Senior – volumes up, margins down

Calls for more efficient, large commercial aircraft, amid increasing air traffic, led key customers, Boeing and Airbus, to start building new planes again, although this had negative implications for margins. Elsewhere, the stabilisation of commodity prices also triggered a rise in heavy truck sales, boosting revenues at Flexonics, Senior’s other division, by 12 per cent to £299m.

Unfortunately, top-line gains came at the expense of profits. Flexonics’ end markets are strengthening, yet conditions in its most profitable segments – downstream oil and gas and power and energy – remain challenging. And in aerospace a preference to retire mature aircraft programmes in favour of developing new ones forced Senior to swallow some extra costs. Those factors saw the group’s adjusted operating margin tighten by 1.2 percentage points to 8.1 per cent, prompting a 9 per cent decline in adjusted operating profit at constant currencies.

Prior to these results, Numis expected 2018 pre-tax profit of £85m, leading to adjusted EPS of 15.8p, up from £72.5m and 14.2p in 2017.