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Senior warns on profits as restructuring plans extended
3rd Nov 2020 09:09
(Sharecast News) - Manufacturing and engineering group Senior warned on Tuesday that annual profits and cash would both be hit by its move to extend restructuring plans amid lower levels of trading in its aerospace and land vehicles divisions.
Senior still expects full-year savings to come in at around £35.0m, however, restructuring charges stemming from the merging of its aerospace divisions and the relocation of certain European operations were now said to come to roughly £37.0m in 2020, while cash outflow was projected to be around £20.0m, with another £8.0m forecast for 2021.
The London-listed group also stated sales in its aerospace unit had fallen 45% year-on-year during the third quarter, expanding on the 22% and 40% declines recorded in the first and second quarters, respectively, as demand for its services took a significant blow due to the ongoing Covid-19 pandemic's impact on air travel and issues with Boeing's embattled 737 MAX aircraft.
On the other hand, Senior did highlight that its Flexonics business had benefited from improved conditions in the heavy-duty truck and passenger vehicle markets but again noted that this had been offset by continued weakness in its oil and gas operations - which saw third-quarter sales drop 25% year-on-year.
Chief executive David Squires said: "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 expectations.
"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."
As of 0955 GMT, Senior shares were up 0.54% at 55.80p.
Senior still expects full-year savings to come in at around £35.0m, however, restructuring charges stemming from the merging of its aerospace divisions and the relocation of certain European operations were now said to come to roughly £37.0m in 2020, while cash outflow was projected to be around £20.0m, with another £8.0m forecast for 2021.
The London-listed group also stated sales in its aerospace unit had fallen 45% year-on-year during the third quarter, expanding on the 22% and 40% declines recorded in the first and second quarters, respectively, as demand for its services took a significant blow due to the ongoing Covid-19 pandemic's impact on air travel and issues with Boeing's embattled 737 MAX aircraft.
On the other hand, Senior did highlight that its Flexonics business had benefited from improved conditions in the heavy-duty truck and passenger vehicle markets but again noted that this had been offset by continued weakness in its oil and gas operations - which saw third-quarter sales drop 25% year-on-year.
Chief executive David Squires said: "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 expectations.
"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."
As of 0955 GMT, Senior shares were up 0.54% at 55.80p.