Cobham revenue to fall in 2013

Defence technology supplier Cobham has predicted a drop in revenues in 2013 as it is hit by the fall un US defence spending.

The firm also said that a change in its sales mix and new investments would mean lower operating margins next year than are expected in 2012.

The US defence and security markets, which make up 40% of Cobham's revenue, remained challenging due to overall fiscal pressure as well as a lack of political consensus on US Government budgets, it said.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The company is predicting a period of declining, then flat, US defence and security budgets, although it added "these conditions can change rapidly with global events".

Given these economic difficulties Cobham anticipates that its US defence and security revenue will decline in 2013 by mid-to-high single digits.

The firm is planning for total group revenue to decline organically by low-to-mid single digits in 2013, as the decline in defence and security revenue is partially offset by growth in commercial markets.

The group anticipates a return to "modest" organic revenue growth from 2014, rising above mid single digit growth as its goes forward.

The firm said it was relying on its transformation programme, 'Excellence in Delivery', the recent acquisition of Thrane & Thrane, as well as a change in sales mix, to drive growth.

So far in 2012 Cobham said organic revenue growth had been broadly flat, in line with the board's expectations, and this trend was expected to continue for the full year.