Cobham PLC COB Cobham Interim Management Statement

  Cobham PLC (COB) - Cobham Interim Management Statement

RNS Number : 8327Q
Cobham plc
12 November 2012

12 November 2012


                     Cobham INTERIM MANAGEMENT STATEMENT

Trading Environment

In August the Group presented the outlook for 2012 but gave no guidance beyond
that, given the US  defence/security market uncertainty  at that time.  There 
remains a high degree of  uncertainty in the near  term but there is  adequate 
clarity to reasonably assess the potential impact the environment is likely to
have. Cobham is today outlining the  strategic actions it will take to  adapt 
to these conditions.

The  Group  is  planning   for  the  current  cyclical   decline  in  the   US 
defence/security market, which  accounts for  40% of Cobham's  revenue, to  be 
consistent with  previous US  defence/security down  cycles, recognising  that 
these conditions can change  rapidly with global  events. Therefore the  Group 
expects a period of declining, then flat, US defence/security budgets. Cobham
continues to have strong technology  positions on key strategic programmes  in 
the US and is committed to  taking the actions required to remain  competitive 
in this important and very large market.

The  Group  enjoys  a  broad  geographical  spread  with  access  to   growing 
defence/security markets  in the  rest of  the world,  accounting for  28%  of 
revenue. Although  European markets  are expected  to be  flat to  declining, 
certain markets including the Middle East, Asia and South America are expected
to grow.

Commercial markets, representing 32% of revenue, offer strong growth prospects
driven by the need for technological innovation, rising demand for  commercial 
aircraft and communications solutions for aviation and marine platforms.

The growth characteristics  of these  latter two  markets remain  particularly 
attractive for the Group.


Cobham's organic revenue growth in the ten months to October has been  broadly 
flat in  line with  the Board's  expectations and  this trend  is expected  to 
continue for the full year.

The initial phases to integrate the Thrane & Thrane (T&T) business acquired in
June, have been  completed on schedule  and T&T is  trading slightly ahead  of 
expectations,  with  the  remaining  integration  activities  also  being   on 
schedule. The Group's Excellence in  Delivery (EiD) programme is  progressing 
well with the overall benefits being delivered in line with the plan.  Cobham 
is on track to  deliver a good  set of results  despite some difficult  market 
conditions and the  need to accelerate  programme investment, particularly  in 
Cobham Defence Systems.

The Board continues to expect  full year 2012 EPS to  be similar to the  prior 

Net debt was reduced to £446m at  the end of September (30 June 2012:  £536m), 
driven by strong cash conversion and  the proceeds from the divestment of  the 
US emergency locator beacon business, which completed in July 2012.


The US defence/security market remains challenging with the market  continuing 
through the down cycle, driven by the overall fiscal pressure the US faces but
with a lack  of political  consensus on  US Government  budgets. Given  these 
economic difficulties,  regardless  of whether  sequestration  occurs,  Cobham 
anticipates that  its US  defence/security  revenue will  decline in  2013  by 
mid-to-high single digits.

Overall, Cobham  is therefore  planning  for total  Group revenue  to  decline 
organically  by  low-to-mid  single  digits   in  2013,  as  the  decline   in 
defence/security revenue is partially offset by growth in commercial markets.

The Group expects  that the  continued success of  the EiD  programme and  the 
contribution made by  the acquisition of  T&T will largely  offset the  marked 
operational impact of the decline  in defence/security revenue, the change  in 
sales mix, as  well as  substantial new investments  to enable  the return  to 
organic growth. This will result in slightly lower operating margins than are
expected in 2012.

Cobham will  also  continue to  significantly  streamline its  operations  and 
reduce its fixed  cost base  to enable it  to remain  competitive through  the 
defence/security down  cycle by  integrating,  downsizing or  closing  further 
facilities. This additional  streamlining will be  achieved by extending  the 
integration aspects of the EiD programme for a further two years to the end of
2015, for an  additional investment of  £60m, with benefits  each year  rising 
steadily to £30m per annum on completion.


