Senior Seeks Acquisition, Plans Chinese Truck Parts Venture

Senior Plc (SNR), a British maker of air ducts and structural parts for passenger jets, is seeking to spend $50 million to $100 million on an acquisition to expand its commercial-aerospace division.

Any target would have to have an operating margin of 12 percent to 15 percent, Chief Executive Officer Mark Rollins said today in an interview. Senior isn’t currently in any discussions, he said.

“We continue to look for the perfect acquisition if we can find it, with opportunities more likely in large commercial aerospace,” the CEO said by phone.

Senior generated 25 percent of its 640.7 million pounds ($1 billion) in sales last year from providing parts for large commercial planes built by Boeing Co. (BA) and Airbus SA. That proportion should swell to 31 percent in 2012 amid aircraft- production rampups and two acquisitions last year that added a combined 70 million pounds in revenue, the CEO said.

The company, based in Rickmansworth, near London, reported today a 21 percent increase in adjusted earnings per share in 2011. Aerospace has helped offset weaker demand for its automotive parts in Europe, and Senior is responding by pursuing growth in China’s truck parts market, including a joint venture to be announced in the first half of this year, Rollins said.

A320 Revenue Boost

Senior is confident about the market for large commercial planes for the next few years, with 40 percent more planes built annually by 2014, Rollins said. It has contracts to supply all major commercial models. Boeing Co.’s single-aisle 737 program brings in the most in revenue, at $241 million last year, while the Airbus A320 single aisle plane brought in $117 million, Rollins said.

Senior recently won a contract to provide parts for the geared turbofan engine that United Technologies Corp.’s Pratt & Whitney will be offering as one of two possible engines for the A320neo, Rollins said. That will boost the revenue it gets per A320 by 50 percent once deliveries of the new version begin in late 2015, he said.

Senior also makes fuel-distribution systems and exhaust-gas recycling equipment for the car and truck markets. Its main automotive market is in Europe, where sales were down 4 percent in 2011 and will probably drop another 3 percent to 4 percent in 2012, he said.

The company’s trucks business is focused in North America, where sales rose 34 percent last year and should “remain strong,” he said. Its biggest customer there is Cummins Inc. (CMI), which makes diesel engines.

Rollins said while Senior doesn’t yet operate in the Chinese trucks market, Cummins has asked it to begin supplying parts in that market. The CEO declined to name its Chinese partner participating in the planned joint venture.

To contact the reporter on this story: Andrea Rothman in Paris at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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