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Senior hikes dividend after reporting above-forecast first-half profits, says current trading ahead of expectations

For the six months ending on 30 June, the FTSE 250-listed engineer saw its pre-tax profits jump by 20% to £39.0mln, beating estimates for around £37.0mln
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Senior raised its interim dividend by 6.8% to 2.19p

Senior PLC (LON:SNR) has hiked its dividend after reporting above-forecast first-half profits, thanks to an improved performance from both of its main divisions, and it said current trading is ahead of expectations.

For the six months ending on 30 June, the FTSE 250-listed aerospace and automobile engineering group saw its pre-tax profits jump by 20% to £39.0mln, beating estimates for around £37.0mln.

READ: Senior shares gain as it reports record revenue although profits decline on narrower margins

On an adjusted basis, Senior’s operating margins improved by 90 basis points to 8.3%, driving a 9% improvement in free cash flow to £32.2mln, even as the company cut its net debt by £33.0mln to £148.8mln.

However, total sales only rose by 2.6% to £523.3mln, as negative exchange rate effects wiped £22.4mln from the firm's top-line.

As expected, Senior benefitted from a 30% jump in the production of North American heavy-duty trucks during the first half, which benefited its Flexonics division.

However, although upstream oil and gas markets continued to see increased drilling activity, the downstream market remained "flat", the firm said.

Slightly second-half weighted

The group said: "At current exchange rates, the Board's expectation of making good progress in 2018 is unchanged, with performance still expected to be slightly weighted to the second half.”

It added: “Overall, end markets are generally healthy, though we are watching with care any impact from the ongoing geopolitical trade discussions."

The group raised its interim dividend by 6.8% to 2.19p.

Senior’s group chief executive David Squires commented: "Trading across the Group in the first half of 2018 has been slightly ahead of expectations with margin progression in both Aerospace and Flexonics and the Group delivered another strong cash performance.”

In early morning trading, Senior shares were 7.4% higher at 327.2p.

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