Shares in Senior (SNR) were marked up on the release of half-year figures that were broadly in line with market expectations. The reduction in volumes at the high-margin segments of the Flexonics division had been well flagged, but profitability at the components and systems manufacturer is being constricted by a “transition from more mature aerospace programmes to the new airframe and engine products”. The end result was a 3.1 percentage point decline in the adjusted operating margin to 7.4 per cent, which led to profit of £37.5m – a 29 per cent constant-currency fall from last year's first half.
You could argue that this earnings cycle is reflective of the markets in which the group operates. Senior front-loads costs at the outset of any given programme, which diminish on a unit basis as the scale of production increases. And there are signs that the aerospace market is moving in the company's favour, with Boeing’s new 737 MAX airliner now in service and the Airbus A330neo scheduled to enter service next year. Encouragingly, the ratio of new orders to completed sales has expanded to 1.3 from 1.15 at the 2016 half year, a sign that commercial activity is picking up.
N+1 Singer forecasts December year-end adjusted pre-tax profit of £70.4m and EPS of 13.2p, against £75.3m and 14.4p in 2016.
| SENIOR (SNR) | ||||
| ORD PRICE: | 263.6p | MARKET VALUE: | £1.11bn | |
| TOUCH: | 263.6-236.9p | 12-MONTH HIGH: | 266p | LOW: 161p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 119p* | NET DEBT: | 36% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | (£m) | profit (£m) | share (p) | per share (p) |
| 2016 | 451 | 32.6 | 6.33 | 1.95 |
| 2017 | 510 | 24.0 | 4.73 | 2.05 |
| % change | +13 | -26 | -25 | +5 |
| Ex-div: | 20 Oct | |||
| Payment: | 30 Nov | |||
| *Includes intangible assets of £361m, or 86p a share | ||||
