Divestments underpin revenue reduction at Cobham

Group revenue contracted by six per cent to 1.75bn pounds in the year ended December 31st at Cobham reflecting a number of divestments.

The FTSE 250-listed company, which provides products and services for the defence, security and commercial sectors, reported that organic revenue (revenue growth stated at constant translation exchange excluding the incremental effect of acquisitions and divestments) remained broadly flat.

A strong performance in Australia and increasing shipments of products, including radios and antennas, to large transport aircraft manufacturers helped to increase Cobham's commercial revenue by 2.0%.

There was 4.0% growth in non US defence/security revenue, with a strong performance in a number of areas, including aerial refuelling, antennas and aerospace communications products, partially offset by lower land revenue.

US defence/security revenue was down 4.0%, mostly due to reduced revenue in land markets.

In 2011, the group divested of Analytic solutions and in July 2012, Cobham completed the planned divestment of its non-core emergency locator beacon businesses for $73m on a debt and cash free basis, with an additional consideration of up to $5m contingent on future events.

Cobham reported that this was "the most significant remaining step towards achieving the divestment of the group's non-core businesses".

Underlying earnings per share rose by 3.2% at constant translation exchange and the recommended full year dividend increased by 10% to 8.8p per share.

Commenting on the results, Bob Murphy, Chief Executive Officer of Cobham, said: "We have delivered a good set of results in market conditions that continue to be challenging.

"The US defence/security market remains highly uncertain and we expect a period of declining, then flat, US Government budgets consistent with previous down cycles.

:As set out in our November 2012 interim management statement, our plans are based on group revenue declining organically by low-to-mid single digits in 2013, as the decrease in defence/security revenue is only partially offset by growth in commercial markets.

"In 2013, group operating margins are expected to be slightly lower than in 2012," he concluded.

Cobham's share price was up 3.18% to 236.50p at 11:05 on Thursday.

MF