Join our community of smart investors

Senior plunges to a loss in 2020

The engineering group has been squeezed by the downturn in civil aerospace
Senior plunges to a loss in 2020
  • Pandemic disruption to international travel wipes out Senior’s profits
  • Aircraft production volumes expected to be lower in 2021 than 2020

As we have already seen with fellow engineering group’s Meggitt (MGGT) and Melrose (MRO), aircraft components supplier Senior (SNR) crashed into the red in 2020. As plane and engine makers cut production rates and Boeing’s (US:BA) 737 Max jet remained grounded, Senior swung to a £177m statutory operating loss, down from a £62m operating profit in 2019.

In response to the civil aerospace downturn, as well as a slowdown in the automotive sector, the group impaired £134m of goodwill and incurred £39m in restructuring costs.

But it wasn’t all bad news. The company generated £47m of free cash flow and has trimmed its net debt by a tenth to £206m. The group believes that it has sufficient liquidity to endure even a “severe but plausible downside scenario”, although there is still no dividend.

Looking ahead, while the 737 Max has returned to service, Senior anticipates that overall commercial aircraft production volumes will be lower in 2021 than 2020. While analysts expect Meggitt to return to a profit in 2021, Senior is forecast to remain loss-making. Sell.

SENIOR (SNR)    
ORD PRICE:114pMARKET VALUE:£472m
TOUCH:113-114p12-MONTH HIGH:143pLOW: 41p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:95p*NET DEBT:52%
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20160.9255.510.86.57
20171.0252.214.46.95
20181.0861.312.87.42
20191.1128.77.042.28
20200.73-192-38.2nil
% change-34---
Ex-div:n/a   
Payment:n/a   
*Includes £170m in intangible assets or 41p a share

Last IC View: Sell, 47p, 3 Aug 2020