Cobham's first-half profit falls 3 pct, leaves year outlook unchanged

Thu Aug 8, 2013 2:43am EDT

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LONDON Aug 8 (Reuters) - British defence electronics group Cobham posted a 3 percent fall in first-half pretax profit, weighed down by U.S. defence spending cuts, and kept its full-year outlook unchanged.

Cobham, whose products help aircraft and military vehicles communicate, said its underlying pretax profit for the six months to the end of June fell to 137 million pounds ($212 million) from 141 million pounds.

Revenue rose 2 percent over the period to 864 million pounds, primarily due to the impact of acquisitions and divestments. Its order book increased to 2.5 billion pounds from 2.4 billion pounds at the end of 2012 on the back of strong orders at its Aviation Services division.

"We have delivered results consistent with our full year guidance, in a US defence/security market that continues to be challenging," Chief Executive Bob Murphy said.

"We anticipate that we will continue to perform in line with our previous full year guidance for 2013. While the outlook for US Government spending remains highly uncertain, on the basis of current market trends, there is the potential to deliver modest organic growth in 2014," he said.

Cobham has been making acquisitions in the commercial sector in a bid to reduce its reliance on the defence sector. In July it took full control of FB Heliservices, a helicopter training joint venture with Bristow Helicopters, for 74 million pounds.

Organic revenue at its U.S. defence and security business, which makes up almost 38 percent of Cobham's business, fell 7 percent over the six months and reduced by 9 percent at its non-US defence arm. At its commercial business, which has grown to account for 36 percent of its revenue, organic revenue rose by 8 percent.

Defence firms have been hit by delays and uncertainty over contracts as the United States began reducing its spending by $37 billion for the fiscal 2013 year in March. Its budget is set to shrink by $50 billion annually over the next nine years, unless Congress acts to avoid these cuts.

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