Cobham has published its second profit warning in six months after several of the engineering company’s divisions performed worse than expected.
In an update, Cobham said trading profit for the year to 31 December will fall by up to 23% to between £255m and £275m from £332.2m. As a result, the company’s debt will be 2.6 times its earnings compared with a ratio of 2.3 at the end of June.
The shares, which have fallen more than 40% this year, tumbled almost 15% to 137p.
Cobham, which supplies radar and other electronic products for industries including defence and aviation, warned in April that annual profit would be lower than expected.
The company completed a £500m rights issue in June to strengthen its finances, which were weakened partly by debt taken on to buy Aeroflex, a US maker of components for wireless communications systems, in 2014.
The Aeroflex purchase was meant to broaden Cobham’s business to cushion the impact of defence cuts, but it has not lived up to expectations. The former Aeroflex business was one of the poorly performing divisions in the third quarter of the year, together with maritime satellite communications and electronic defence products.
Cobham said: “Following the underperformance in the third quarter, the group expects an improvement in fourth-quarter trading from increased volumes in a number of areas. Despite this, the group’s anticipated full-year outcome is now below the board’s previous expectations, largely resulting from a continuation of issues seen in the year to date.”
The FTSE 250 company announced in August it would replace Bob Murphy as chief executive with David Lockwood, the boss of Laird. Lockwood is due to join by the end of the year along with a new finance director, David Mellors.
Profits fell 36% in the first half of the year, leaving Cobham needing a big improvement in performance to meet annual targets. Financial performance was also affected by delays in gaining approval for Cobham’s refuelling system for the Boeing US KC-46 tanker.
