16 Feb, 2017
Defence group Cobham market value in free fall
Shares in Cobham have plummeted after the troubled defence group issued another profit warning, saying it will take millions of pounds of goodwill charges, while revealing its inability to give guidance on its performance in 2017.
Cobham, which provides communications equipment, control systems and services to the defence industry, will take a £574m hit on problems across several of its units.
The company will also face a £150m fee for spending over and above its contract terms to develop a mid-air refuelling tanker for Boeing. It's underlying profit for the year - excluding these one-off charges - will now be £225m, the company said, down from the £245m in a warning last month. Cobham has now issued five profit warnings in two years. The company’s shares plunged 19% in early trading, to 106p.
The defence group went on to explain how it was unable to give any “balance sheet guidance” for 2017, saying “the ability of the group to forecast performance is also not as strong as it should be".
The company added in a statement: "The balance sheet is clearly not strong enough to properly support the operations of the group, given the important role it plays in many customer programmes."
It will release further information in its preliminary results on March 2nd.
Chief executive of Cobham, David Lockwood said: "2016 was an incredibly turbulent and disappointing year for Cobham. Execution failure in many businesses led us to miss expectations badly and provides a poor entry point into 2017.
"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."
In January Cobham's shares went in free fall after the company cancelled its dividend and issued its last profit warning. Last year it was forced into a £500m rights issue to get its debt under control.
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