News

May 20, 2023

Boeing supplier Senior sees strong H2 as demand picks up, supply issues ease

By Eva Mathews (Reuters) -Britain's Senior forecast a strong second half of the year on Monday, after adjusted profits for the first six months doubled, propelled by easing supply chain issues in its

By Eva Mathews

(Reuters) -Britain's Senior forecast a strong second half of the year on Monday, after adjusted profits for the first six months doubled, propelled by easing supply chain issues in its aircraft parts business and strong demand in the auto and power unit.

The engineering firm, whose customers include Boeing and Airbus, is benefiting from planemakers ramping up production to meet booming air travel demand.

For the first half, ended June 30, Senior's adjusted profits doubled to 17.6 million pounds ($22.62 million) on a reported basis. Revenue rose 20% to 482.3 million pounds.

"Planned aircraft build rate increases should lead to higher sales in H2 with supply chain challenges enduring but anticipated to be less severe towards the end of the year," the company said in a statement.

Aerospace engineers Rolls-Royce and General Electric Co hiked their profit forecasts last week, banking on this faster-than-expected recovery from pandemic lows.

Boeing is lifting production of its bestselling 737 narrow-body jet to 38 jets per month, from 31. Airbus, the world's largest planemaker, reaffirmed its goal to produce 75 A320neo-family jets a month in 2026.

"So we're going to be in a sustained growth environment now and aerospace for quite a long period of time, which is great news," CEO David Squires said in an interview.

Senior's flexonics business, which makes fluid conveyance and thermal management components for vehicles and power and energy applications, has also seen a recovery in sales and margins as the North America-focused unit wins new electric vehicle contracts and cost pressures ease, Squires said.

Senior is fully-booked for the second half of the year in some parts of the business, he added.

Still, investors remained cautious in part due to the risk of supply chain issues lingering.

Shares in the London-listed firm were down 2.8% at 0912 GMT on Monday.

"Aerospace made progress, but well-documented supply chain challenges continue to restrict near-term growth/EBITA margin recovery potential," Jefferies analysts said in a note.

($1 = 0.7781 pounds)

(Reporting by Eva Mathews in Bengaluru; Editing by Subhranshu Sahu and Conor Humphries)