Senior (SNR) Trading Update summary

Trading performance and market conditions

• Group revenue rose 5% year-on-year on a constant currency basis, with Aerospace up 13% and Flexonics down 9%.

• Strong order intake maintained, with a book-to-bill ratio of 1.13.

• Civil Aerospace demand remains robust, supported by rising air passenger traffic and future aircraft replacement needs; IATA reports a 12% year-on-year increase in passenger traffic and expects demand to double by 2040.

• Flexonics saw growth in downstream oil and gas, power generation, and nuclear, offsetting weaker land vehicle and upstream oil and gas markets; North American and European heavy-duty truck production forecast to decline 7% and 20% respectively in 2024.

• Land vehicle markets in Europe and North America are slowing, as anticipated.

Operational headwinds and mitigation

• Commercial Aerospace faces temporary headwinds from Boeing's 737 MAX production restrictions and a strike in the Puget Sound area.

• Airbus supply chain imbalances have led to a Tier 1 supplier reducing scheduled deliveries in Q4, with normalization expected in Q2 next year.

• Cost and cash management actions include headcount alignment, discretionary spend containment, material rescheduling, and postponement of uncommitted capex.

• Temporary furloughs and permanent reductions are being used, especially in the Pacific Northwest.

• The group expects to remain comfortably within its covenant limits.

Financial outlook and guidance

• Aerospace full-year 2024 sales and profits expected to exceed 2023, but H2 performance will be lower than H1 due to temporary disruptions.

• Aerospace operating profit for 2024 expected around £30 million, with margins in H2 similar to H1 (approx. 4.8%).

• Flexonics outlook unchanged, with H1 stronger than H2.

• No formal 2025 guidance yet, but expectations are for improved performance as production rates rise and price agreements take effect.

• The group’s robust order book and market positioning support future growth, with increasing aircraft build rates and operational efficiencies expected to drive performance beyond 2024.