LONDON (Alliance News) - Shares in Cobham PLC faced another torrid day on Wednesday, after the defence and aerospace technology group said 2016 profit will miss its thrice-downgraded guidance and it will scrap its final dividend.
Cobham said group trading profit for the year to December will be GBP245.0 million, below the guidance range of GBP255.0 million to GBP275.0 million that it provided in October.
Cobham said its management team is starting a balance-sheet review, including looking at major contracts and carrying values. The profit guidance it provided on Wednesday is before any adjustments this review may require.
In light of the challenges it faces and the "disappointing" 2016 performance, Cobham said it will scrap its final dividend payment for 2016. It paid a 2.030 pence dividend at the interim stage of 2016, down from 2.585p a year before. In 2015, it paid a total dividend of 11.180p.
Shares in Cobham were down 17% at 137.30p on the news, the worst performer in the FTSE 250, having hit a low of 13030p earlier. Shares in the group have fallen by half in the past 52 weeks.
Cobham issued a series of profit warnings over the course of 2016, kicking off with a warning in April accompanied by a rights issue to shore up its balance sheet and culminating in another warning in October.
The company - which makes satellite communications equipment, microelectronics products and air-to-air refuelling technology for the aviation, maritime, defence and space sectors - suffered operational issues in its Wireless arm in early 2016, resulting in delayed shipment and an impairment charge being booked in the first half.
This was exacerbated by ongoing challenges in Cobham's commercial fly-in fly-out business, particularly a slowdown among natural resources sector clients in Australia, which has resulted in reduced flying activity in this market.
Added to those issues were cost increases in development programmes in its Advanced Electronics Solution segment, resulting from technical and supplier quality issues.
This was all just in the first half of 2016 but, rather than abating, those problems continued apace in the second half of the year.
Cobham's SATCOM arm, housing its satellite communications business, continued to see subdued demand, only partially offset by limited revenue growth from next-generation Ka band products.
In Integrated Electronic Solutions, within Cobham's Advanced Electronic Solutions segment, some additional costs and revenue deferrals were suffered due to technical problems on a small number of space-related development programmes.
On Wednesday, Cobham added another division to those that are struggling. Mission Systems, Cobham's refuelling systems arm, is supplying the hose and drogue refuelling system and body fuel tanks for the Boeing US KC-46 tanker.
The group said there is "significant uncertainty" about the outcome of the KC-46 tanker programme. Cobham is in talks with the customer on the programme on the commercial terms.
Cobham will publish its annual results on March 2.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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