Senior Plc: A Turnaround in Aerospace Drives Bullish Outlook

Senior Plc, a British engineering firm specializing in fluid conveyance and thermal management systems, has faced headwinds in its aerospace division due to production challenges and macroeconomic pressures. However, a closer look at its recent financial updates, strategic moves, and sector dynamics reveals a compelling case for optimism. Here’s why investors should remain bullish on Senior Plc despite near-term turbulence.

The Aerostructures Turnaround: From Losses to Profitability

Senior’s Aerostructures division, which supplies components to aerospace giants like Boeing and Airbus, posted losses in 2024 amid production delays and supply chain bottlenecks. But management has turned the corner in 2025. The division is now projected to deliver an operating profit of £9–11 million this year, with the bulk of earnings expected in the second half. This rebound is driven by two key factors:

1. Rising Aircraft Production Rates: Boeing and Airbus are accelerating output to meet demand for commercial jets, especially narrow-body models like the 737 MAX and A320neo. Senior’s Aerostructures business supplies critical parts for these aircraft, positioning it to capture growth as production ramps up.
2. Operational Efficiency Gains: Cost-cutting measures and improved contract pricing—likely tied to long-term agreements with Boeing and Airbus—are boosting margins.

The division’s recovery is critical to Senior’s broader strategy. CEO David Squires has emphasized that the sale of Aerostructures, now in “advanced stages” with multiple parties, will allow Senior to pivot to its core Fluid Conveyance and Thermal Management business. This repositioning could unlock value for shareholders, as the company focuses on high-margin, stable sectors.

Flexonics: Stability Amid Energy Sector Volatility

While Aerostructures grabs headlines, Senior’s Flexonics division—focused on fluid systems for energy, defense, and land vehicles—has shown resilience. Despite a 6% revenue decline in 2024 due to weaker upstream oil and gas markets, Flexonics stabilized in 2025 by leveraging strong demand in downstream refining, nuclear energy, and defense contracts.

Key positives for 2025 include:
- Balanced Performance: While North American land vehicle markets face softness, Flexonics’ recent contract wins in Europe and Asia are offsetting losses. The division’s book-to-bill ratio of 1.34 in Q1 2025 signals robust order intake.
- Sustainability-Driven Growth: Senior is positioning Flexonics to capitalize on the energy transition. The division’s thermal management systems are critical for electric vehicle and renewable energy projects, aligning with global decarbonization goals.

Dividend Growth and Shareholder Value

Senior’s 4.3% dividend hike to 2.40 pence per share for 2024 underscores its financial health. The company’s focus on cost discipline—despite macroeconomic headwinds like U.S. tariffs and energy market volatility—has kept its balance sheet strong. A successful Aerostructures sale would further bolster cash reserves, potentially enabling buybacks or strategic acquisitions.

Navigating Challenges: Why the Dip in Stock Price Doesn’t Tell the Full Story

Senior’s shares dipped 0.1% in early 2025 trading amid investor caution about the Aerostructures sale timeline. But the subsequent 4.1% rebound suggests markets are starting to price in the upside of the turnaround. Key risks—such as delays in aircraft production or a prolonged downturn in oil and gas—are mitigated by:
- Diversification: Senior’s dual divisional model spreads risk between aerospace and energy sectors.
- Contractual Certainty: Long-term agreements with Boeing, Airbus, and defense clients provide predictable revenue streams.

Conclusion: Bullish on Senior’s Long-Term Value Play

Senior Plc’s 2025 outlook is anchored in a clear path to profitability: Aerostructures’ recovery, Flexonics’ stability, and strategic asset sales. With £9–11 million in projected Aerostructures profits and a dividend yield of 1.9% (based on current prices), the stock offers both growth and income potential.

Crucially, the company is well-positioned to capitalize on secular trends like the 4% annual growth in global electricity demand through 2027 (supporting thermal management systems) and the $100 billion+ market for commercial aircraft over the next decade. While near-term volatility remains, Senior’s fundamentals suggest it’s a buy for investors with a 3–5 year horizon.

In short, Senior Plc isn’t just surviving—it’s primed to thrive as it navigates its way to a leaner, more focused future.