Cobham unveils £500m rights issue as profits fall by a third
Troubled defence giant Cobham today announced a £500m rights issue – as it unveiled a 37 per cent fall in pre-tax profits.
The aerospace company, the inventor of air-to-air refuelling, said underlying pre-tax profits fell to £175.2m in the year to the end of December, from £280.4m last year.
Revenues fell to £1.94bn, from £2.07bn, while earnings per share fell to 9p, from 16.5p the year before. Its dividend fell to 2.03p, from 11.18p last year.
The rights issue, which is fully underwritten, will be its second in a year. Investors weren't phased, though – shares rose 2.7 per cent to 125.5p in early trading.
The company, which issued its fifth profit warning in less than two years last month, said profits had been hit by "weaknesses" in management and financial controls, as well as contractual and commercial failures. It also cited challenging market conditions "in a few businesses".
The bad news? This year is unlikely to be better. Cobham said it will be "challenging to deliver a similar performance to that of 2016 in 2017" – although it said it "should be able to deliver underlying operating margins two to three per cent higher than at present, all else being equal".
"The board and I are deeply disappointed with events through 2016 and the poor outcome that has been delivered," added chairman Michael Wareing.
"While the board has already undergone significant change over recent months, it is my intention to effect a rolling programme of material board changes over the next two years."