6th Mar 2014 08:08
LONDON (Alliance News) - Cobham PLC said Thursday full-year pretax profit tumbled 38% amid challenging trading conditions in the defence and security markets, while boosting its dividend as it realigns the organisation to ready for its next stage of development.
The aerospace and security technology company said pretax profit came in 38% lower than 2012 at GBP127 million from GBP204 million, noting that strong growth in its commercial markets was offset by continued weakness in the defence and security markets, which resulted in a 4% decline in organic group revenue - revenue stated at constant translation exchange rates. Total group revenue increased 2% to GBP1.79 billion, up from GBP1.75 billion in 2012.
In its full-year results for the year to December 31, 2013, Cobham said it is increasing its full-year dividend by 10% to 9.68 pence from 8.80 pence last year, "continuing the Group's long standing, progressive dividend policy."
Organic growth in the Group's commercial markets remained strong at 7%, said Cobham, with a good performance in Aviation Services and increasing revenue from products for commercial aircraft production and from SATCOM products. Organic US defence/security revenue however, was 11% lower, with a significant decline in short cycle land revenue. There was an organic revenue decline of 5% in non-US defence/security, including lower revenue from the UK Future Strategic Tanker Aircraft (FSTA) programme.
Cobham operates in three end markets; US defence/security, non-US defence/security and commercial, which comprises specialist aerospace, marine and land markets. A focus for Cobham during the year has been to bring greater balance to its operations, as at December 31, 2013 the firm said the portfolio is more balanced, with its commercial business now accounting for 35% of group revenue, up from 31% in 2012. The commercial arm was the only market which record growth, of 7%, for the year; growth in US defence/security fell 11% and non-US defence/security fell by 5%.
The company said that the greater balance has been achieved due to a combination of organic growth and acquisitions. These acquisitions have brought complementary technology and capability to the Group in predominantly commercial markets, it said. Further balance remains a goal as the company notes that it its making good progress with its strategic objectives, which also include increasing organic investment in the business and focusing on operational excellence and customer delivery.
During the year, the company invested over GBP150 million in acquisitions. It purchased Axell in May 2013 for around GBP85 million, including contingent consideration, and in July 2013 the GBP74 million acquisition of the outstanding 50% stake in FBH, its helicopter joint venture, was completed.
In November last year Cobham cut its outlook for its next year, warning that budgets in key US defence and security markets were continuing to deteriorate. While retaining its full-year guidance for 2013 unchanged after saying trading in the first 10 months of the year had met its expectations. It said weakness in its defence markets was being partially offset by strength in commercial aerospace markets.
Looking ahead, the firm expects trading conditions to remain challenging during 2014, not least due to potentially significant foreign currency headwinds and continued pressure on US defence/security investment accounts. However, the firm said it expects its strong and growing positions in attractive commercial markets and the generally positive prospects for its non-US defence/security markets to partially offset this. Cobham said it is planning for group organic revenue to decline by low-to-mid single digits in 2014, noting, "We will continue to take further actions as appropriate to substantially mitigate the impact of this organic decline."
Bob Murphy, Chief Executive Officer, said, "We have delivered results in line with our previously stated guidance, in what remains a challenging US defence/security market. We have made good progress in the year against our strategic objectives, including increased technology and other organic investments and accelerated benefits from our operational excellence programme. We are now realigning our organisational structure to enable the next stage of development.
"Cobham has innovative technology and know-how supported by market leading positions, which allows us to leverage across our markets. As a result, we continue to anticipate that Cobham can deliver mid-single digit organic revenue growth from 2015," he added.
Shares in Cobham were trading up 1.60% at 304.8 pence per share Thursday, one of the biggest gainers on the FTSE 250.
By Alice Attwood; [email protected]; @AliceAtAlliance
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Cobham