After a slew of profit warnings and two rights issues initiated within a year of one another, you would imagine that Cobham (COB) would welcome an interlude of relative calm. But standing still isn’t an option for the embattled defence contractor. These half-year figures received general assent from the market, but the group’s recovery is far from guaranteed with a “wide range of potential outcomes for 2017”.
Management is faced with the need to shore up the balance sheet while resolving outstanding onerous contracts, including the KC-46 US tanker aircraft programme. “The necessary actions will take time and have associated costs,” according to new chief executive David Lockwood. Six months on from the year-end, the £497m generated from the latest capital raise has halved leverage, in terms of net debt relative to cash profit, to 1.5. But the group anticipates increased net cash out flows in the next 12 months due to past exceptional charges.
You wouldn’t argue that these figures indicate that the decline has been arrested, but there were some hopeful signs: underlying revenue held up at constant currencies, while orders were up 4 per cent on that basis. JPMorgan Cazenove forecasts adjusted profit of £202m and EPS of 5.3p for the year-end, against £225m and 7.8p in 2016.
| COBHAM (COB) | ||||
| ORD PRICE: | 142p | MARKET VALUE: | £3.4bn | |
| TOUCH: | 141.8-142p | 12-MONTH HIGH: | 155p | LOW: 89p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 42p* | NET DEBT: | 46% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 0.92 | -38.4 | -1.6 | 2.03 |
| 2017 | 1.00 | 14.3 | 0.8 | nil |
| % change | +9 | - | - | - |
| Ex-div: | - | |||
| Payment: | - | |||
| *Includes intangible assets of £1.07bn, or 45p a share | ||||
