20th Oct 2016 06:21
LONDON (Alliance News) - Senior PLC on Thursday issued a profit warning as the ongoing problems in its Flexonics divisions were exacerbated by a slower-than-expected ramp-up of new programmes for its Aerospace business in the third quarter.
The aerospace, military and vehicle components manufacturer, which also had issued a profit warning in June, said activity in the large commercial aircraft and regional jets market for its Aerospace business improved in the third quarter.
However, while bid activity is high and the unit secured important new contracts in the quarter to the end of September, Senior said trading for the Aerospace Division was below its expectations due to slower ramp-ups on new production programmes and by certain supplier issues which have hit its operations in the UK and the US.
Flexonics - which makes expansion joints, flexible metal and teflon hoses, and cryogenic equipment for pressure and piping systems - has struggled throughout 2016, and this continued in the third quarter. It is suffering from softer truck and off-highway vehicle markets, plus the downturn in oil and gas sector activity.
Senior said the outlook for North American heavy truck production got worse in the third quarter, resulting in a further deterioration in Flexonics trading. The focus at Flexonics will remain on cutting costs to mitigate these challenges.
In total, Senior said group revenue for the nine months to the end of September was GBP682.2 million, up 7.0% year-on-year, primarily due to a translation boost from the weak pound and acquisition contributions. Organic, constant currency revenue fell 4.0%.
Senior said it does anticipate some improvement in the fourth quarter against the third, but its results for the full year will fall below its previous expectations.
Longer-term, it said it remains well-positioned on key aerospace programmes and said it has also won key contracts in Flexonics for the future, despite the difficulties that division currently faces.
By Sam Unsted; [email protected]; @SamUAtAlliance
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