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UK aerospace supplier Senior swings to loss, hit by pandemic

08/03/2020 | 03:24am EST

British aerospace supplier Senior Plc swung to a first-half loss and shelved its interim dividend on Monday as costs rose and its sales were hit by coronavirus-driven production cuts across the air industry.

Its shares slid as much as 15.7% to its lowest in nearly 11 years by 0855 GMT.

The aerospace industry has been plagued by back-to-back crises - the Boeing 737 MAX jet groundings last year following two fatal crashes, and then the pandemic-induced slump in global air travel, with the virus playing havoc in other manufacturing sectors as well.

Senior, which counts Boeing and heavy equipment maker Caterpillar as some of its biggest customers, said would not pay a dividend in the first half of 2020.

It has so far cut jobs, executive pay and sought relaxations from its banks to ride out the crisis.

"The coronavirus pandemic has had a profound effect on our markets and customers, and we anticipate that the impact will be with us for some time to come," said Chief Executive Officer David Squires.

Senior, which supplies parts such as airframes to planemakers, said sales in its biggest division, aerospace, fell by nearly a third at constant currencies. The unit accounted for about 73% of group revenue.

Boeing and Airbus both slashed production of some of their jets, and Caterpillar, considered a bellwether for economic activity, forecast weak equipment demand.

JP Morgan and Jefferies analysts both pointed to a difficult second half for Senior, with JPM expecting a negative EBITDA margin. Both brokerages kept unchanged their ratings of "neutral" and "buy", respectively.

Other Boeing suppliers, including Spirit Aerosystems and Safran, have been hit too, while aerospace engineer and GKN-owner Melrose also plans job cuts.

Senior made a pretax loss of 136.3 million pounds in the first half, versus a profit of 26.5 million pounds last year, as it took a 110.5-million-pound charge.

(Reporting by Yadarisa Shabong and Pushkala Aripaka in Bengaluru; Editing by Subhranshu Sahu and Emelia Sithole-Matarise)

By Pushkala Aripaka

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE -0.75% 92.55 Real-time Quote.3.09%
CATERPILLAR INC. -1.41% 194.62 Delayed Quote.8.45%
MELROSE INDUSTRIES PLC -1.91% 181.95 Delayed Quote.2.19%
SAFRAN -1.88% 114.75 Real-time Quote.-1.03%
SENIOR PLC -0.84% 94.7 Delayed Quote.6.11%
SPIRIT AEROSYSTEMS HOLDINGS, INC. -3.70% 38.77 Delayed Quote.-0.82%
THE BOEING COMPANY -2.66% 204.32 Delayed Quote.-1.94%
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