Senior doubles dividend but logistics woes weigh on aircraft parts maker
- Senior supplies aircraft parts to companies including Boeing and Rolls-Royce
- It saw sales grow by around £80m to £482.3m for the first six months of 2023
- The firm benefited from higher energy prices and sustained growth in air travel
Senior will double its interim dividend following a continued recovery in trade across both the engineering group’s core divisions.
The aircraft and automotive parts supplier, whose major customers include Boeing and Rolls-Royce, saw turnover grow by around £80million to £482.3million for the opening six months of the year.
Sales in its Flexonics business, which makes metal expansion joints, climbed by a quarter to £178.6million thanks primarily to more robust demand from the land vehicles market, particularly in North America.
Results: Aircraft parts supplier Senior, whose major customers include Boeing and Rolls-Royce, has announced a doubling in its interim dividend (Pictured: Boeing 787 aircraft)
Oil and gas firms provided a further uplift to the segment’s revenues as high energy prices led them to ramp up upstream activity.
At the same time, the bump in civil aeroplane manufacturing boosted turnover in Senior’s aerospace division and offset a fall in demand from the semiconductor equipment industry.
Senior expects aircraft build rates to improve over the latter half of 2023, while Flexonics is anticipated to achieve year-on-year expansion.
Its operating profits jumped by 28 per cent to £20.8million, with better sales and price rises making up for added inflationary costs.
Because of the solid performance and positive outlook, the FTSE 250 company has announced a hike in its half-year dividend from 0.3 pence to 0.6p per share.
However, it warned that logistics snags, which have been compounded by a fire affecting a prominent supplier in Thailand, are expected to endure until ‘well into’ next year.
David Squires, chief executive of Senior, said: ‘The ongoing supply chain challenges are being actively managed but, as expected, are temporarily dampening volume-related operating leverage.’
Headquartered in Rickmansworth, Senior was heavily impacted by the pandemic-induced slowdown in air travel as airlines deferred their spending on new planes.
Its sales had also been heavily damaged by problems with the Boeing 737 Max, which was grounded worldwide for 19 months following two fatal crashes.
American private equity house Lone Star attempted to acquire the business amid this turmoil, making five takeover bids, including a final offer worth £839million.
Senior turned them down, with its chairman Ian King calling the last proposal ‘highly opportunistic’ given the firm’s depressed share price and the recovery benefiting the aerospace industry.
Analysts at broker Jefferies said: ‘The medium/long-term aerospace outlook remains very strong, underpinned by build rates and technological evolution across key markets.’
Senior shares were 2.1 per cent, or 3.6p, down at 166.8p on early Monday afternoon, yet remained below pre-pandemic levels.