UPDATE 1-Cobham sees return to growth in 2014 after profit fall
LONDON, March 7
LONDON, March 7 (Reuters) - British defence and aerospace supplier Cobham said it expected to make a return to modest organic growth in 2014 after cutbacks in the United States take their toll in 2013.
Cobham, whose products help military vehicles and aircraft to communicate with one another, said underlying profit before tax in 2012 was 302 million pounds ($455 million), down from 328 million pounds in 2011, due to restructuring costs and weaker U.S demand.
Group revenue fell 6 percent to 1.7 billion pounds due to divestments, while core revenue rose 5 percent to 1.7 billion pounds. Order intake fell 19 percent to 1.7 billion pounds.
Analysts on average expected Cobham to post pretax profit of 259.3 million pounds, against revenue of 1.8 billion pounds, Thomson I/B/E/S data showed.
"We have delivered a good set of results in market conditions that continue to be challenging," said Chief Executive Bob Murphy. "The U.S. defence/security market remains highly uncertain. In 2013, group operating margins are expected to be slightly lower than in 2012."
"On the basis of current market trends, we continue to anticipate a return to modest organic growth from 2014, rising above mid single digit growth thereafter," he said.
The U.S. defence and security market accounts for 40 percent of Cobham's revenue. The company said in November it expects revenue next year to fall by a low-to-mid single digit percentage.
About $85 billion in automatic, across-the-board U.S. government spending cuts for fiscal 2013, also known as "sequestration", started to take effect on March 1 after President Barack Obama and Congress failed to agree an alternative budget deal.
The cuts add to earlier plans made by the U.S., the largest market for weapons, to slash $487 billion from its defence budget over the next decade.
Defence contractors BAE Systems, Northrop Grumman and General Dynamics Corp, which have been hit by deal cancellations and contract delays amid the political deadlock, have warned in recent weeks that the tough U.S. outlook could hit sales and earnings in 2013.
Shares in Cobham closed at 229.2 pence on Wednesday, valuing the company over 2.5 billion pounds.