Defence firm Cobham issues profits warning after ‘turbulent and disappointing year’
Struggling aerospace and defence firm Cobham has issued another profits warning after revealing that it would book a mammoth £574m writedown and take a £150m hit from a US military contract.
The writedown includes costs linked to its acquisition of Aeroflex in 2014 and the group said delays and an “onerous commercial arrangement” for its KC-46 air-to-air refuelling tanker have resulted in soaring costs for the project.
It will also take a £33m charge against other assets in the balance sheet.
As a result, it expects full-year underlying trading profits to come in at £225m, down from the £245m it forecast in January.
Thursday’s profits warning is the company’s fifth in just over a year.
Boss David Lockwood, who was drafted in last August following the departure of Bob Murphy, said 2016 had been an “incredibly turbulent and disappointing year”, and warned that the next 12 months would also be challenging.
“Execution failure in many businesses led us to miss expectations badly and provides a poor entry point into 2017,” he said.
Last year the beleaguered firm was forced to issue an emergency £506.7m rights issue to reduce its debt pile.
Mr Lockwood added: “The medium term provides significant opportunity with encouraging market dynamics and strong product and programme offerings. The route to realising this potential is strong operational performance and financial control, which will be the relentless focus through 2017. This has commenced and the potential to improve is clear.”