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In terms of corrective action the focus has been on software and pilot trainings/procedures.
The resultant delays to delivery should have little impact on SNR.
This was reported this morning, 'Investigators have found a piece of a stabilizer in the wreckage of the Ethiopian jet with the trim set in an unusual position similar to that of the Lion Air plane, two sources familiar with the matter said.'
Perhaps SNR manufacture this, or a related, component and those algorithm trading bots responsible for the majority of trading in SNR have made a linkage.
Time will tell if this is an over-reaction or a 'shot across the bows'.
Therefore, the comment you made, "they bought the Oil and Gas engineering company at the top of the market a few years ago" was wrong.
yes, I was and tragically that is less significant than the 737 problems. Not sure of the impact here but the market does not like it , clearly.
Taverham, are you referring to the Lymington acquisition in 2015?
If so, SNR did say at the time, "Due to the current short-term uncertainties in the oil and gas market, which accounts for 85% of LPE's sales, the financial performance of the Company is expected to be materially lower over the next twelve months than that experienced in the recent past. The acquisition is, however, still expected to be immediately earnings enhancing. Following the acquisition, sales to the oil and gas sector will represent approximately 5% of Group revenue.
LPE's impressive capabilities and customer focus, together with contracted growing revenue from existing nuclear, marine and aerospace customers, mean the Company's future prospects are encouraging. In addition, LPE is very well-positioned to benefit from a recovery in the oil and gas industry when it comes."
At the half way stage Boeing targeted 810 big jets for the full year and hit 806.
Also at the half way stage SNR guided on the jets they supply. Boeing beat on all models, but the 737 mix was below the forecast 275 for the max (this has a higher revenue content than the std 737), however totalling up the numbers x chip sets, revenues were 99.8% target - let's call that a hit.
At the Q3 stage it didn't look like Boeing were going to hit these numbers so that might have contributed to SNR's share price decline going into the end of 2018. The late recovery in Boeing deliveries might account for the recent recovery in SNR's share price including today's 5%.
These numbers suggest brokers consensus of £1,060m should be achieved - my number was £1,072m 7% cc, and I'm still comfortable with that.
Boeing delivered 69. 737 jets in Dec. The monthly build rate is moving from 52 to 57 during 2018 (2018 average 48), subject to CMF engine supply issues being addressed - news is that there has been good progress on this issue. Broker consensus of £1,120m for 2019 now looks light.
That said, big jets only account for 45% of the group. Still need those big trucks to perform.
SNR figures out 4th Mar.
I had great confidence in this until they bought the Oil and Gas engineering company at the top of the market a few years ago and since then I have doubted their judgement. However they are in good markets and should continue to grow with the aviation industry . So am thinking a steady rise rise from here.
Not noticed any announcements on their front for sometime?
Anyone have a view on this, thanks.
Like many this is currently at an annual low. In fact it is two years since this traded so low.
PER = 11
Yield = 3.5 (covered x2)
Optimistic statement in November.
Lowest broker target is 270 (a 50% profit)
There is a lot of debt, but it has been put to good use with decent acquisitions.
Making good and steady progress, good to see.
In Feb I said, "which suggests to me 2018H1 margin may struggle to beat 2017H2 but will be up on a year on year basis."
And with the H1 margin at 8.3% versus 8.8% in last year's H2 that's what we got, but 100 bps on margin and good revenue growth in a good combination for profits.
More of the same expected so I guess close to 10% margin for H2 and with Boeing upping their H2 production (see previous comment) it looks good for the full year. Looking forward to the Q&A at 11am.
Senior down today, it seems, on slightly disappointing news from Boeing, but disappointment with Boeing doesn't seem to be around factors relating to Senior's business.
One number that jumped out of todays update is that Boeing expect to meet their 810 aircraft delivery target for the full year which represents a 14% increase in the 2nd half over the first half. However, I don't know how this mix of product relates to Senior's deliveries to Boeing.
Maybe Monday's interims from Senior will provide some clues.
no doubt tickling the algorithms of the bots.
huge buys gone through in the last half hour of trading.
