Bullish outlook at Senior

It said pre-tax profit for the first 11 months showed a significant improvement over the previous year and the outcome for the full year 2008 was expected to be in line with the market expectation of around £55 million (2007: £37.8m). At around £44 million, operating profit at Senior’s aerospace division is expected to show an increase of 30% over the prior year with new programme wins, increases in build rates, improved operational efficiencies and beneficial exchange rates driving the improvement. The anticipated result was particularly pleasing given that Boeing, the Group's largest customer, was on strike for two months during the second half of the year. During the first 11 months of 2008, Airbus and Boeing delivered a combined 771 aircraft and saw their order books increase significantly. They now had eight-year order books at current production rates, said Senior, although some airlines were now deferring the timing of their orders. During the second half of 2008, Senior successfully launched a new $16m p.a. assembly programme for the Boeing 737 and additional opportunities in higher value-added assembly work could now be anticipated, it said. Boeing's new 787 aircraft, on which Senior has significant content, is now due for its first flight in the second quarter of 2009 and for delivery to customers to start in the first quarter of 2010. Elsewhere, the business jet market remained satisfactory but the regional jet market was showing signs of weakening. Senior's presence in the defence market continued to grow with programme wins on Lockheed's C130 military transport aircraft and Sikorsky's Black Hawk helicopter. With much of the Group's aerospace management team having been through a downturn in 2002 (following "9/11"), and nine out of the fourteen operations in the Division being located in North America, the Group is well placed to implement appropriate rationalisation plans, in a timely and cost efficient manner, in the event that the aerospace markets do soften. To-date, this has not been necessary. The operating profitof the Flexonics Division in 2008 was expected to be around £26 million, around 48% ahead of the £17.4m achieved in 2007. The company said there had been a severe and rapid deterioration in land vehicle markets during the second half of the year and consequently prompt mitigating actions were taken. These actions, together with stronger than anticipated industrial markets, price increases, other operational efficiency improvements, raw material cost savings, and beneficial exchange rates were each contributing to the division's strong 2008 performance although employee numbers had fallen by around 350 people in the division during the final quarter of the year. Looking ahead, the company said it was entering 2009 with strong order books at its largest industrial operations, generally healthy aerospace markets and continuing weak land vehicle markets. Overall, market activity is anticipated to be marginally lower in 2009 than in 2008, but cost savings from the headcount reductions, new aerospace programme wins, the absence of the Boeing strike, favourable exchange movements and raw material cost savings ccould all be expected to benefit the Group in 2009.