Shares in aerospace engineer Senior (SNR) surged 7.4% higher to 151.7p on Monday as management expressed confidence in returning the business to growth in 2021 amid ‘firm actions’ to restructure the business and reported a strong free cash flow performance for 2019.
The share price spike came despite news of a 5% fall in adjusted pre-tax profit after the high technology components maker’s earnings were hurt by the grounding of Boeing’s 737 MAX aircraft. Senior was able to mitigate some of the revenue impact through stronger sales on other civil and military programmes.
PROFIT GROWTH GROUNDED
Senior makes aerospace and industrial equipment with a high exposure to the large civil aerospace manufacturers. Adjusted pre-tax profit for the year to December 2019 softened from £83m to £78.5m as revenue edged 3% higher to a shade over £1.11bn.
Chief executive David Squires cautioned: ‘It is clear that our performance in 2020 will continue to be affected by the 737 MAX situation’, although he assured the company is taking all necessary actions to mitigate the impact.
CLOSELY MONITORING COVID-19
Senior, which also supplies major original equipment producers across the defence, land vehicle and power and energy markets, said it is closely monitoring the development of the coronavirus (COVID-19), including the potential impact of any macroeconomic disruption on end markets, its supply chain and those of its customers.
PROGRESS WITH ‘PRUNE TO GROW’
Although Senior faces some significant headwinds, 2019 saw progress aplenty with its ‘Prune To Grow’ restructuring plan, with a further three non-core businesses sold in order to sharpen the focus on higher return opportunities in its core activities.
Squires also insisted Senior, which nudged up its annual dividend by 1% to 7.51p, entered 2020 ‘with a robust balance sheet and a continued focus on cost, efficiency and cash generation’.
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