Slide 1: Interim Results 2019
INTERIM RESULTS 2019 Interim Results 2019
Slide 2: Agenda
AGENDA Introduction David Squires CEO 2019 Interim Results Bindi Foyle FD Markets & Outlook David Squires CEO Interim Results 2019
Slide 3: H1 2019 Highlights
H1 2019 HIGHLIGHTS • Sales and profit growth despite 737 MAX challenges • Good progress with technology investments – Additive design and manufacturing – Electric vehicle • Opened new Aerospace manufacturing facility in Kuala Lumpur, Malaysia • Disposal of Blois (French automotive business) • Full y
Slide 4: Cautionary Statement
2019 INTERIM RESULTS Cautionary Statement This document contains certain forward-looking statements. Such statements have been made in good faith based on information available at the time of announcing the results for the six months ended 30 June 2019. These statements should therefore be treated w
Slide 5: Financial Highlights
FINANCIAL HIGHLIGHTS H1 2019 H1 2018 Change constant currency Revenue £580.4m £523.3m +11% +6% Adjusted Operating Profit £46.2m £43.4m +6% +1% Adjusted Operating Margin 8.0% 8.3% -30bps -40bps Adjusted Profit before Tax £40.7m £39.0m +4% (+7% like-for-like post IFRS 16) Adjusted Earnings per Share 7
Slide 6: H1 2019 at a Glance
H1 2019 AT A GLANCE £m 610 Revenue 49.8 (15.5) 580.4 Aerospace(1) 590 0.4 H1 2019 H1 2018 Change £m £m 570 Revenue 431.2 381.4 +13.1% 550 22.4 Adj OP(2) 38.9 39.9 -2.5% 523.3 Adj Margin(2) 9.0% 10.5% -150bps 530 • Civil £40.7m 510 $1.29 (H1 18: 1.38) • Military £13.9m • Other £(4.8)m 490 • Mar
Slide 7: Adjusted and Reported Profit
ADJUSTED AND REPORTED PROFIT H1 2019 H1 2018 Change £m £m Adjusted operating profit 46.2 43.4 +6% (1% on constant currency basis) Net interest payable – borrowings and cash (5.9) (4.5) – retirement benefits 0.4 0.1 Adjusted profit before tax 40.7 39.0 +4% (7% on like-for-like IFRS 16 basis) Tax (H1
Slide 8: Cash Flow and Use of Funds
CASH FLOW AND USE OF FUNDS £m 26.5 1.9 (10.3) 75 Gross capex £(35.0)m 70 Disposal proceeds £0.2m (34.8) 65 Gross capex of £35.0m includes: 60 £19.4m – USA, including Fluid Systems capacity expansion & additive technology investment 55 £ 7.6m – Malaysia Aerospace capacity expansion, A320neo £ 1.8m –
Slide 9: Balance Sheet
BALANCE SHEET June Dec June 2019 2018 2018 FX Impact from Dec 2018 £m £m £m £m Goodwill and other intangible assets 334.0 339.6 340.8 Non current assets 6.1 Investment in JV 3.2 3.0 2.7 Working capital 1.3 Property, plant and equipment (1) 390.1 285.6 265.0 Net debt (1.1) Other long-term assets 2.6
Slide 10: Working Capital
WORKING CAPITAL Working capital as a % of revenue 18.0% 1.0% (0.1)% flat 16.0% (0.4)% 14.4% 14.9% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Dec-18 Receivables Payables Inventories FX /Other Jun-19 Interim Results 2019 Page 10
Slide 11: H1 2019 Financial Summary
H1 2019 FINANCIAL SUMMARY H1 2019 trading at the Group level in line with expectations Organic Revenue Growth Return on Revenue Margin (OP%) +6% -30 bps to 8.0% Return on Capital +8% (ex Blois) Employed Increases from cost management Aerospace revenue +13% and operational efficiencies offset by (ROC
Slide 12: Markets & Outlook
MARKETS & OUTLOOK Interim Results 2019
Slide 13: Our Markets
