SNR Senior Plc

 

TIDMSNR 
 
RNS Number : 9375Q 
Senior PLC 
22 April 2009 
 

Senior plc 
Interim Management Statement for the three months ended 31 March 2009 
Ahead of its Annual General Meeting on Friday 24 April, Senior plc ("Senior" or 
"the Group"), an international manufacturer of high technology components and 
systems, for the worldwide aerospace, defence, land vehicle and energy markets, 
issues this interim management statement for the three-month period ended 31 
March 2009 (the "quarter"). 
Trading 
Trading during the three month period to 31 March 2009 was in line with the 
Board's expectations.  The Group's adjusted profit before tax(1) for the quarter 
was GBP12.8m (Q1 2008: GBP17.0m / full year 2008: GBP56.0m) with the impact of 
significantly lower volumes for land vehicles, regional and business jets being 
partially mitigated by decisive cost reduction measures and beneficial foreign 
currency translation movements.  The Group's operating cash flow was slightly 
stronger than anticipated and net debt was GBP175.5m at the end of the quarter 
(31 December 2008: GBP174.5m). 
Markets and Operations 
Within the Aerospace Division (56% of Group sales in 2008), production of large 
commercial aircraft (38% of 2008 Aerospace Division sales) has remained healthy 
with Boeing and Airbus delivering a combined 237 aircraft in the quarter (Q1 
2008: 238 aircraft).  As anticipated, their order intake was weak with gross 
orders of 50 aircraft being broadly matched by cancellations during the quarter. 
 Nevertheless, their combined order book of 7,196 aircraft, at the end of March 
2009, represents over seven years production at current build rates.  The 
defence markets (23% of 2008 divisional sales) have been strong, with growing 
sales on unmanned aerial vehicles and the C130 transport aircraft being 
particularly beneficial.  The regional and business jet markets, collectively 
25% of divisional sales, have seen steep reductions in build rates, illustrated 
by the two principal regional jet manufacturers, Embraer and Bombardier, 
delivering 49 regional jets in the quarter, a fall of 25% from the 65 aircraft 
delivered in the first quarter of 2008. 
The Flexonics Division accounted for 44% of Group sales in 2008, of which 
approximately half were derived from industrial markets (such as oil and gas, 
coal fired power generation, renewable energy, nuclear and chemical processing) 
and half from land vehicle markets (such as passenger cars, commercial trucks 
and off-highway vehicles).  The first quarter of 2009 has seen healthy demand in 
many of the industrial markets but, as expected, very weak demand in land 
vehicle markets, where production of new vehicles was typically down by 35% to 
55% compared to the first quarter of 2008. 
As previously reported, the Group took decisive action last year to mitigate the 
effects of some weakening markets, particularly for land vehicles.  These 
actions included a plan to reduce the Group's headcount by 980 employees (17% of 
the Group's headcount) during the final quarter of 2008 and the first four 
months of 2009, at a cost of GBP2.7m and realising an expected GBP19.0m cost 
saving for 2009.  This plan was largely achieved by the end of March and, as a 
result, the operations exposed to the land vehicle markets were collectively 
cash generative and profitable in the first quarter, despite the severe volume 
reductions. 
The Group experienced a number of new opportunities to quote for work during the 
quarter, as the challenging markets caused some customers, in both the Aerospace 
and Flexonics Divisions, to look more closely at the financial status and 
operational performance of their supply base.  Senior's strong financial 
position, particularly relative to many of its competitors, combined with the 
Group's excellent delivery performance and increased customer focus, leave the 
Group well placed to win future business from these enquiries. 
Outlook 
Airbus has announced a modest reduction in the build rate of their narrow-bodied 
A320 series aircraft from 36 per month to 34 per month starting in October 2009. 
 Boeing recently stated that its commercial aircraft programmes are all to 
continue at current build rates until further notice, with the exception of its 
777 aircraft, whose production will decline from 7 to 5 per month from June 
2010.  A number of industry commentators are, however, predicting further 
declines and Senior is ready to take the appropriate action if 
required.  Positively for Senior, Boeing still expects that its new 787 
aircraft will fly for the first time in June 2009 and be delivered to customers 
starting in Q2 2010.  878 of these aircraft had been ordered by the end of March 
and Senior has over GBP0.5m of sales content per plane, which should provide 
significant sales volume for the Group starting sometime during 2010. 
Defence markets are anticipated to remain healthy for Senior in the near term 
and to grow substantially in the longer term as programmes such as the Joint 
Strike Fighter come into production.  The recent announcement by the US 
Government of the acceleration in funding for this programme was positive news 
for Senior.  The regional and business jet markets are weak and no recovery in 
production volumes is anticipated for the foreseeable future.  However, the 
Group has adjusted its cost base and acceptable results are being achieved. 
Production of land vehicles has generally been running at a lower level than 
sales and, as a result, the number of finished vehicles of many models has been 
declining.  This is particularly the case in Europe, where sales of smaller 
passenger vehicles have risen in recent months as a result of Government 
initiatives, notably in Germany and France.  Production volumes are now 
stabilising, after many months of decline, and when production volumes do 
increase, the Group will benefit substantially from its available capacity and 
lower cost base.  This is already proving to be the case for the Group's 
operation in Brazil.  The majority of the Group's industrial businesses have 
satisfactory order books for the remainder of 2009, although there is the 
anticipation of a slow down in order-intake for capital-project markets later in 
the year.  A growing proportion of the Group's industrial products relate to 
emission control, renewable energy and the nuclear markets, all of which offer 
encouraging opportunities for the future. 
Senior has no material re-financing need until 2012 at the earliest, is 
anticipated to remain strongly cash generative and is operating comfortably 
within its bank covenants.  Whilst the Group's end markets are expected to be 
challenging for the foreseeable future, this financial position combined with 
the decisive actions taken by management to reduce the Group's cost base and the 
content it has on future growth programmes, such as Boeing's 787 and Lockheed's 
Joint Strike Fighter aircraft, give the Board confidence in the long term future 
prospects for the Group. 
Other 
The results for the six-month period to 30 June 2009 will be announced on Monday 
3 August 2009. 
Note: 
(1) Adjusted profit before tax is that before loss/profit on sale of fixed 
assets and amortisation of intangible assets arising on acquisitions. 
Further information 
+----------------+---------------------------------+----------------------------+ 
| Mark Rollins   | Group Chief Executive, Senior   | +44 (0) 1923 714 738       | 
|                | plc                             |                            | 
+----------------+---------------------------------+----------------------------+ 
| Simon Nicholls | Group Finance Director, Senior  | +44 (0) 1923 714 722       | 
|                | plc                             |                            | 
+----------------+---------------------------------+----------------------------+ 
| Clare Strange  | Finsbury Group                  | +44 (0) 20 7251 3801       | 
+----------------+---------------------------------+----------------------------+ 
About Senior 
Senior is an international manufacturing group with operations in 11 countries. 
It is listed on the main market of the London Stock Exchange (symbol SNR). 
 Senior designs, manufactures and markets high technology components and systems 
for the principal original equipment producers in the worldwide aerospace, 
defence, land-vehicle and energy markets.  It employs around 5,000 people 
worldwide.  Further information on Senior plc, may be found at: 
www.seniorplc.com 
Cautionary Statement 
This announcement contains certain forward-looking statements.  Such statements 
are made by the Directors in good faith based on the information available to 
them at the time of the announcement and they should be treated with caution due 
to the inherent uncertainties underlying any such forward-looking information. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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