Put Senior on your radar

Aerospace generated just 10 per cent of group sales in the late 1990s. Now, it's 60 per cent and the substantial visibility provided by some of the largest and most lucrative commercial and military aircraft programmes ever undertaken is compelling. Senior knows that Boeing, its biggest customer, and arch rival Airbus will be delivering thousands of planes over the next 20 years.

Airbus is currently sitting on orders for 4,216 planes, while Boeing's figure is 3,471. Build rates are likely to increase 41 per cent by 2013 but, at the current rate of 1,000 a year, the backlog stretches to between seven and eight years – gold dust. Critically, the first of Boeing's 787 Dreamliners have just been delivered and another 800 are on order. Making airducts, tail-fin parts and engine casings for the revolutionary plane will be Senior's biggest money spinner for years to come. Each will bring in about $871,000 (£552,000) and $30m overall this year, rising to more than $100m by 2014. Meanwhile, and even though Airbus has just delayed its rival A350 wide-body jet until the first half of 2014, it has orders for 567 so far and more will follow.

Crucially, Senior has recently confirmed that its order book since end-June remains healthy, despite the eurozone crisis and weakness in the regional and business jet market. While, in the first half, group sales grew 10 per cent and adjusted pre-tax profit rose 17 per cent. True, another recession could usher in a wave of aircraft cancellations. But chief executive Mark Rollins is quick to counter. "Even if 20 per cent of orders were cancelled Boeing and Airbus would still be trying to grow build rates," he says. "The challenge over the next five years is how fast the industry can ramp up."

Lion Air of Indonesia said earlier this month that it intends to buy a record 230 Boeing 737s worth $21.7bn at list prices. Just days before at the Dubai Air Show, Emirates put in a firm order for 50 777s at $18bn and Singapore Airlines wants eight. In July, American Airlines ordered 200 737s and 260 A320s – all good news for Senior. It makes wing ribs, landing gear wheel wells and other parts for each 737 worth $238,000 and $71,000-worth of nacelle rings and front flanges for the A320. It will also supply new, more fuel-efficient, versions of these narrow-body aeroplanes, the A320neo and 787 Max.

Strong cash generation is expected to push net debt down below £50m by the year-end, and a new £60m refinancing means Senior has the firepower for acquisitions, most likely in commercial aerospace where prospects and margins are better.

Defence contracts are chipping in, too, generating 18 per cent of group sales. And, despite concerns about military spending, the outlook for Senior remains strong. Every C-130J military transporter manufactured adds $854,000 to Senior's top line, the rival A400M over $500,000, an average of $227,000 for the F-35 Joint Strike Fighter and $198,000 for the Black Hawk helicopter.

Moreover, 40 per cent of revenues come from Senior's Flexonics division, which includes the automotive business and industrials arm. In auto – 21 per cent of group sales – the recovering North American heavy truck market continued to offset weakness in the group's non-premium passenger vehicles markets in Europe and Brazil. US truck production, however, is still running at around half its 2006 peak – suggesting further improvements to come. Meanwhile, at the smaller niche industrials division, strength in Germany and healthy emergency expansion joint repair sales mitigated slow implementation of US emission legislation.