UPDATE 2-Cobham sees fall in 2013 sales on U.S. defence cuts
* Sees 2013 group revenues down low-to-mid single digit
* US defence/security sales seen down mid/high single digit
* Shares down 7.5 pct (Adds company, analyst comment, shares, additional detail)
By Rhys Jones
LONDON, Nov 12 (Reuters) - British aerospace and defence supplier Cobham forecast a fall in revenues next year, blaming cuts to the U.S. military budget and sending its shares to an eight-month low.
Cobham, whose equipment aids communication between military vehicles and aircraft, said on Monday it expected revenue next year to decline by a low-to-mid single digit percentage because of the "fiscal pressure the U.S. faces ... and a lack of political consensus on U.S. government budgets".
The U.S. defence and security market accounts for around 40 percent of Cobham's revenue.
Defence firms around the world have seen contract awards delayed and some existing deals cancelled as politicians in the United States, the world's biggest spender on military equipment, argue over how to cut the country's deficit.
Military contractors including Britain's BAE Systems and U.S. firms Northrop Grumman Corp and General Dynamics Corp have reported lower earnings amid the uncertainty.
The United States, by far the largest market for weapons, already has plans in place to cut $487 billion from its defence budget over the next decade, while Congress could make a further $500 billion in military spending cuts in January under a process of automatic reductions known as sequestration.
"Regardless of whether sequestration occurs ... U.S. defence and security revenue will decline in 2013 by mid-to-high single digits," Cobham's chief executive Bob Murphy said.
Cobham shares were down 7.5 percent at 195.25 pence by 1030 GMT, their lowest level since March, valuing the group at just over 2 billion pounds.
RBC analyst Rob Stallard expects to downgrade his forecast for Cobham's 2013 sales by 5 to 8 percent but predicts it will deliver modest growth from 2014.
Prior to Monday's announcement, Cobham was expected to report 2013 revenues of around 1.79 billion pounds ($2.9 billion), according to a Thomson Reuters I/B/E/S poll of 17 analysts.
In response to the U.S. slowdown, Cobham plans to extend its restructuring programme for a further two years, until end-2015. It will invest an extra 60 million pounds in the scheme in the hope of saving around 30 million pounds per year on completion.
Cobham said its organic revenue growth, which excludes acquisitions, in the ten months to October 2012 had been broadly flat and expects this to continue for the remainder of 2012. It predicts 2012 earnings per share similar to the prior year.
($1 = 0.6286 British pounds) (Editing by Kate Holton and Mark Potter)
- Tweet this
- Share this
- Digg this