policy to review its portfolio on an ongoing basis and evaluate all its operating businesses in terms of their strategic fit within the Group. Senior can confirm that it has been reviewing all strategic options for its Aerostructures business, which includes an early stage assessment of a potential divestment of the division. There can be no certainty that this will lead to a transaction.

Senior plc state further announcements will be made as appropriate.

Senior plc (LON: SNR), an international manufacturer of high technology components and systems, principally for the worldwide aerospace, defence, land vehicle and power & energy markets, issues this trading update for the ten months ended October 2019.

David Squires, Group Chief Executive of Senior plc said:

“Senior is focussed on delivering improved returns for shareholders with many of our operating businesses performing well. However, in recognition of the challenges in some of our Flexonics and Aerospace markets, Senior is implementing a restructuring programme to drive improved returns. These actions and our “prune to grow” strategy will strengthen our business. Combined with a slightly lower forecast tax rate and lower central costs, this means that the Group’s performance in 2019 will be broadly in line with our expectations.”

Flexonics

Activity in the Flexonics Division in the Period has been broadly in line with expectations with markets weakening in the last four months as anticipated. We continue to expect the full year margin progression in the Division to offset the sales decline with the benefits from our focus on cost management and efficiency initiatives being delivered.

The truck, off highway and passenger vehicle markets in North America, Europe and Asia have softened over the last four months. Current economic forecasts suggest that our Flexonics cyclical end markets will continue to decline through the rest of 2019 and into 2020, before starting to recover in 2021. We will continue to take appropriate steps to protect our returns and position the Group to take advantage of future recovery in our end markets.

Aerospace

We have seen year-on-year sales growth in the ten months of 2019 compared to the previous year. However, revenue in the last four months has been lower than our previous expectations due to weakness in wide-body commercial aircraft engine demand and further impact of the 737 MAX situation as some customers balance inventory to demand. Despite the lower revenues, we expect to maintain Aerospace margins at a similar level in the second half of the year compared to the first half of the year.

Senior continues to make good progress on new product introduction and industrialisation activity. In those businesses where this activity is near completion, we continue to see improving returns. We have seen some customers delay the production ramp of certain contracts, where we are displacing incumbent competitors, and we now expect these to be at full rate production in 2021 instead of 2020.

In a highly competitive environment, we are maintaining our pricing and return on capital discipline. While we have successfully renewed a number of important long-term contracts, in line with our strategy to improve returns across our businesses, we have decided not to renew certain contracts which did not meet our returns requirement. As a result of this, our current view is that sales in our Aerospace Division will be lower in 2020 than in 2019 before returning to growth in 2021.

Restructuring

Management is taking actions to mitigate the challenges described above. We are implementing a restructuring programme across the Group, which includes:

● Aligning direct headcount to match capacity to sales demand profile

● Further efficiency improvements resulting in overhead cost reductions

● Transferring major work packages to South East Asia, taking advantage of our global footprint and cost competitive country strategy

● Closure of Senior Aerospace AMT’s South Carolina facility by early 2020

The opportunities currently identified will result in a total exceptional restructuring charge of around £20m, with a significant portion coming from headcount reductions as we match capacity to demand. The cash cost of this is approximately £15m, of which £6m is expected to be incurred in 2019 and will be financed by improvements in operating cashflow. The balance of the cash cost is expected to be incurred in 2020. The cost of this restructuring programme is expected to be largely recovered in 2020 and 2021.

Prune to grow

The Group has continued with its “prune to grow” activities and recently disposed of two more non-core businesses, in addition to Senior Flexonics Blois which was disposed of at the start of the year.

In September 2019, the Group disposed of its Flexonics operating company in Brazil, Senior Flexonics Brazil Ltda, serving the local automotive and power & energy markets.

In October 2019, the Group completed the sale of Absolute Manufacturing, part of our Aerospace Structures Division, focused on small built-to-print precision machining components.

These disposals enable us to have greater focus on our core activities and to deploy capital in other parts of the Group that have higher returns. These two businesses represented less than 2% of Group revenue in 2018 and the transactions are slightly accretive to the Group’s adjusted earnings for 2019.

Pensions

The latest triennial actuarial valuation of the Senior plc Pension Plan, which is a funded scheme in the UK, has been completed. As a result, and effective from April 2019, the Group’s cash contributions to the UK Plan have reduced from an annual amount of £8.1m to an annual amount of £5.5m. These contributions are payable over the three year period to March 2022 and are subject to review and amendment as appropriate at the next funding valuation in 2022.

Summary and Outlook

Many of our operating businesses are performing well with improving returns. However, as described above, we are dealing with some challenges in some of our Flexonics and Aerospace markets. The Group is taking actions to address these by implementing a restructuring programme and by continuing its “prune to grow” programme. Combined with a slightly lower forecast tax rate and lower central costs, this means that the Group’s 2019 performance remains broadly in line with our expectations.

We continue to manage capital expenditure and working capital and, together with the benefit from the reduction in pension contributions, this enables us to fund our restructuring programme without impacting net cashflow for the year.

Senior plc 2019 full year results will be announced on Monday 2nd March 2020.