OUR MARKETS Power & Energy 14% (15%) Land Vehicles 12% (16%) 55% Civil Aerospace (51%) Other Aerospace 6% (7%) Military Aerospace 13% (11%) End markets composition based on H1 2019 revenue % in brackets are H1 2018 comparatives Interim Results 2019 Page 13
Slide 14: Our Technology Themes
OUR TECHNOLOGY THEMES Fluid Conveyance Structures Flexonics 26% Aerospace 74% (31%) (69%) World Class Mechanical Engineering Capabilities % in brackets are H1 2018 comparatives Interim Results 2019 Page 14
Slide 15: 737 MAX
737 MAX 13 March 2019 FAA suspend operations of 737 MAX 05 April 2019 Boeing announce temporary move from a production rate of 52 airplanes per month to 42 airplanes per month starting in mid-April 25 April 2019 Senior issue trading update highlighting assumptions of reduction to rate 42 on 737 MAX
Slide 16: Civil Aerospace Transition
CIVIL AEROSPACE TRANSITION Aircraft Deliveries/Production (number) 2,200 Group sales 15%(1) compared to H1 2018 2,000 1,800 2019 will be the peak transition year 1,600 Increased production of the A320neo, A350, 787, A220 and E190 - E2 1,400 Decline in build rates of the 777, A330, 1,200 A380
Slide 17: Civil Aircraft (55% of Group)
CIVIL AIRCRAFT (55% of Group) Shipset Value ($k) Avg.(1) shipset Airframe Var. in avg.(1) Deliveries x Avg.(1) Shipset Value ($m) value shipset value 0 200 400 600 800 1000 1200 H1 2019 deliveries Order book 12/18 to 06/19 0 10 20 30 40 50 60 70 80 90 ($k) (number) ($k) 737 MAX 350 57 4,547 737 MAX
Slide 18: Military and Defence (13% of Group)
MILITARY AND DEFENCE (13% of Group) Avg. (1) Airframe Var. in avg. Shipset Value ($k) shipset H1 2019 (1) shipset value Deliveries x Avg. Shipset Value ($m) 12/18 to 06/19 value deliveries 0 200 400 600 800 1000 1200 ($k) 0 5 10 15 ($k) (number) 1,092 13 +65 C-130J C-130J F-35 (JSF) 250 55 -25 F-35
Slide 19: Land Vehicles (12% of Group)
LAND VEHICLES (12% of Group) North American Truck and Off-Highway (7% of Group) EU & ROW Truck and Off-Highway (2% of Group) North American Class 8 Truck Production Forecast (Thousands) 400 350 9% 27% 5% Group EU and ROW sales 6%(1) over H1 2018 21% 10% 300 10% -29% 12% -30% 250 200 • The Group wa
Slide 20: Power & Energy (14% of Group)
POWER & ENERGY (14% of Group) Units $ Oil Price and Rig Count 4000 90 3500 80 Group H1 2019 sales compared to H1 2018(1) 3000 70 60 2500 50 Oil & Gas (5% of Group): 2000 40 1500 Sales 9% (£3.0m) 30 1000 20 - Upstream impacted from decreased drilling activity in 500 10 North America 0 0 - Downstrea
Slide 21: Environmental, Social & Governance
ENVIRONMENTAL, SOCIAL & GOVERNANCE Climate We reduced our total carbon footprint by 8% from 65 to 60 tonnes per £m revenue in 2018 In 2018 we recycled 92% of our waste, beating our 2020 goal of 90% two years early In 2019 we are working on new targets aligned with the Paris Agreement using the Scien
Slide 22: Group Outlook
GROUP OUTLOOK H1 2019 trading at the Group level in line with expectations The Board expects to meet current expectations for 2019 • Aerospace – margins similar level in H2 compared to H1 • Flexonics – full year margin progression in 2019 to offset the sales decline Working to minimise the impact of
Slide 23: Any Questions?
