Aerospace and defence business Senior (SNR) is in a tailspin, down 19.6% to 162.65p, as it warns on full year profits in a third quarter trading update.

The company already warned in June this year, attributing the weak performance to issues in its Flexonics division. Although the problems here remain, this time it’s the Aerospace business which is really to blame.

SNRchart

The company facing a slower than anticipated ramp up in some major new aircraft programmes, a decline in business jets, undisclosed supplier issues and unresolved price increase discussions with customers.

Investors are likely to look ahead nervously to updates from aerospace-focused peers Meggitt (MGGT) and Rolls-Royce (RR.) on 15 November and 16 November respectively to see if they have been affected by the same headwinds. Meggitt is currently down 1.2% to 447.6p, while Rolls slips 1.6% to 735.5p.

Investec puts its ‘buy’ recommendation under review and says it expects consensus pre-tax profits forecasts for 2016 and 2017 to come down by 10% apiece. This downgrade is particularly disappointing when you consider Senior’s revenue is benefitting from a currency tailwind.

Foreign exchange movements are less helpful for net debt which spikes from £207.3 million to £222.7 million in the three months to 30 September.

N+1 Singer moves from ‘buy’ to ‘hold’ and cuts its price target from 262p to 196p. Analyst Jon Lienard says: ‘A highly disappointing update from Senior reports a number of issues adding up to the group being behind expectations.

‘Following the Flexonics issues over the past 12 months, there are now issues on the Aerospace side which are affecting the outlook. In a period when some stability was required, this is disappointing.’

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Issue Date: 20 Oct 2016