Aircraft and vehicle parts manufacturer Senior proved its ability to generate cash by reducing net debt by a further £15m since the start of the year, while management took a bullish stance and predicted that current year profits will be ahead of expectations. In response, broker Investec Securities upgraded its 2010 and 2011 pre-tax profits forecasts by 10-15 per cent to £62m and £69m, giving EPS of 11p and 12.6p, respectively (2009: £48m/8.7p).
Most of the increase in sales came from a pick up in demand from European car makers and North American heavy truck manufacturers as the de-stocking process finally ended and vehicle production aligned with demand. The group's Flexonics division benefited most from this and reported sales of £118m (2009: £108m) and an operating margin nearly 3 percentage points higher at 12.9 per cent. However, the infrastructure segment of Flexonics was flat as capital intensive projects in the oil & gas and power generation industries were put on hold or cancelled.
Senior's aerospace division also generated margin growth, up from 13 to 14.9 per cent, so although sales were 3 per cent higher at £170m in constant currencies, this translated to a 18 per cent rise in operating profits. Boeing and Airbus aircraft deliveries remain healthy and Senior should start to see the benefit of the 787 Dreamliner's arrival on the market in 2011.
SENIOR (SNR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 135p | MARKET VALUE: | £ 540m | |
| TOUCH: | 134-136p | 12-MONTH HIGH: | 139p | LOW: 40p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 51p* | NET DEBT: | 43% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 276 | 21.1 | 3.92 | 0.9 |
| 2010 | 288 | 30.2 | 5.59 | 1.0 |
| % change | +4 | +43 | +43 | +11 |
Ex-div:27 Oct Payment:29 Nov *Includes intangible assets of £187m, or 47p a share | ||||