ANY QUESTIONS? Interim Results 2019
Slide 24: Appendices
APPENDICES Interim Results 2019
Slide 25: Group Evolution
GROUP EVOLUTION Revenue (£m) Adjusted Operating Profit (£m) Adjusted Operating Margin (%) 1200 120 18 16 Total after central costs 1000 100 14 800 80 Total after central costs 12 10 600 60 8 400 40 6 4 200 20 2 0 0 0 2014 2015 2016 2017 2018 H1 2019 2014 2015 2016 2017 2018 H1 2019 2014 2015 2016 20
Slide 26: Trade Considerations
TRADE CONSIDERATIONS H1 2019 split Sales Adj. OP Employees N. America 63% 74% 3,698 Senior is an international manufacturing Group with 32 operating businesses in 14 countries UK 14% 1% 1,534 Rest of Europe 10% 12% 1,002 Within Europe, Senior has 11 operations across 5 countries, including the U
Slide 27: IFRS 16 Leases – From 1 January 2019
IFRS 16 LEASES – FROM 1 JANUARY 2019 Balance Sheet: opening adjustments at 1 January 2019: Right of Use Assets £96.7m Lease Liabilities/ Net Debt £96.3m Net Balance Sheet Impact Nil Working Capital and Other £0.4m Balance Sheet: carrying values at 30 June 2019: Right of Use Assets £93.
Slide 28: Currency Effect
CURRENCY EFFECT Translation Impact on HALF YEAR H1 2018(1) (£m) Avg. H1 Avg. H1 Adj. 2018 Exchange Rates to GBP 2019 Revenue PBT(2) 1.38 US $ 1.29 20.9 1.5 1.14 Euro € 1.15 (0.5) - 16.94 South African Rand 18.44 (0.5) - 43.91 Thai Baht 40.96 2.3 0.4 4.72 Brazilian Real 5.00 (0.2) - 1.76 Canadian $ 1
Slide 29: Earnings and Dividends per Share
EARNINGS AND DIVIDENDS PER SHARE H1 2019 H1 2018 Change Average number of shares Basic 415.8m 418.6m -2.8m Fully diluted 422.7m 424.1m -1.4m Adjusted earnings per share (1) Basic 7.84p 7.36p +6.5% Fully diluted 7.71p 7.26p +6.2% H1 2019 2018 Dividends (pence per share) Interim 2.28p 2.19p +4.1% Fina
Slide 30: Change in Net Debt
CHANGE IN NET DEBT H1 H1 FY 2019 2018 2018 £m £m £m Free cash flow (page 8) 13.2 32.2 45.3 Dividends (21.7) (20.5) (29.6) Costs net of proceeds on disposal of business (1.3) - - Loan repayment by JV - 0.2 0.5 Purchase of shares by employee benefit trust (6.3) (3.5) (7.2) Net cash (outflow) / inflow
Slide 31: Gross Capital Expenditure
GROSS CAPITAL EXPENDITURE H1 2019 H1 2018 Capex Depn (1) Capex Depn (1) £m £m £m £m Aerospace 29.0 18.9 16.0 14.2 Flexonics 5.9 7.3 5.9 6.0 Holding companies 0.1 0.3 0.1 0.1 Total 35.0 26.5 22.0 20.3 (1) Depreciation of £20.7m (H1 2018: £19.3m), IFRS 16 depreciation £4.8m (H1 2018: nil) and amortisa
Slide 32: Usage of Credit Facilities – June 2019
USAGE OF CREDIT FACILITIES – June 2019 Usage by Currency Interest Facility Usage £ $ € Other % £m £m US Private placements: $30.0m (Sep 2028) 4.18% 23.7 23.7 - 23.7 - - €28.0m (Feb 2027) 1.51% 25.0 25.0 - - 25.0 - $60.0m (Oct 2025) 3.75% 47.3 47.3 - 47.3 - - £27.0m (Jan 2025) 2.35% 27.0 27.0 27.0 -
Slide 33: Maturity Profile of Credit Facilities
MATURITY PROFILE OF CREDIT FACILITIES In February 2019 the Group refinanced its main UK RCF of £80m by increasing the committed facilities to £120m and extending the maturity to February 2024. The previous £80m was due to mature as follows: £20m in March 2019 and £60m in November 2021. £m 340 Oct-
Slide 34: Covenants at Frozen GAAP
