Interim Management Statement

RNS Number : 9401U

Senior PLC

22 October 2014

 



Interim Management Statement

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 for the period since 1 July 2014 (the "Period").

Trading and Financial Position

The Group's adjusted profit before tax⁽¹⁾ for the Period was in line with the Board's expectations.  Net debt at the end of September was slightly higher than anticipated due to currency impacts and an increased investment in working capital.

Markets and Operations

Senior operates through two Divisions: Aerospace (66% of H1 2014 Group sales) and Flexonics (34% of H1 2014 Group sales).

In the Aerospace Division, the large commercial aircraft market, which accounts for 60% of the Aerospace Division's revenue, remained healthy.  Airbus and Boeing delivered a combined 971 aircraft in the first nine months of 2014, an increase of 5% over the 921 aircraft delivered in the same period of 2013.  Their combined year-to-date net order intake of 1,791 aircraft (nine months 2013: 1,952 aircraft) was nearly twice the number of deliveries.  The resultant order books, nearly nine years at current build rates, continue to provide a very strong foundation for future growth.  This was demonstrated by Boeing recently announcing a further increase in the build-rate for its B737 aircraft (Senior's largest revenue programme), to 52 per month in 2018.  Certification of the Airbus A350, an important future growth platform for Senior, has proceeded to plan with the first customer delivery still anticipated before the end of 2014.

Elsewhere, the regional jet, business jet and military markets have performed largely in line with the expectations set out in the Interim Results Statement issued on 4 August.  Flight testing of Bombardier's CSeries aircraft, on which Senior has significant content, recommenced in the Period with Bombardier still expecting the first customer delivery to take place before the end of 2015.  As previously announced with the Interim Results, the operational challenges associated with industrialising a greater number of new commercial aerospace programmes continue, particularly at SSP.  The physical relocation of Capo to Ketema was completed, as planned, towards the end of the Period, although the requalification of products has been more time consuming than anticipated.  This is expected to result in a £1.7m increase in the relocation provision set up at the end of 2013.

In the Flexonics Division, healthy demand from the North American heavy-duty diesel engine market, an improved European automotive market compared to the prior year and a strong performance from the newly acquired Upeca oil and gas business in Asia, resulted in an encouraging third-quarter performance.  European and Brazilian industrial markets, however, remained subdued, and demand for products going to the agricultural and construction equipment manufacturers began to slow towards the end of the Period.  Delivery of the large expansion joint project for a Catofin plant remains on schedule to commence before the year-end.

On the evening of 19 October, a fire occurred at the Group's £6m revenue Mexican aerospace facility.  Nobody was injured and the business is insured.  The extent of the damage is currently being assessed and is not anticipated to have a material effect on the Group.

Outlook

Given the financial performance for the first nine months of the year and the current levels of activity, the Board expects 2014 adjusted profit before tax⁽¹⁾ to be in line with its previous expectations.

The commercial aerospace sector continues to grow at a healthy rate and, assuming exchange rates are broadly similar to current levels and no material impact arises from the recent increased global uncertainty, the Board believes the Group remains well positioned to make solid progress in 2015 and beyond.

Other

The recruitment process for a new Group Chief Executive to succeed Mark Rollins, who previously announced his intention to retire from a full-time executive career during the first half of 2015, is progressing as planned.

The Group expects to announce its 2014 full year results on Monday 2 March 2015.

Note:
1.	Adjusted profit before tax is before loss/profit on sale of fixed assets, pension curtailment charges, one-off costs associated with the relocation of operations, acquisition costs and amortisation of intangible assets arising on acquisitions.

Further information

Mark Rollins	Group Chief Executive, Senior plc	[phone]
Derek Harding	Group Finance Director, Senior plc	[phone]
Bindi Foyle	Head of Investor Relations & Leadership Development	[phone]
Philip Walters	RLM Finsbury	[phone]

About Senior

Senior is an international manufacturing group with operations in 14 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 Interim Management Statement contains certain forward-looking statements.  Such statements have been made by the Directors in good faith based on information available to them at the time of their approval of this Statement.  These statements should therefore be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information.

 

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