(Reuters) - British engineering firm Senior (SNR.L) posted a 16% drop in first-half profit on Monday, as margins in its aerospace unit were hit by Boeing’s (BA.N) production cuts of its best-selling 737 MAX planes following the global grounding of the jet.
Senior, which makes a wide variety of components used in commercial jets and counts Boeing as one of its top customers, said pretax profit fell to 26.5 million pounds in the six months ended June 30 from 31.4 million pounds a year earlier.
“Notwithstanding the reported 737 MAX production rate cuts and the ongoing uncertainty around the current geopolitical and macro-economic backdrop, overall the Board expects to meet current expectations for 2019,” Chief Executive Officer David Squires said in a statement.
The company warned in April that the groundings would impact its aerospace unit’s margins for the rest of 2019. The division accounts for 71% of total revenue and supplies parts directly to Boeing as well as engine suppliers and other customers.
Senior said on Monday it had been able to mitigate some of the 737 MAX revenue impact through stronger sales from other civil and military programmes.
“The outlook for the civil aerospace market remains positive as new, more efficient, aircraft programmes continue to ramp-up in production. Nevertheless, this sector has been impacted by the grounding of the 737 MAX fleet,” Senior said.
General Electric Co (GE.N), MAX’s other major supplier that makes engines with Safran SA (SAF.PA) of France, said last week it had cut production of the LEAP-1B engines that power Boeing’s single-aisle jets to “meet the planemaker’s revised aircraft build rate”.
Senior said it expects to make progress across its aerospace division in the second half of the year, while watching developments at Boeing.
Senior also said its flexonics division’s end markets were less certain and somewhat dependent on factors such as the ongoing trade war between the United States and China.
Reporting by Noor Zainab Hussain and Justin George Varghese in Bengaluru; Editing by Anil D'Silva