COVENANTS at FROZEN GAAP(1) Jun 2019 Dec 2018 Jun 2018 Net debt - restated at average exchange rates £171.4m £147.8m £146.6m Net interest - rolling 12 months £8.4m £8.8m £9.0m EBITDA - rolling 12 months £138.1m(2) £133.7m £127.6m(3) Interest cover (to exceed 3.5 times) 16.4 x 15.2 x 14.2 x Net debt
Slide 35: Pensions
PENSIONS 6 months 2019 2018 UK USA Various IAS 19 Retirement Benefit Funded Funded Unfunded Total Total £m £m £m £m £m Scheme assets 309.6 47.3 0.8 357.7 368.7 Scheme liabilities (278.7) (52.5) (8.0) (339.2) (364.0) Scheme asset/(deficit) at opening 30.9 (5.2) (7.2) 18.5 4.7 Current service cost - (
Slide 36: Our Business Model
OUR BUSINESS MODEL Long-Term Sustainable What We Do How We Do It Value Design and manufacture of Create value for all our highly engineered, Our Values Our Strengths Strategic Priorities stakeholders through our technology rich products and business model systems for OEMs in the Autonomous and follo
Slide 37: Strategic Priorities
STRATEGIC PRIORITIES Autonomous and Autonomous and Considered and High Performance Competitive Cost High Performance Collaborative Business Focus on Growth Collaborative Business Focus on Capital Effective Growth Talent Development Operating System Country Strategy Operating System Model Model Deplo
Slide 38: Acquisition Framework
ACQUISITION FRAMEWORK More Likely Less Likely Fluid Systems Structures New Markets Division Flexonics Large Commercial Rotorcraft Reg Jet Biz Jet VLJ Market Defence Energy Truck/ Off Highway Automotive Renewables General Industrial Medical Semi-conductor Equipment Aero Ducting Control Bellows Precis
Slide 39: Senior's Locations
SENIOR’S LOCATIONS UK Massachusetts Rickmansworth H.O Metal Bellows Crumlin Lymington Canada BWT SF Canada Bird Bellows H1 2019 split Sales Adj. OP Thermal Wisconsin Weston EU N. America 63% 74% GA UK 14% 1% Germany Washington SF GmbH Rest of Europe 10% 12% AMT Czech Republic Rest of World 13% 13% A
Slide 40: Senior's Products – H1 2019
SENIOR’S PRODUCTS – H1 2019 26% Flexonics Division Other machined parts 3% Aerospace Division 74% (6%) (31%) Industrial flexible parts 11% (69%) (9%) Off-highway hydraulics (LV) 1% 20% Engine structures (3%) (18%) and mountings Fuel distribution (LV) 1% (3%) Exhaust flexes (LV) 3% (3%) Emission cont
Slide 41: Senior's Customers – H1 2019
SENIOR’S CUSTOMERS – H1 2019 Other Power & Energy 12% 12% Boeing 26% Flexonics Division (12%) (11%) Aerospace Division 74% (31%) (69%) Schlumberger 2% all 1% of (3%) Group or less Other Land Vehicle 6% 10% Spirit (10%) (9%) all 1% of Group or less Caterpillar 2% (3%) Cummins 4% (4%) 9% Rolls Royce (
Slide 42: Technology Theme One: Fluid Conveyance
TECHNOLOGY THEME ONE: FLUID CONVEYANCE Aircraft Low Pressure Ducting High Pressure Ducting Aerospace Control Products Non-Aerospace Control Products Gas Turbine Engines Complex Ducts, Tubes & Pipes Bellows Seals & Controls Aerospace Controlling the flow of fluids within systems Extending the technol
Slide 43: Technology Theme Two: Structures
TECHNOLOGY THEME TWO: STRUCTURES Airframe Structures & Assemblies Airframe Structures Airframe Assemblies Helicopter Transmission Structures Hard & Soft Metal Machined Parts Engine Structures & Mountings Nacelle Rings Engine Casings Aerospace Aerofoils Precision Machined Components and Assemblies La
