Interim Management Statement

RNS Number : 4971F

Senior PLC

27 April 2011

 



Senior plc

Interim Management Statement

Ahead of its Annual General Meeting on Thursday 28 April, Senior plc ("Senior" or "the Group"), an international manufacturer of high technology components and systems, principally for the worldwide aerospace, defence, land vehicle and energy markets, issues this interim management statement.

Trading

Overall, the Group performed strongly during the three month period to 31 March 2011 with results ahead of the same period in 2010.  In particular trading in the Group's Aerospace Fluid Systems businesses was encouraging, and operating margins remained healthy across the Group.

Markets and Operations

Within the Aerospace Division (59% of Group sales in 2010), production of large commercial aircraft, the Group's largest market sector, remained healthy with Boeing and Airbus delivering a combined 223 aircraft in the quarter (Q1 2010: 230 aircraft).  Their combined order books remain strong at almost seven years' annual production, with gross orders in the quarter of 222 aircraft improving significantly from last year's 160 aircraft.  However, their combined net order in-take declined to 107 aircraft (after allowing for 115 cancellations) for the three month period compared to the 143 aircraft(after allowing for 17 cancellations) ordered in the first quarter of 2010.  Elsewhere in the Aerospace Division markets followed anticipated trends, with regional and business jet markets remaining stable and continued strength being seen in both the Group's principal military aerospace programmes (the Black Hawk helicopter and C-130J military transporter) as well as in certain non-aerospace sectors, such as the semi-conductor market.

In the Flexonics Division, which comprises the Group's land vehicle and industrial operations, satisfactory market conditions were experienced.  In the Group's principal land vehicle markets (22% of Group sales in 2010) demand for the Group's heavy truck products in North America improved although only modest year-on-year benefits were seen due to a strong comparative first quarter last year, whereas European passenger car markets declined marginally, as anticipated, with no adverse impact seen to date in the Group's supply chain from the effects of the recent events in Japan.  Demand conditions in industrial markets (19% of Group sales in 2010) were in line with expectations, with activity levels in the Group's global large industrial expansion joint markets and in European general industrial markets remaining relatively healthy.

Acquisition and Net Debt

As announced on 28 March, Senior acquired all of the share capital of Damar Machine Company during the period for a total consideration of $24.5m (£15.3m).  Integration is proceeding in line with expectations and the business has made an encouraging start in its first month within the Group.  Senior's operating cash flow was strong during the quarter and the Group continues to enjoy significant headroom under its committed borrowing facilities.  However, as a result of the acquisition, net debt increased to £71.8m at 31 March 2011 (31 December 2010: £63.7m).

Non-Executive Directors

It had previously been announced that Michael Steel would step down from the Board at the end of tomorrow's Annual General Meeting, and the Board would be enlarged and strengthened through the recruitment of two new non-executive Directors.  Accordingly the Group is now pleased to announce that Mark E. Vernon, Group Chief Executive Officer of Spirax-Sarco Engineering plc, and Andy Hamment, Group Marketing Director of Ultra Electronics Holdings plc, will join the Board with effect from 29 April 2011.  Mark and Andy bring extensive Plc Board experience of managing successful international specialist engineering companies, operating in similar environments to Senior, which will be of significant future value to the Group.  Senior confirms that there are no other matters requiring disclosure in relation to paragraphs 9.6.13(1) to (6) of the Listing Rules of the UK Listing Authority.

Outlook

Whilst the Group has started the year strongly, ongoing short-term uncertainties principally arising from recent events in Japan lead the Board to be slightly cautious on the outcome for the second quarter, particularly in the land vehicle markets.  However, the underlying drivers of growth in the business remain unchanged and healthy, especially for the commercial aerospace market, and the Board continues to expect 2011 adjusted profit before tax⁽¹⁾ to be in line with its previous expectations.

Looking further ahead, Senior expects to benefit from the increasing build rate of the Boeing 787 aircraft, following its anticipated entry into service in the third quarter of 2011, as well as from the announced volume increases of Airbus and Boeing's other commercial aircraft, continued improvements in the North American truck market and the impact of tightening emission legislation in both land vehicle and industrial markets over time.  Therefore, prospects for the Group remain encouraging not only for the remainder of the year, but also over the longer term.

The results for the six-month period to 30 June 2011 will be announced on Monday 1 August 2011.

Note:
1.	Adjusted profit before tax is before loss/profit on sale of fixed assets, amortisation of intangible assets arising on acquisitions and acquisition costs.

Further information

Mark Rollins	Group Chief Executive, Senior plc	[phone]
Simon Nicholls	Group Finance Director, Senior plc	[phone]
Clare Hunt	Finsbury Group	[phone]

About Senior

Senior is an international manufacturing group with operations in 11 countries.  It is listed on the main market of the London Stock Exchange (symbol SNR).  Senior designs, manufactures and markets high technology components and systems for the principal original equipment producers in the worldwide aerospace, defence, land-vehicle and energy markets.  Further information on Senior plc, may be found at: www.seniorplc.com

Cautionary Statement

This announcement contains certain forward-looking statements.  Such statements are made by the Directors in good faith based on the information available to them at the time of the announcement and they should be treated with caution due to the inherent uncertainties underlying any such forward-looking information.

 

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