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Aerospace engineer Senior’s profits shrink after Boeing 737 Max grounding

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RENTON, WA - MARCH 22: One of two sensors that measures the angle of attack is pictured at bottom on a Boeing 737 MAX 8 airplane outside the company's factory on March 22, 2019 in Renton, Washington. The sensor and the associated software are at the center of a safety investigation after two 737 MAX airliners crashed within five months of one another. (Photo by Stephen Brashear/Getty Images)

British engineer Senior has become the latest aerospace supplier to highlight the impact of Boeing grounding its flagship 737 Max jet, reporting a first half profit drop of more than one-sixth this morning.

The FTSE 250 aerospace firm said although it had mitigated some of the damage through stronger sales in other parts of its business, “the sector has been impacted” by the grounding.

Read more: Boeing takes $4.9bn hit on 737 Max groundings to compensate airlines

Shares in the firm fell 0.5 per cent this morning. 

The figures

Profit before tax fell 16 per cent to £26.5m, while revenue rose 11 per cent to £580.4m.

Free cash flow fell 59 per cent to £13.2m, while net debt on the 30 June was £268.3m.

Why it’s interesting

Senior makes sensors and other high-tech parts for commercial jets and defence customers. Boeing is one of its most important customers.

The FTSE 250 firm, which has been one of British aerospace engineering’s mainstays since before World War Two, warned in April that the groundings would hit its aerospace unit’s margins for the rest of the year. 

The department accounts for nearly three-quarters of total revenue and supplies parts directly to Boeing as well as engine suppliers and other customers.

Firms like General Electric and France’s Safran, which help make the jet’s engines, have also cut production rates while Boeing deals with the crisis.

What Senior said

Chief executive David Squires said: “Notwithstanding the reported 737 MAX production rate cuts and the ongoing uncertainty around the current geopolitical and macroeconomic backdrop, overall the board expects to meet current expectations for 2019.

“Looking ahead, the group is working to minimise the impact of the risk associated with the challenges described, with a renewed focus on cost and efficiencies.  

Read more: Ryanair boss Michael O’Leary blasts Boeing over 737 Max delays

“The group is well-positioned, operating in attractive end markets and is financially robust.  The board remains confident of improving performance and returns for our shareholders.”

Main image: Getty