Senior reports improved 2012 margins, acquisitions seen

25th Feb 2013 07:17

Aeronautics and industrial component manufacturer Senior has today unveiled somewhat mixed figures, albeit accompanied by an improvement in margins, an upbeat outlook and while delivering a 22% increase in its full-year dividend. The company's profit before taxes grew by 16% to £83,4m on the back of an increase in revenues from continuing operations of 14% to £712m. The latter was modestly less than forecast by analysts. The firm's most important other metrics of financial performance also improved. Hence, its free cash flow gained 4% to £57.6m while its net debt decreased by £22m to £70.9m. On this point the group's Chief Executive highlighted that Senior's net debt to EBITDA ratio stood at only 0.6 times at year-end. Hence, in his own words, the Group: "[is] well placed to fund future organic and acquisitive growth."Adjusted operating margins rose by one tenth of a percentage point versus last year, to 13.9%.The first few weeks of 2013 saw the Group perform 'in-line' with the Board's expectations. The Flexonics Division - which includes equipment for emissions control as well as for industrial processes - is benefiting from solid sales to the North American heavy-truck market, but being impacted by weakening European passenger vehicle production, and the Aerospace Division is seeing healthy volumes from large commercial aircraft but a continuing decline in the military and defence market, Senior explained. Analysts highlight lower taxes, improved marginsCommenting on the results this is what analysts at Investec had to say: "Following the lower tax guidance (22.5% from 23.0%) and improved margins, we expect to upgrade our estimated fiscal year 2013 earnings per share of 18.0p by 2-3% although we need to understand the revenue miss in more detail."With many moving parts, we see headwinds from European autos and on-going concerns about the important B787 programme, and tailwinds from FX (strengthening US$) and improving Flexonics revenue mix. We don't see a major catalyst on the near-term horizon."Dividend cover to remain at 3.8The Board is recommending a final dividend of 3.27 pence per share (2011 - 2.65 pence) which, if approved, would bring the total dividends, paid and proposed, in respect of 2012 to 4.65 pence per share, an increase of 22% over 2011 in line with the increase in adjusted earnings per share. Significantly, the company points out that, at the level recommended, the full-year dividend would be covered 3.8 times (2011 - 3.8 times) by adjusted earnings per share.As of 09:19 shares of Senior were rising by 5.92% to 234.4p. AB