Senior shares tumble as lower Boeing and Airbus output triggers profit warning
Shares in FTSE 250 aerospace parts supplier Senior tumbled on Tuesday after the firm warned on earnings and revealed cost-cutting measures in response to lower output at Boeing and Airbus.
Senior’s stock price plunged as much as 18.3 per cent in early trading – the biggest drop since August 2020 and reaching its lowest level since the start of last year.
The Hertfordshire-based firm said in a trading update that, due to “temporary but significant headwinds” in the commercial aerospace manufacturing industry, it now expected a “lower performance” for its aerospace division in the second half of 2024 compared to the first half.
The firm said it was making temporary furloughs and permanent job cuts to “match capacity to sales demand profile”, as well as reducing is discretionary spending.
Senior added that it was postponing some capital expenditure to save cash.
The warning comes after supply chain issues and regulatory disruption have hobbled aircraft delivery at Boeing and Airbus.
After the side of an Alaska Airlines aircraft blew out mid-flight in January, the US Federal Aviation Administration restricted Boeing’s 737 MAX production at 38 aircraft per month and has ramped up in-person oversight.
Meanwhile, a crippling employee strike at Boeing’s commercial aircraft operations in the Puget Sound area is now in its fourth week.
“There is an inevitable impact on our operating businesses most exposed to this customer, both directly and through its Tier 1 suppliers,” Senior said.
Elsewhere, both Airbus and Boeing have been hit by supply chain disruption at a time when travel demand is booming.
Senior highlighted Airbus’ challenges on “engines and interiors”, while saying other parts of the supply chain it has contracts with “have generally produced in line with originally scheduled rates”.
As a result, the firm said there seemed to be “an imbalance of supply into different parts of the aircraft.”
It added that one of its customers, an Airbus Tier 1 supplier, had recently informed Senior that it intends to “significantly reduce scheduled deliveries” from Senior in the fourth quarter of this year before “returning to normal” in the second quarter of 2025.
“The short-term issues described in this trading update are clearly temporary in nature,” Senior said.
“The group’s future growth is underpinned by a robust order book and is well positioned in its markets and with its customers to capture further new business.”