Senior profit hit by 737 MAX groundings
Senior reported a drop in interim profit on Monday as it took a hit from a cut in production rates for the Boeing 737 MAX, but the engineer reaffirmed its expectations for the year.
In the six months to the end of June 2019, pre-tax profit fell 16% to £26.5m on revenue of £580.4m, up 11% or 6% at constant currency. On an adjusted basis, pre-tax profit edged up 4% to £40.7m and the company said trading had been in line with expectations.
Chief executive David Squires said: "Notwithstanding the reported 737 MAX production rate cuts and the ongoing uncertainty around the current geopolitical and macro-economic backdrop, overall the Board expects to meet current expectations for 2019.
"Looking ahead, the group is working to minimise the impact of the risk associated with the challenges described, with a renewed focus on cost and efficiencies. The group is well-positioned, operating in attractive end markets and is financially robust. The board remains confident of improving performance and returns for our shareholders."
Senior said the outlook for the civil aerospace market remains positive as new, more efficient aircraft programmes continue to ramp-up in production.
"Nevertheless, this sector has been impacted by the grounding of the 737 MAX fleet following the Lion Air and Ethiopian Airlines tragic air accidents," it said.
Boeing subsequently cut production rates on the 737 MAX programme from 52 airplanes per month to 42 in mid-April, instead of increasing the rate to 57 as planned. As a result and working on the assumption that the 42 rate will continue for the rest of the year, Senior said there is likely to be "some ongoing impact" on margins in its aerospace division.
"We will continue to take steps across the group as necessary to mitigate this," the company said.
At 0803 BST, the shares were up 1.1% at 201p.