Building up a coherent picture of Cobham's interim results was complicated by the defence specialist's frenetic acquisition and divestment activity during the first half, primarily the £281m takeover of Thrane & Thrane and the disposal of its locator beacon business for $73m (£46.7m). However, with the group order book flat at £2.5bn, management's focus on diversification into civilian aerospace is surely the right strategy, as budget cuts threaten to bite deep into Cobham's traditional defence markets, particularly in the US.
As things stand, Cobham is experiencing organic declines in order intake in its core businesses with trading profit flat, according to analysts at Investec. In fact, when November's sale of Analytic Solutions is excluded, total underlying orders fell 8 per cent to £768m. The important aerospace & security unit was held back by weakness in small aircraft demand and sales, though partly underpinned by acquisitions actually fell 8 per cent on an underlying basis. Defence Systems put in a better performance with revenues rising 4 per cent to £159m, but contract timing issues held back profits here.
Guidance is for flat EPS growth this year and management is approaching 2013 "with caution". So Investec is forecasting full-year pre-tax profit of £310m and EPS of 22.2p (£328m and 22p in 2011).
COBHAM (COB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 231p | MARKET VALUE: | £2.49bn | |
| TOUCH: | 230-231p | 12-MONTH HIGH: | 243p | LOW: 163p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 94p* | NET DEBT: | 53% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 892 | 99.4 | 6.96 | 1.8 |
| 2012 | 843 | 90.2 | 7.30 | 2.4 |
| % change | -5 | -9 | +5 | +33 |
Ex-div: 10 Oct Payment: 9 Nov *Includes intangible assets of £1.14bn, or 106p a share | ||||
