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Senior responds to Boeing crisis

The engineering group has seen a softening in demand outside its aerospace work, too
November 7, 2019

Senior (SNR) will shed jobs in a business restructure as it acknowledges challenges for its aerospace and flexonics divisions, chief among which includes disruption from the grounded Boeing 737 Max jet.

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The engineering group’s aerospace division has reported a revenues fall over its last four months, owing to falling demand for wide-body commercial aircraft and a “further impact” from the 737 Max debacle, as “some customers balance inventory to demand”. Senior makes airframe and engine components for the Max, which remains subject to a global ban from the skies after two crashes killed 346 people. Earlier in November, airline Ryanair (RYA) cut its target range for its full-year post-tax profits in partial response to the 737 crisis.

Senior did not provide an update on concerns voiced in August over the Boeing 777x jet, whose first deliveries have been delayed by engine problems. Senior provides a host of components to the 777 and 777x aircraft.

The group’s flexonics division, which engineers products for a range of markets including land vehicles, power generation and oil and gas, has been affected by a softening in demand in truck, off highway and passenger vehicle markets in North America, Europe and Asia over the past four months. It expects margin growth in the division to offset the effects of sales declines, owing to a variety of cost management and efficiency initiatives.

Yet Senior is enacting a number of sweeping changes across its business. It has elected not to renew “certain contracts which did not meet our returns requirement”, which will drag its 2020 aerospace sales below those achieved in 2019, before returning to growth in 2021. Senior is also taking the axe to jobs across the group, while it is transferring “major work packages” to south-east Asia and pledged to close its South Carolina aerospace facility by early 2020.