Aerospace engineer Senior (SNR) deepened first-half losses and scrapped its interim dividend as the Covid-19 pandemic and grounding of the Boeing 737 MAX aircraft took a heavy toll on trading.
Pre-tax losses for the six months to 30 June soared £136.3 million as revenue slumped 30% to £409 million. This time last year the company reported a first-half loss of £26.5 million.
Senior also had to write down the value of some assets, meaning it booked a goodwill impairment charge of £110.5 million. Its adjusted pre-tax profit tumbled 91% to £3.6 million.
COST CUTS DEEPEN
The aerospace industry has been one of the worst affected by the coronavirus crisis and Senior has been forced to extend restructuring plans to cope. Cutting back on staff numbers has already seen 1,329 jobs, or 17% of its headcount, laid off between June 2019 and June 2020.
A further reduction of 570 positions was expected in the aerospace division in the second half of 2020, while another around 50 positions would go in the flexonics division.
Restructuring charges would now be around £35m, an increase from the £23m announced at Senior's full-year results. Cumulative savings would now be around £35m in 2020.
Shares in the business fell sharply in morning trade on Monday, down more than 11% to 46.27p, lows not seen since the global financial crisis more than a decade ago.
ROBUST BALANCE SHEET
On the positive side, the company said it had generated ‘robust’ free cash flow of £16 million while net debt stands at a reasonably comfortable 1.6-times earnings before interest, tax, depreciation and amortisation (EBITDA). Lenders don’t normally get nervous until the ratio hits 3% or more.
Senior also confirmed that all of its manufacturing sites are now operational.
‘The coronavirus pandemic has had a profound effect on our markets and customers, and we anticipate that the impact will be with us for some time to come,’ chief executive David Squires said.
