Last checked at 23 Apr 2021 07:00
Senior plc - Q1 Trading Update and Completion of Senior Aerospace Connecticut Divestment
Ahead of its Annual General Meeting on Friday 23 April, Senior plc ("Senior" or "the Group"), an international manufacturer of high technology components and systems, principally for the worldwide aerospace, defence, land vehicle and power & energy markets, issues this trading update for the three months ended March 2021 (the "Period") and announces the completion of the Senior Aerospace Connecticut divestiture.
Key points
● | Trading in line with expectations |
● | Senior Aerospace Connecticut divestiture has completed |
● | Agreed extension of US revolving credit facility |
Trading Update
Trading in the period has been in line with expectations.
In Aerospace, on a quarterly basis, sales declined 25% in Q1 2021 compared to the pre-COVID Q1 2020 levels. On a sequential basis, Aerospace sales in Q1 2021 improved by 2% relative to Q4 2020 with modest growth in civil aerospace and defence.
In Flexonics, sales declined 4% in Q1 year-on-year. On a sequential basis, Flexonics sales in Q1 2021 were 10% above Q4 2020. Revenue in Q1 benefited from the recovery in heavy-duty truck and off-highway markets, partially offset by a decline in oil & gas and the closure of the Senior Flexonics business in Malaysia.
Net debt at the end of March 2021 was £220.8m (including capitalised leases of £75.8m) with £140.6m of headroom on our committed borrowing facilities. The increase in net debt of £14.9m from 31 December 2020 is in line with our normal seasonal working capital pattern.
In April 2021, the Group refinanced its US revolving credit facility of $50m (£36m)(1) and extended the maturity by a further 12 months to June 2023.
Completion of Senior Aerospace Connecticut divestiture
Further to our announcement on 5 March 2021, Senior today announces that the divestiture of Senior Aerospace Connecticut was completed on 22 April 2021(2). The net cash proceeds from the transaction are $68m (£49m)(1), subject to customary working capital adjustments.
Market Update & Outlook
Certain domestic aviation markets have seen improving trends, such as China, Australia and the US, where a relaxation of restrictions on domestic flying resulted in significantly more travel. Unsurprisingly, international travel remains subdued as travel restrictions remain in place while the vaccination rollout gathers pace. Most industry commentators continue to expect air traffic to return to 2019 levels by 2023/2024.
The outlook for narrow and wide body production rates remains unchanged since our Full Year 2020 Results with production rates expected to recover to pre-COVID-19 levels by 2024/2025 for single-aisle aircraft with wide-body expected to take longer.
In Flexonics, the recovery that Land Vehicle markets saw in the second half of 2020 has continued into the first quarter of 2021. While demand has increased, the well-publicised supply constraints around semiconductor devices, steel and freight have caused some disruption throughout the supply chain during the first quarter and is likely to continue to be a constraint in the second quarter of 2021. Upstream oil and gas markets continue to be challenging in the near term as expected.
Throughout the period, other markets important to Senior, such as defence and semiconductor equipment remained healthy.
Our current market assumptions for the full year 2021 remain unchanged from those we set out at our Full Year 2020 Results:
● | Production volumes for civil aerospace will be lower in 2021 than 2020 based on the production rates that the aircraft and engine OEMs have announced. We also recognise that there are varying levels of inventory in different tiers of the supply chain. |
● | Defence markets are anticipated to remain stable. |
● | Based on independent industry forecasts, heavy-duty truck and passenger vehicle markets are expected to continue to recover in 2021. |
● | In power & energy markets, recovery in the oil & gas sector is unlikely before 2022. |
Based on these assumptions, our guidance remains unchanged. We continue to expect overall Group performance to be broadly similar to 2020(3), prior to adjusting for the impact of the divestment of Senior Aerospace Connecticut.
Notes
This announcement contains inside information.
(1) | At the current US Dollar to Pound Sterling exchange rate of $1.38:£1. |
(2) | For the financial year ended 31 December 2020, Senior Aerospace Connecticut's external revenue was £36.2m and its adjusted operating profit was £5.1m. As at 31 December 2020, gross assets subject to the transaction amounted to $12.2m (£8.9m) and goodwill allocated to this cash generating unit that will be written-off on disposal amounted to $20.9m (£15.3m). The US Dollar exchange rate applied to the balance sheet at 31 December 2020 was $1.37. |
(3) | Currently assuming exchange rate for the US Dollar to Pound Sterling of $1.38: £1 average for 2021. |
Further information
Bindi Foyle | Group Finance Director, Senior plc | +44 (0) 1923 714 725 |
Gulshen Patel | Director of Investor Relations, Senior plc | +44 (0) 1923 714 722 |
Richard Webster-Smith | Finsbury | +44 (0) 7796 708 551 |
About Senior
Senior is an international manufacturing group with operations in 13 countries. It is listed on the main market of the London Stock Exchange (symbol SNR). Senior designs, manufactures and markets high technology components and systems for the principal original equipment producers in the worldwide aerospace, defence, land vehicle and power & energy markets. Further information on Senior plc may be found at: www.seniorplc.com
Cautionary Statement
This announcement contains certain forward-looking statements. Such statements are made by the Directors in good faith, based on the information available to them at the time of the announcement, and they should be treated with caution due to the inherent uncertainties underlying any such forward-looking information.