Senior PLC - Q3 Trading Update
3 November 2020
Senior plc: Q3 Trading Update
Senior plc ("Senior" or the "Group"), an international manufacturer of high technology components and systems, principally for the worldwide aerospace & defence, land vehicle and power & energy markets, today issues this trading update for the nine-month period ended
At our 2020 Interim Results we highlighted that the lower level of activity seen in Q2 2020 due to the impact of COVID-19 on some of our key end markets was likely to persist for the remainder of 2020; and that remains our view.
In Aerospace, for the Period, sales were 36% lower than for the same period in 2019 on a constant currency basis. On a quarterly basis, Aerospace sales declined 22% in Q1, 40% in Q2 and 45% in Q3, year-on-year. This was as expected, with our 2020 Aerospace revenues significantly reduced as a result of the ongoing impact of COVID-19 and the 737 MAX situation. On a sequential basis, Aerospace sales in Q3 declined 18% relative to Q2 reflecting the ongoing production cuts by civil aerospace original equipment manufacturers (OEMs) along with the rebalancing of inventory throughout the supply chain; an activity that is continuing.
In Flexonics, sales for the Period were 27% lower than for the same period in 2019 on a constant currency basis. On a quarterly basis, Flexonics sales declined 23% in Q1, 33% in Q2 and 25% in Q3 year-on-year. As we expected, our customers continued to be impacted by the challenging end market conditions. On a sequential basis, Flexonics sales in Q3 were 1% below Q2. Whilst the performance in Q3 benefited from improved conditions in the heavy-duty truck and passenger vehicle markets compared to Q2, this was offset by continuing weakness in the oil & gas sector.
The Group continues to focus on cash preservation and Q3 was in line with expectations. Headroom on our committed borrowing facilities was
There is some evidence that when people are able to fly, demand will recover strongly: for instance, domestic air travel in
In Flexonics, some of our Land Vehicle customers saw their end markets improve in Q3, in particular, heavy-duty truck. Whereas at the time of our Interim Results, ACT Research predicted that North American heavy-duty truck production in 2020 would be down by 51% year-on-year, this outlook has improved, and production levels are now only expected to be down by 42% year-on-year. Similarly, for 2021, production is now expected to increase by 40% year-on-year, up from 27% at the time of our Interim Results. Oil and gas markets continue to be challenging in the near term given the low levels of drilling activity.
Throughout the Period, other markets important to Senior, such as defence and semiconductor equipment, remained healthy.
Our restructuring programme is delivering the expected benefits and we continue to adapt our plans to further reduce costs in light of the ongoing challenging market conditions. As part of that, we have merged our Aerospace Structures Division and Aerospace Fluid Systems Division to form one Aerospace Division. The new Aerospace Division is led by
In addition, we have taken the decision to close our Senior Aerospace Bosman operating business in
The additional restructuring activities mean we now expect the total restructuring charge for FY 2020 to be around
"Our highest priority continues to be the health and welfare of our employees. They have worked tirelessly and skilfully in response to the changing environment; however, we have had to take some very difficult decisions across Senior with many loyal and highly valued colleagues leaving the organisation.
Turning to the outlook for the remainder of the year, it is clear that we are in the midst of a second wave and the Coronavirus pandemic is continuing to have a profound effect on some of our markets. We may yet see some short-term changes in customer requirements due to COVID-19 which could impact Q4 2020, however, overall, the Board's current expectations for 2020 are broadly in line with market expectations1.
In the near term, the Board believes that the consequences of the pandemic will continue to impact our business. While it is too early to be definitive about the timing of the recovery, given the unpredictable nature of the pandemic, it is likely to be 2022 before we see a meaningful recovery in Group revenues. In 2021, Aerospace is set to be at least as challenging as 2020 given the current production rates which our customers are advising. This highlights the importance of both the comprehensive restructuring actions which we are taking and the relentless and effective focus on cash preservation and liquidity.
Looking further ahead, our differentiated offering in fluid conveyance and thermal management products; our investment in low carbon and advanced manufacturing technology; our global footprint; and our positioning in attractive and diverse end markets will help to ensure that we emerge strongly as the recovery starts to take shape. In that regard, we are encouraged by recently announced new contract awards and the high levels of bid activity in both our Aerospace and Flexonics Divisions".
This announcement contains inside information.
(1) Company compiled consensus for FY20 adjusted profit before tax is
There will be a call for investors and analysts at
International access number: +44 (0) 20 3003 2666
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Group Finance Director, Senior plc
+44 (0) 1923 714 725
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Director of Investor Relations, Senior plc
+44 (0) 1923 714 722
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+44 (0) 7796 708 551
Senior is an international manufacturing group with operations in 13 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 power & energy markets. Further information on Senior plc may be found at: www.seniorplc.com
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.
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