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Highlights:
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Senior PLC reports a 16% drop in share price following a profit warning attributed to challenges in the aerospace market linked to Boeing's production issues.
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The company anticipates lower performance from its aerospace division in the second half of the year, while the Flexonics business maintains broadly unchanged full-year expectations.
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Group order intake remains strong, but revenue growth has slowed, with aerospace revenue growth declining from 14% in the first half to 13% in the third quarter.
Shares in Senior PLC {LSE:SNR} plummeted by 16% after the engineering firm issued a profit warning, citing challenges in the aerospace sector resulting from ongoing difficulties at Boeing. The FTSE 250-listed aerospace, defense, and power systems engineer indicated that it expects to see a decline in performance from its aerospace division in the latter half of the year compared to the first half.
For the Flexonics division, which supplies the land vehicle, power, and energy markets, expectations for the full year are described as "broadly unchanged," although performance is also projected to be lower in the second half. Overall, the company reported a group order intake that remains strong; however, revenue growth of 5% for the nine months ending in September reflects a decrease from the 7% growth recorded in the first half of the year.
In terms of specific segments, aerospace revenue growth has slowed to 13%, down from 14% in the first half, while Flexonics has experienced a more significant decline, with revenue down 9%, worsening from a 6% fall in the first half. Senior PLC attributed these challenges to "temporary but significant headwinds" in commercial aerospace manufacturing, particularly in light of Boeing's restricted production of the 737 MAX following a regulatory incident earlier in the year.
Despite the difficulties, company directors expressed cautious optimism, noting Boeing's confirmation of its aim to achieve a monthly production rate of 38 aircraft by year-end. However, an employee strike at Boeing's commercial aircraft operations has been ongoing for four weeks, causing inevitable impacts on Senior’s operations, especially those directly connected to Boeing and its Tier 1 suppliers. The company is implementing cost and cash management strategies to mitigate these challenges and navigate the turbulent market landscape.
