Despite Cobham's (COB) best efforts to increase its exposure to commercial communications and aviation markets, currency effects and lower defence spending once again grabbed the headlines.
Following the $1.5bn (£869m) acquisition of New York-based rival Aeroflex, 39 per cent of Cobham's revenues come from the fast-moving microelectronics and wireless communication markets. Strip out a hefty currency hit and that shift in focus drove order intake up by two-fifths and sales up by 9 per cent. But while a decent early contribution from Aeroflex and strong performances from Cobham's aviation services and SATCOM units supported the top line, they weren't sufficient to arrest a slump in profits.
That's due to a reduction in high-margin business from land conflict in places such as Afghanistan. Cobham's cost-cutting initiatives were not enough to make up for an increase in lower-margin engineering work, triggering a 220 basis point drop in adjusted operating margins to 15.5 per cent. Operating profits also took sizeable one-off hits due to currency losses (£13m) and a provision against cost overruns within its aerial refuelling development programme (£15m).
Broker Investec expects adjusted pre-tax profit of £301m in 2015, giving EPS of 20.8p (from 18.3p in 2014).
| COBHAM (COB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 326p | MARKET VALUE: | £3.7bn | |
| TOUCH: | 325-326p | 12-MONTH HIGH: | 349p | LOW 258p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 125 | |
| NET ASSET VALUE: | 98p* | NET DEBT: | 110% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.90 | 189 | 13.3 | 6.00 |
| 2011 | 1.85 | 234 | 16.8 | 8.00 |
| 2012 | 1.75 | 204 | 16.0 | 8.80 |
| 2013 | 1.79 | 127 | 10.7 | 9.68 |
| 2014 | 1.85 | 24 | 2.6 | 10.65 |
| % change | +3 | -81 | -76 | +10 |
Ex-div: 30 Apr Payment: 29 May *Includes intangible assets of £2bn, or 175p a share | ||||
