Cobham shares plummet after missing targets and culling dividend
Cobham shares tanked nearly 20 per cent this morning after culling its dividend in the wake of annual results that will miss targets.
In a trading update, the engineering giant said it expected profit of £245m, below the previous guidance of £255m-£275m.
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"The detailed year end close and audit is ongoing but is not expected to result in an increased trading profit," the firm outlined.
Read more: Cobham's share price in double-digit flop
Customer discussions
In a further blow, Cobham revealed there is "significant uncertainty surrounding the outcome of the KC-46 tanker programme. Cobham remains in discussions with its customer on the commercial terms for the complex conformity and qualification phases of this contract, which are taking place concurrently with the early phase of production."
And the bad news just kept coming. While net debt had reduced from £1.2bn at the end of 2015 to £1.0bn at the end of 2016, the reduction was not sufficient to free cash to provide a payout to investors.
In the light of the disappointing trading and higher than expected net debt, the Board will not be recommending a final dividend payment in respect of financial year 2016.
A year to forget?
The Dorset-based group had a tumultuous 2016. In October the group announced its second profit downgrade of the year after a "challenging" third quarter in which its wireless and satellite communications division underperformed.
Meanwhile in April, Cobham launched a £500m rights issue to combat problems the group was facing as a result of delayed shipments in its wireless communications business. This was as a result of lower demand from Australian oil and mining companies.
Three executives left the firm as a result of last year's tumult, including chairman John Devaney (who stepped down on 31 December), and the chief executive and chief financial officer.