- Revenue: GBP501.4 million, increased by GBP19 million despite adverse exchange rate translation of GBP12.3 million.
- Adjusted Operating Profit: Increased by 13%.
- Adjusted Profit Before Tax: Increased 8% to GBP18.4 million.
- Adjusted Earnings Per Share: Increased by 1% to 3.55p.
- Free Cash Flow: GBP3 million, a significant improvement over last half year.
- Net Debt: GBP156 million, excluding capitalized leases.
- Return on Capital Employed (ROCE): Increased by 100 basis points to 7.3%.
- Interim Dividend: 0.75p, a 25% increase from last year.
- Aerospace Revenue: Increased by 14% on a constant currency basis.
- Civil Aerospace Sales: Up 18%.
- Defense Revenue: Grew 5%.
- Flexonics Revenue: Decreased by 6%.
- North American Truck Market Sales: Increased 5.1%.
- Power and Energy Markets Revenue: Decreased by 10%.
- Adjusted Operating Margin (Aerospace): Increased by 90 basis points to 4.8%.
- Adjusted Operating Profit (Flexonics): Decreased by 8% to GBP17.9 million.
- Adjusted Operating Margin (Flexonics): 10.9%.
- Net Borrowing Costs: Increased by GBP1.3 million to GBP6.1 million.
- Tax Charge: GBP3.7 million, effective rate of 20%.
- Capital Expenditure: GBP16.9 million.
- Net Cash Outflow: GBP18.5 million in the first half of 2024.
- Net Debt-to-EBITDA: 1.9x in June.
- Liquidity Headroom: GBP158 million under committed borrowing facilities.
Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Senior PLC (SNIRF, Financial) delivered a robust trading performance with revenue, profit, and margins all growing year on year.
- Aerospace revenue increased by 14%, with civil aerospace sales showing the strongest growth at 18%.
- The Flexonics division maintained double-digit margins despite a 6% decrease in revenue.
- The order book is robust and growing, with a book-to-bill ratio of 1.15 and notable contract wins in both divisions.
- The Board recommended a 25% increase in the interim dividend, reflecting confidence in the company's future prospects.
Negative Points
- 737 MAX volumes remained subdued, impacting overall aerospace performance.
- Net debt increased to GBP156 million, reflecting payments for acquisitions, dividends, and share purchases.
- Revenue from power and energy markets decreased by 10%, with significant destocking by upstream oil and gas customers.
- The Flexonics division saw a decrease in land vehicle revenue by 2.9% due to market normalization.
- Net borrowing costs increased by GBP1.3 million due to higher interest rates and levels of average indebtedness.
Q & A Highlights
Q: Can you talk a little bit more about Spencer? It wasn't in the presentation today, but is in the announcement. Clearly strong growth there. So can you just give us an update on how that is progressing clearly well, but what's driving that 4% growth?
A: Spencer has shown strong growth, with a 42% increase in the first half of this year compared to the same period last year. This growth is driven by highly engineered hydraulic fluid fittings becoming standard parts after detailed development and qualification on various aircraft. Despite lower sales to Boeing, Spencer's performance remains strong, and we are making significant inroads into the European market.
Q: On the 737 MAX, clearly that's been moved down in terms of the near-term rates. Could you just tell us about how you're managing that cost base because it's quite a tricky one?
A: We have agreed sensible production schedules with Boeing and other customers, and we are realigning our cost base accordingly. This involves reducing headcount to match the lower build rates. Additionally, we are exploring new opportunities for our Pacific Northwest businesses to balance the impact.
Q: Over the last six months, where would you kind of pick out where you're most pleased with the technological progress that you've made?
A: We have made significant progress in several areas, including securing contracts for battery cooling systems for the first all-electric heavy-duty truck, advancing hydrogen technology, and winning a contract with Deutsche Aerospace Group for the Bleed Air System on their new 328 Ecoprop. Our advanced additive manufacturing center in California is also making good progress, particularly for military applications.
Q: Just on supply chains, your dialog there feels as though you've improved and you're feeling more confident there. Given the current industry situation as well, is that helping you win new business?
A: Yes, our operational performance in terms of quality and on-time delivery has improved significantly. We have managed to fix supply chain issues and are carrying extra inventory to protect our supply lines. This improved performance positions us well to win new business, as evidenced by positive discussions at the recent Farnborough air show.
Q: On pricing, it looks like you've made significant progress in the first half. Whereabouts are you in terms of that negotiation with your customers and where does that place you? Is there more to come?
A: We have made substantial progress in pricing negotiations, with significant price increases already agreed upon. Flexonics has seen margin improvements, and aerospace pricing will kick in during the second half of this year. We have more price increases agreed for January next year and even for January 2026 on some major programs. Several large negotiations are ongoing and expected to close in the second half of this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
