Boeing supplier Senior could be in for a rough ride in 2020 after the firm warned that continued issues over the production of the 737 Max and potential disruption from the coronavirus outbreak could hit sales.
Despite the warning, shares in the FTSE 250 firm rose over two per cent today.
Although the firm, which supplies parts for the 737 Max, beat analyst expectations for profit, adjusted profit before tax still fell nine per cent from last year, down to £78.5m.
Reported profit fell more than 50 per cent to £28.7m.
Revenue increased three per cent, rising from £1.08bn to £1.1bn in 2019.
Earnings per share nearly halved, falling 45 per cent to 7.04p from 12.81p.
Senior also managed to reduce its net debt by nearly £20m over the course of the year, with its total debt pile now standing at £229.6m.
Why it’s interesting
The 737 MAX has been grounded since March 2019 after two fatal crashes killed 346 people, with Boeing suspending production of the model in January.
Boeing has said its best estimate is that the aircraft will not be ungrounded until mid-2020, after endorsing simulator training for pilots before flights resume, and that regulators will determine the timing.
In January, US Federal Aviation Administrator Steve Dickson told senior US airline officials that the FAA could approve the return of the aircraft before mid-year, earlier than the planemaker has suggested, according to people briefed on the call.
Senior also said that it was closely monitoring the development of the coronavirus (COVID-19), including the potential impact of any macroeconomic disruption to its end markets, supply chain and customers.
Airlines and aerospace firms have been amongst the worst hit by the outbreak, due to the suspension of flights to mainland China.
What Senior said
Chief executive David Squires said: “Senior delivered robust full year results for 2019 with adjusted earnings per share growth and a strong free cash flow performance.
“This result has been achieved in a period where the business has faced challenges caused by the grounding of the Boeing 737 MAX fleet. It is clear that our performance in 2020 will continue to be affected by the 737 MAX situation and the Company is taking all necessary actions to mitigate the impact.
“However, we entered 2020 with a robust balance sheet and a continued focus on cost, efficiency and cash generation. We are taking firm actions to restructure the business and have every confidence in returning to growth in 2021.”