As appetite for aeroplane parts soars, new boss David Squires is confident that Senior (SNR) is well equipped to ramp up production. He also dismissed speculation that Airbus and Boeing are driving a hard bargain. Yet these results suggest the aerospace giant is encountering some difficulties in its core market.
Costs incurred from the industrialisation of new aerospace programmes, volume reductions on big projects such as the Airbus A330 and lower reclaimed aluminium prices squeezed the divisional adjusted operating margin by 1.7 points to 13.2 per cent. Nevertheless, management is confident that actions to offset volume declines and the forthcoming transition from industrialisation to series production will boost profitability in the second half. Overall aerospace demand, meanwhile, is expected to remain rampant.
The outlook isn't so bullish for Flexonics, its diesel technologies business, which accounts for one-third of group sales. Although a favourable sales mix and operational efficiencies boosted the divisional margin by 0.2 points to 15.1 per cent, organic revenue fell by 4 per cent. Management blamed lower volumes in the off-highway, power and energy markets, coupled with tepid oil and gas, mining and agriculture markets.
Broker Investec expects adjusted pre-tax profit of £105m in the year to December 2015, giving adjusted EPS of 19.5p (from £102.6m and 19.6p in 2014).
| SENIOR (SNR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 273p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 272-273p | 12-MONTH HIGH: | 362p | LOW: 249p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 100p* | NET DEBT: | 35% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 400 | 45.1 | 8.7 | 1.67 |
| 2015 | 435 | 45.0 | 8.5 | 1.84 |
| % change | +9 | - | -2 | +10 |
Ex-div: 22 Oct Payment: 30 Nov *Includes intangible assets of £326m, or 78p a share | ||||
