Ahead of its Annual General Meeting on Friday 26 April, Senior plc (LON:SNR), an international manufacturer of high technology components and systems, principally for the worldwide aerospace, defence, land vehicle and power & energy markets, issues this trading update for the three months ended March 2019 (the “Period”).
Trading in the Period has been in line with expectations.
Flexonics
Activity in the Flexonics Division in the Period was in line with expectations, including the effect of the sale of our Blois operating business in February 2019.
Market conditions in our Flexonics Division remain consistent with the position set out in the announcement of 4 March 2019 and we continue to expect margin progression in this Division in 2019 to offset the small sales decline.
Aerospace
Activity in the Aerospace Division in the Period increased with newer programmes ramping up and mature programmes decreasing.
Following the Lion Air and Ethiopian Airlines tragedies, we have been talking to our 737 MAX aerostructures and propulsion customers about the potential schedule impact on our operating businesses. Although these discussions are ongoing and initial schedule changes have not yet been fully defined, we are working hard to mitigate any likely impact following Boeing’s announcement of a cut in production to rate 42.
Senior Aerospace AMT (“AMT”) in the Seattle area, which is our Structures Division’s largest business, has the largest content within Senior on the 737 MAX. This is one business in particular that is unlikely to be able to fully mitigate this impact of a cut to rate 42 instead of gearing up for an increase to rate 57. AMT has also secured a high level of new content on the Boeing 777X and therefore is already absorbing high new product introduction (NPI) and industrialisation costs as that platform moves closer to entry into service. As a consequence, AMT is less able than our other operating businesses to fully absorb the likely impact of the 737 MAX production cuts and this will have some impact on Aerospace margins for the rest of 2019.
On the military side we continue to benefit from the ramp up in production of the Joint Strike Fighter.
Outlook
As described, we are expecting some impact from the 737 MAX situation. However we are taking action to reduce costs across the Group and together with a slightly lower forecast tax rate, we expect only a modest reduction in our earlier expectations. We continue to monitor developments on the 737 MAX situation closely and should anything change that affects our current assumptions, we will update the market accordingly.
The results for the six-month period to 30 June 2019 will be announced on Monday 5 August 2019.
