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Senior swings to operating loss in ‘extraordinary’ year

Senior swung to an operating loss of £177.3m in 2020, it said on Monday, from a profit of £61.6m in 2019, with its results “significantly” impacted by the Covid-19 pandemic and the grounding of the Boeing 737 MAX fleet globally.
The London-listed engineering company said its basic losses per share came in at 38.2p for the year ended 31 December, compared to earnings of 7.4p in the prior year, as its adjusted operating margin plunged 750 basis points to 0.5%.

It described its free cash flow generation for the year as “strong”, at £46.5m, which was down 20% year-on-year, with the board adding that the firm’s restructuring was on track, and delivering its targeted savings.

Net debt-to-EBITDA stood at 2.8x, with the company maintaining liquidity headroom of £157.1m, and the board confirming that “appropriate” covenant relaxations remained in place through to the end of 2021.

Looking ahead, Senior noted that the 737 MAX was now returning to service, and announced the divestiture of Senior Aerospace Connecticut for gross proceeds of $74m (£53m).

The company declared nil dividend for the year, having paid total distributions of 2.28p per share in 2019.

“2020 was an extraordinary year – the coronavirus pandemic had a profound effect on our markets and customers and, although there are some signs of stabilisation, the impact will be with us for some time to come,” said group chief executive David Squires.

“We quickly took action to protect our business with a relentless and effective focus on cash preservation that enabled, in the circumstances, a very strong free cash flow result to be delivered.

“The restructuring programme, which we launched in 2019 and extended in 2020 has progressed in line with our plans, delivering costs savings to help offset the fall in demand for our products.”

Squires said the company had continued to review the overall portfolio of its businesses and evaluate their strategic fit within the group, leading to the divestiture of its standalone build-to-print helicopter structures business Senior Aerospace Connecticut for gross proceeds of £53m.

“Looking forward to the rest of 2021, while there remains uncertainty because of the unpredictable nature of the pandemic, based on our assumptions for our core markets in 2021 and prior to adjusting for the impact from the divestment of Senior Aerospace Connecticut, we would expect overall group performance to be broadly similar to 2020.

“Looking further ahead, our differentiated offering in fluid conveyance and thermal management products; our investment in low carbon and advanced manufacturing technology; our global footprint; our strong track record and commitment to the highest environment, social and governance (ESG) standards; and our positioning in attractive and diverse end markets will help to ensure that we emerge strongly as the recovery starts to take shape.”

At 0836 GMT, shares in Senior were up 4.64% at 115.1p.

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