Senior launches restructuring amid challenges in aerospace and Flexonics
Senior announced a restructuring programme on Thursday amid difficulties in its Flexonics and aerospace markets.
Chief executive David Squires said: "Senior is focussed on delivering improved returns for shareholders with many of our operating businesses performing well. However, in recognition of the challenges in some of our Flexonics and aerospace markets, Senior is implementing a restructuring programme to drive improved returns.
"These actions and our 'prune to grow' strategy will strengthen our business. Combined with a slightly lower forecast tax rate and lower central costs, this means that the group's performance in 2019 will be broadly in line with our expectations."
As part of the restructuring programme, Senior will align direct headcount to match capacity to the sales demand profile and implement further efficiency improvements to reduce overhead costs.
It will also transfer major work packages to South East Asia and close Senior Aerospace AMT's South Carolina facility next year.
Senior said the opportunities identified will result in a total exceptional restructuring charge of around £20m, with a significant portion coming from headcount reductions. The cash cost is around £15m, of which £6m is expected to be incurred in 2019 and will be financed by improvements in operating cashflow.
The balance of the cash cost is expected to be incurred in 2020 and the cost of the restructuring is expected to be largely recovered in 2020 and 2021.
The company said revenue in the aerospace division grew year-on-year in the 10 months of 2019, but revenue in the last four months was lower than it expected due to weakness in wide-body commercial aircraft engine demand and the impact of the 737 MAX situation.
At 0940 GMT, the shares were down 6.4% at 175.80p.