July 30, 2018 / 10:13 AM / 3 months ago

New aircraft programs to boost Senior after strong first half

LONDON (Reuters) - British aerospace engineer Senior (SNR.L) reported better-than-expected first-half revenue and profit on Monday buoyed by demand for components for commercial aircraft such as the Boeing 787 and Airbus A350.

The company, whose products are also used in trucks and off-road vehicles, reported a 24 percent rise in adjusted pretax profit to 39 million pounds ($51 million) on revenue up 7 percent to 523.3 million pounds.

Chief Executive David Squires said both divisions were performing strongly while an efficiency program was helping the bottom line with a 100 basis-point increase in operating margin.

“The full-year margins will be higher than last year’s full-year margins,” he said in an interview.

“We are going to see things slightly weighted to the second half. The second half will be better than the first half, but we don’t want people to get too carried away.”

Senior has won significantly more work on new airline programs such as the 777X, 737 MAX and A320NEO, which he said was positive for the longer term but would increase some costs in the second half as the products were introduced.

Shares in Senior were trading up 6.7 percent at 325 pence at 0913 GMT, one of the best performers in the FTSE 250 index.

Analyst at Jefferies said Senior had “sensibly pitched” its full-year outlook despite the strong start to the year, reflecting both product introduction costs and geopolitical uncertainty around trade.

Squires said the company, which has facilities in countries including the United States, Britain and Malaysia, was having to manage the impact of tariff changes in aluminum and steel.

He said Senior was able to pass tariff costs to its customers but lead times had gone up. “That is something we have to manage very carefully,” he said.

Reporting by Paul Sandle; editing by Jason Neely

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