Incomes inline with my expectations, but better debt reduction and free cash flows - guess currency exch helped here. Nice pop first thing for some trading profit but happy to retain a core holding based on this update. The SP came back during and after the analyst call. The main focus of Q&A was on margins and management were not saying much other than margins will be up on an interim basis against 2017 and at the finals, which suggests to me 2018H1 margin may struggle to beat 2017H2 but will be up on a year on year basis. Cap Ex is a key element. Expected to be up �10m on 2017. The average chipsets are up significantly on just about every big jet programme. No doubt these require new production lines, hence the cap ex increase. Key to future margins is the extent to which additional volumes can be covered by existing lines. So stating the obvious it's all about margins, margins and margins. Higher margin downstream oil/gas should be an additional kicker 12-18 months out. Londoner7
Hi Copout, I get the sense that Senior's markets are in or close to a recovery phase. They have continued to increase revenues through small acquisitions and organic growth and I wouldn't be surprised to see them approaching mid teen margins again in 2019. On higher revenues I can see a sweet spot on earnings for a few years out - all assuming world growth can be maintained (particularly North America) for the next couple of years. OK itself a bit of a bet but I'm comfortable with the risk reward ratio. In the dividend front I don't expect a hike but a resumption of the steady 10% pa growth. I never invest on the possibility of a bid. I have have no idea of the prospects but who knows. In earlier years Senior have shown good ROIC. I doubt there are many good cheap companies out there to buy at this point in the cycle so I'd be encouraged by any uplift in organic CapEx. Best, Londoner7
You seems to be a bit lonely up here L7 so I thought I'd join you. Like me you seem to have been hangin' in through the dull times. Patience brings its own rewards and looks like Senior is beginning to be recognised for the fundamentally sound company it is. Nice trading update, not too flashy but quietly confident I thought.What do you reckon to a divvi hike once 2018/19 order books start firming up and the oil price uptrend plods on? Any thoughts on the takeover front, either SNR picking up undervalued outfits or they themselves in the eye?
"Senior is pleased to report that trading in the Period has been slightly ahead of previous expectations, driven by a good performance in November and December." We know the new model aircraft production is taking off, now it looks like the trucks are rolling - 3 months of sales over 30,000. http://www.foxbusiness.com/markets/2018/01/05/north-american-truck-orders-jump-77-in-december-ftr.print.html Now if only the oil sector could come good, but that needs higher oil price. Oh look ... Londoner7
First half numbers down as expected. I like the positive commentary for the second half and into 2018. Expect them to reconfirm their expectation of a 40:60 OP split for the year in the call at 11am. Looks the capital cycle has turned. Londoner7
Post 2008 I enjoyed a great run with Senior but as the aerospace supplier capital cycle started to bite I cut back my holding to a monotoring investment. Not much to get excited about in this mornings results and call but I sense the mood is changing after a very downbeat call last Oct, which set the stage for this mornings results. If we are close to the bottom of the aerospace capital cycle then this would be a good point to start reloading - I started this afternoon but will be staggering this over the rest of the year on a show me basis. Senior has maintained good revenue growth through a combination of organic and acquisition, funded by good cash flows. Added to anything close to a return to mid teen margins later in the cycle could see them above their previous highs. I'm sure there are other supplier companies out there with better prospects but I got to know Senior's business well during the last cycle and looking again now Senior seems well placed to suceed again. I particularly like the addition of the oil industrial segment which could give an extra kick a couple of years out. I wouldn't go for a pure play on this sector but like it as a third leg to aerospace and Flexonics. Londoner7
Devalued sterling and recovery in oil price must result in an improvement in the business that has been affected by strong sterling and low oil prices. This should be a buying opportunity the current share price gives much upside potential.
The problem with profit warnings is they are often a prelude to a dividend cut. One of the redeeming virtues of SNR is the plus 3pc divvi. If that gets tampered with then you'll see even more selling. It all depends on cash flow. But hopefully the devaluation of sterling will help steady management nerves.
This looks like another marker overreaction to a disappointing , but not terrible, update. We had the same with Capita recently-these present opportunities for those of us prepared to look more than a week or two ahead.Even solid companies have their bumps in the road,but to wipe off 30%or so from the perceived value in a week is irrational at best.
I did wonder why it was dropping, not insider dealing of course naaaah!!, nearly sold some other shares to buy in @ 204p, glad I didn't. Would have bought this morning in the low 160's if I'd had immediate funds available.
Whilst disappointing the issues with Aerospace appear short term and not insurmountable. SNR are well embedded in a growth cycle. Clearly some of the issues have been known to some investors as the the sell off appears to have happened well before this announcement at least from the end of Sept, hence todays share price drop seems way overdone.