(Reuters) - UK engineer Senior Plc forecast a near one-third drop in first-half revenue on Friday and cut another 12% of its staff as it deals with an aerospace industry downturn brought on by the COVID-19 pandemic.
The company, which supplies parts such as airframes and engine build-up tubes to planemakers, said it was expecting a sharp drop in the production rate in its civil aerospace business to continue into 2021.
Including the latest staff cuts, Senior has cut about 17% of its workforce and another 19% remained on furlough, it said. Senior had about 8,200 employees at the end of June 2019.
“The coronavirus pandemic has had a profound effect on our markets and customers since March and the impact will be with us for some time to come,” CEO David Squires said.
Senior has been struggling with excess capacity ever since Boeing’s 737 MAX crisis and in November laid out a restructuring plan to cut costs.
A likely “prolonged contraction” due to the coronavirus crisis has forced it to broaden the restructuring, it said.
Senior makes parts for original equipment manufacturers in the aerospace, defence, land vehicle and power and energy markets.
It said weakness was seen in most of its markets, except for defence, semi-conductor equipment and medical, which remained “healthy”.
Senior’s aerospace division, which makes components for Boeing, Airbus, as well as for private jets and military helicopters such as the Black Hawk, brings in the bulk of revenue.
While it had considered selling its aerostructures unit, in April it had decided that it was in its best interests to keep it.
Analysts at Credit Suisse said in a note on Friday they were impressed with Senior’s cash performance and the decline in aerospace revenue was “not as severe as expected going into 2020”.
Net cash inflow came in at around 3 million pounds ($3.77 million), helped by capex and inventory management, Senior said.
Shares in the smallcap firm were down 3.5% at 0810 GMT.
($1 = 0.7948 pounds)
Reporting by Yadarisa Shabong in Bengaluru; Editing by Anil D’Silva and Jane Merriman
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