Senior doubles dividend, but logistical problems weigh on aircraft parts maker
- Senior supplies aircraft parts to Boeing and Rolls-Royce, among others
- It saw revenue grow by around £80m to £482.3m in the first six months of 2023
- The company benefited from higher energy prices and continued growth in air travel
Senior will double its interim dividend following a continued recovery in trading in both of the engineering group’s core divisions.
The aircraft and car parts supplier, whose main customers are Boeing and Rolls-Royce, saw sales grow by around £80 million to £482.3 million in the first six months of the year.
Sales at its Flexonics business, which makes metal expansion joints, rose by a quarter to £178.6 million, mainly due to stronger demand from the land vehicle market, particularly in North America.
Results: Aircraft parts supplier Senior, whose main customers are Boeing and Rolls-Royce, has announced a doubling of its interim dividend (Photo: Boeing 787 aircraft)
Oil and gas companies further boosted segment revenues as high energy prices led them to ramp up upstream activity.
At the same time, the surge in civil aircraft production boosted sales in Senior’s aerospace division and offset a decline in demand from the semiconductor equipment industry.
Senior expects aircraft construction numbers to improve in the second half of 2023, while Flexonics is expected to grow year-over-year.
Operating profit rose 28 per cent to £20.8 million, with better sales and price increases offsetting additional inflationary costs.
Due to its solid performance and positive outlook, the FTSE 250 company has announced an increase in its semi-annual dividend from 0.3 pence to 0.6 pence per share.
However, it warned that logistical problems, exacerbated by a fire that hit a leading supplier in Thailand, are expected to persist “well into” next year.
David Squires, senior chief executive, said: “The ongoing supply chain challenges are being actively managed but, as expected, are temporarily dampening volume-related operating leverage.”
Senior, headquartered in Rickmansworth, was hit hard by the pandemic-induced flight slowdown as airlines postponed spending on new aircraft.
Sales were also severely damaged by problems with the Boeing 737 Max, which was grounded for 19 months worldwide after two fatal crashes.
US private equity house Lone Star attempted to take over the company amid this turmoil, making five takeover bids, including a final offer worth £839 million.
Senior turned them down, with chairman Ian King calling the latest proposal “highly opportunistic” given the company’s low share price and the recovery benefiting the aerospace industry.
Analysts at broker Jefferies said, “The medium/long-term aerospace outlook remains very strong, supported by construction rates and technology evolution in key markets.”
senior shares were down 2.1 percent, or 3.6 pence, to 166.8 pence early Monday afternoon, but remained below pre-pandemic levels.