As with the successful EiD re-engineering programme, the further restructuring
of the Group's cost base to remove fixed costs will allow Cobham to transition
through a difficult period and subsequently return to growth. The majority  of 
the additional  savings  will  be  reinvested to  enable  Cobham  to  generate 
incremental organic revenue and gain  market share, while slightly  increasing 
operating margins. Accordingly, and on the basis of current market trends, the
Group anticipates a return to modest organic revenue growth from 2014,  rising 
above mid single digit growth thereafter.

Cobham will continue  to use its  knowledge of chosen  technology markets  and 
adjacent areas to reinforce its capabilities, expand its market positions  and 
support the  Group's return  to organic  growth by  making carefully  selected 
acquisitions consistent with its disciplined financial criteria. The  Group's 
focus is on prioritising investment that  will bring more balance between  its 
defence/security and commercial end markets.

The Board believes that taking these robust actions swiftly together with  the 
Group's cash generative business model will underpin the Group's long standing
policy of paying a 10% progressive annual dividend increase.

                                   - ends -


Cobham plc

Bob Murphy, Chief Executive Officer +44 (0)1202 882020

Warren  Tucker,  Chief  Financial  Officer  +44  (0)1202 

Julian Wais,  Director  of  Investor  Relations  +44  (0)1202 


Mike Harrison/Will Carnwath +44 (0)20  7404 


1.   Cobham  will  hold  a conference  call  on  its  Interim  Management 
Statement at 08:30 (UK time) on  Monday, 12 November 2012. Participants  will 
be Bob  Murphy, Chief  Executive Officer  and Warren  Tucker, Chief  Financial 

 The dial-in number for the conference call will be +44 (0) 1452  555 
566, the conference  ID is  68632537. The  conference call  will recorded  for 
playback and available  at  for seven  days after  the 

2. Cobham's preliminary results for the year ended 31 December 2012  will 
be announced on 7 March 2013.

3. Cobham specialises in meeting the demand for data, connectivity  and 
bandwidth  in  defence,  security  and  commercial  environments.  Offering  a 
technically diverse and  innovative range  of technologies  and services,  the 
Group protects  lives  and  livelihoods, responding  to  customer  needs  with 
agility that  differentiates it.  Employing more  than 10,000  people on  five 
continents, the Group has customers and partners in over 100 countries.

4. This document contains  'forward-looking statements' with respect  to 
the financial condition, results of operations  and business of Cobham and  to 
certain of Cobham's plans and objectives with respect to these items.

Forward-looking statements are  sometimes but not  always identified by  their 
use of a date  in the future  or such words  as 'anticipates', 'aims',  'due', 
'could',  'may',   'should',   'expects',  'believes',   'intends',   'plans', 
'targets', 'goal',  or 'estimates'.  By  their very  nature,  forward-looking 
statements are  inherently unpredictable,  speculative  and involve  risk  and 
uncertainty because they relate to events and depend on circumstances that may
or will occur in the future.

There are various factors that could cause actual results and developments  to 
differ materially from  those expressed  or implied  by these  forward-looking 
statements. These factors  include, but are  not limited to,  changes in  the 
economies, political  situations  and markets  in  which the  Group  operates; 
changes in  government priorities  due to  programme reviews  or revisions  to 
strategic objectives; changes in the  regulatory or competition frameworks  in 
which the Group operates; the impact of legal or other proceedings against  or 
which affect the Group; changes to or delays in programmes in which the  Group 
is involved; the completion  of acquisitions and  divestitures and changes  in 
exchange rates.

All written or  verbal forward-looking  statements, made in  this document  or 
made subsequently, which are attributable to Cobham or any other member of the
Group or  persons acting  on their  behalf are  expressly qualified  in  their 
entirety by the factors referred to  above. Cobham does not intend to  update 
these forward-looking statements.

                     This information is provided by RNS
           The company news service from the London Stock Exchange


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