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Senior expects 'another year of improvement' after 2018 profits jump on record sales

Senior expects a "slight decline" in sales at its flexonics division in 2019 but this will be offset by improved margins
Growth in the aerospace business was led by demand in the large commercial aerospace market

Senior PLC (LON:SNR) reported a 17% increase in 2018 profit on the back of record sales and said trading in the new financial year has started in line with expectations.

The engineering firm said pre-tax profit rose to £61.3mln in the year ended December 31 from £52.2mln in 2017.

READ: Senior says on course to make "good progress" in 2018, aided by aerospace division

Revenue gained 6% to a record £1.09bn with growth across its two divisions - aerospace and flexonics.

Demand in the large commercial aerospace market led growth in aerospace while increase revenue in flexonics was driven by sales from truck, off-highway and power and energy markets.

Aerospace margins were flat  at 10.6% and flexonics margins increased 140 basis points to 8.1%. 

Free cash inflow declined 22% to £45.3mln after capital expenditure of £56.3mln to support new product introductions. Net debt was cut to £153mln from £155.3mln last year.

Senior declared a dividend of 7.42p, up 7% on the 6.95p paid a year ago.

The company expects "another year of improvement" in its performance in 2019.

It said visibility in the aerospace division “remains good” and its “future prospects remain strong” but market conditions in the flexonics division are “less certain”.

Senior anticipates a “slight decline” in flexonics top line, after adjusting for the sale of its French land vehicle business Blois in February, due to softer demand in some of its industrial markets.  

However, the group expects improved margins to offset the lower sales.

“ Looking further ahead, the group is well-positioned, financially robust and expects to continue to make good progress,” it said.

Peel Hunt maintained an 'add' rating and target price of 260p, saying the full year results were ahead of expectations.

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