Slide 44: Aerospace Division
AEROSPACE DIVISION Interim Results 2019
Slide 45: Aerospace Division: A Summary
AEROSPACE DIVISION: A SUMMARY H1 2019 H1 2018(1) Change 19 Operations Revenue £431.2m £381.4m +13.1% NAFTA 10 Europe 3 Adjusted Operating Profit (2) £38.9m £39.9m -2.5% UK 4 Adjusted Operating Margin(2) 9.0% 10.5% -150bps ROW 2 Markets Customers Space & Non Military 7% Other Helicopter 1% 16% Boeing
Slide 46: Civil Aerospace (55% of Group)
CIVIL AEROSPACE (55% of Group) Demand for new civil aircraft remains robust Boeing, Airbus and independent forecasters predicting air traffic to grow > 4% p.a. over the next 20 years By 2037, approx. 85% of emerging country populations will fly (up from 30% in 2017) World Air Traffic Trips per
Slide 47: Military Aerospace (13% of Group)
MILITARY AEROSPACE (13% of Group) Global defence spending to exceed $2 trillion in 2022 The US continues to spend more on defence than the next 7 countries combined Senior is well placed with good content on F-35, CH-53K and T-X Trainer The United States spends more on defence than the next se
Slide 48: Shipset Value Progression – Large Commercial Aircraft
(1) SHIPSET VALUE PROGRESSION – Large Commercial Aircraft $k % CAGR 1000 Share of T1000 +18% 900 reduced Share of T7000 800 +58% reduced 700 600 -4% 500 +5% -5% 400 300 +4% 200 100 0 737 MAX 777X 787 A320neo A330neo A350 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Ju
Slide 49: Shipset Value Progression – Regional, Business and Military
(1) SHIPSET VALUE PROGRESSION – Regional, Business and Military $k % CAGR 800 +66% 700 600 +5% +30% 500 400 +21% -5% 300 200 100 0 A220 ERJ 190/195- E2 GL7500 JSF (F-35) CH-53K Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Jun-19 (1) Average based on programme share an
Slide 50: Flexonics Division
FLEXONICS DIVISION Interim Results 2019
Slide 51: Flexonics Division: A Summary
FLEXONICS DIVISION: A SUMMARY H1 2019 H1 2018(1) Change 12 Operations & JV NAFTA 4 Revenue £149.6m £165.1m -9.4% Europe 2 Adjusted Operating Profit(2) £14.4m £13.3m +8.3% UK 2 ROW 4 Adjusted Operating Margin (2) 9.6% 8.1% +150bps China JV 1 Markets Customers Other markets 9% 3% Aerospace 15% Cummins
Slide 52: Land Vehicles (12% of Group)
LAND VEHICLES (12% of Group) Commercial vehicles grow at 4% p.a. and passenger vehicles grow at 2% p.a. through the cycle Growth in GDP and tighter emissions regulations increase demand for Senior’s land vehicle products Senior is addressing the changing landscape with innovative products Worl
Slide 53: Power & Energy (14% of Group)
POWER & ENERGY (14% of Group) Projected increases in global energy usage, tightening emission control regulations and emerging changes in power generation will drive increased demand for Senior’s power & energy products Senior supplies into oil and gas and power generation, including nuclear and
Slide 54: Index
INDEX Presentation Appendices H1 2019 highlights 3 Group evolution 25 Financial highlights 5 Trade considerations 26 H1 2019 at a glance 6 IFRS 16 leases 27 Adjusted and reported profit 7 Currency effect 28 Cash flow and use of funds 8 Earnings and dividends per share 29 Balance sheet 9 Change in ne