Senior first half hit by sharp fall in Flexonics unit

A tough six months in the US for Aerospace engineering firm Senior's Flexonics division saw half year pre-tax profits fall 28% to £32.6m.

Group revenue increased by 3.7% to £450.5m, including a favourable exchange rate impact of £21.5m and a beneficial incremental impact from acquisitions of £18.6m.

In aeropsace, Senior's most important market is large commercial aircraft where Boeing and Airbus collectively delivered 673 aircraft in the first half of 2016, 1.8% less than the prior year.

Senior's sales in the large commercial aircraft sector increased by 12.3% during the six-month period to 30 June 2016, with organic growth, excluding acquisitions, at 9.6%.

The company said it benefited from increased production of the Airbus A350 and A320neo, which began customer deliveries in January 2016, and from higher deliveries of the 787; however, these increases were partly offset by the comparative impact of the decline in A330 build rates.

In the Flexonics Division, which produces 28% of group revenue, market conditions in North American truck and off-highway and oil and gas markets remained challenging, Senior said.

The division's adjusted operating profits fell 53.4% to £10.8m.

“Production of North American heavy-duty diesel trucks is forecast to decline in 2016 and 2017, and the off-highway market is expected to remain weak,” Senior said.

“Oil and gas related markets remain challenging in the near term as investment in the sector is reduced or postponed.”

Chief execuitve David Squires said there were “no clear signs of recovery yet visible” in the unit's markets.

“Overall the Group remains well positioned for the future with Aerospace production programmes continuing to ramp-up and many new business opportunities in discussion with key customers,” he said.

“In Flexonics, despite the challenging conditions, we have continued to secure positions on new programmes and platforms, and therefore are well positioned to resume growth when markets recover. As previously announced, the board expects the group's performance in the second half of 2016 to be stronger than the first half and is confident of progress in 2017 and beyond."