Cobham reports slump in half-year sales and profits

Cobham saw sales slump over the first half of the year as it ran into trouble with Boeing on the KC-46 tanker programme.

But following divestments during the period, management argued that the resulting company was now more focused and the balance sheet stronger.

On an underlying basis, sales over the six months ending on 30 June fell by 10.1% to £924.5m, with profits before tax retreating from £73.7m in the year ago period to £60.9m.

Earnings per share meanwhile slipped from 2.7p to 2.0p and free cash flow from £64.6m to £9.2m.

More positively, the sale of the AvComm and Wireless test and measurement businesses allowed Cobham to almost eliminate its debt pile, which decreased from £460.8m to £53.6m, for a net debt to EBITDA ratio of just 0.2.

Also during the period, Boeing had made as yet unquantified damages assertions related to the KC 46 programme and was therefore withholdng payment on Cobham's invoices for the Centerline Drogue System and Wing Aerial Refuelling Pods.

Commenting on the company's results, group chief David Lockwood said: "These underlying results show that we are making encouraging progress to improve our operational performance, with the business and the balance sheet in better shape. Risks and challenges remain and we are continuing to engage with Boeing to resolve the issues around the KC-46 tanker programme.

"Cobham has differentiated technologies and know-how and leading positions in a number of attractive markets, with global defence budgets being driven by heightened security threats.

"Overall, the Board's expectations for 2018 Group underlying profit remains unchanged, and we continue to have confidence in our medium and longer term outlook."