(Reuters) – Senior Plc (SNR.L), on Friday warned of a deeper hit to its 2020 revenue and margins from the grounding of the 737 MAX airliner, sending shares in the Boeing (BA.N) supplier to 8-year lows.
FILE PHOTO: Grounded Boeing 737 MAX aircraft are seen parked in an aerial photo at Boeing Field in Seattle, Washington, U.S. July 1, 2019. Picture taken July 1, 2019. REUTERS/Lindsey Wasson
Shares of the FTSE 250 firm, which makes airframe and other components for the MAX, tumbled as much as 10% in morning trade.
Like many Boeing suppliers, Senior has seen a squeeze in profits and margins since the grounding of the MAX in March following two deadly crashes.
The decision by the U.S. planemaker to halt production of the once fast-selling 737 MAX has also taken a toll on its suppliers.
“With Boeing’s temporary halt in production, the assumptions around reduced production rates and the slower ramp-up, the board currently expects aerospace revenue in 2020 to be around 20% below 2019 levels, before returning to growth in 2021,” Senior said in a statement.
In November, the British firm had warned that revenue would fall but did not specify by how much.
The aerospace unit accounts for 70% of Senior’s revenue and supplies parts directly to Boeing as well as to engine suppliers and others.
“We believe 2020 (estimates) will be the trough in Senior’s performance,” Credit Suisse analysts said in a note.
Last week, Boeing warned that it did not expect to win approval for the return of the 737 MAX to service until mid-year.
Senior continues to expect one-off benefits from lower central costs and a reduction in effective tax rate to help it meet 2019 group revenue expectations and to beat adjusted earnings per share forecasts.
This week, Boeing reported its first annual loss since 1997 as 737 MAX costs doubled to nearly $19 billion.
Reporting by Yadarisa Shabong in Bengaluru; editing by Bernard Orr and Jason Neely