Cobham warns 2013 sales to fall on U.S. slowdown
LONDON (Reuters) - British aero electronics group Cobham (COB.L) said it expected its revenues to fall by "low-to-mid single digits" in 2013 due to increasing pressures on the defense budgets of the United States.
Defense firms around the world have seen contract awards delayed and some existing deals cancelled as politicians in the U.S., the world's biggest spender on military equipment, argue over how to cut the country's deficit.
"The U.S. defense and security market remains challenging with the market continuing through the down cycle, driven by the overall fiscal pressure the U.S. faces but with a lack of political consensus on U.S. government budgets," Cobham said in a statement on Monday.
"Overall, Cobham is therefore planning for total group revenue to decline organically by low-to-mid single digits in 2013."
The U.S. defense and security market accounts for around 40 percent of Cobham's total revenue.
Prior to Monday's announcement, Cobham was expected to report an average 2013 pretax profit of 275.48 million pounds ($438.27 million) on revenues of 1.79 billion pounds, according to a Thomson Reuters I/B/E/S poll of 17 analysts.
In response to the U.S. slowdown, Cobham, whose equipment aids communication between military vehicles and aircraft, plans to extend its ongoing restructuring program for a further two years, until the end of 2015.
It will invest an extra 60 million pounds in the restructuring scheme in the hope of saving around 30 million pounds per year on completion.
Cobham said its organic revenue growth in the ten months to October 2012 had been broadly flat in line with its expectations. It expects this to continue for the full year and sees its 2012 earnings per share to be similar to the prior year.
(Reporting by Rhys Jones; editing by Kate Holton)
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