* Maintains guidance for 2014, sees growth next year
* HY profit down 14 pct due to lower military spending
* Shares rise 3.3 pct
(Adds CEO comment, analyst comment, share price)
By Sarah Young
LONDON, Aug 7 British defence company Cobham
said growth would return in 2015 as it maintained its
outlook for declines this year, with U.S. military spending cuts
and currency headwinds lowering its half-year profit by 14
Western defence firms are being squeezed as their biggest
customers in the United States and Europe reduce spending amid a
withdrawal from Afghanistan and Iraq, prompting firms like
Cobham to look to new sectors and markets.
For the year Cobham said it was maintaining its guidance for
organic revenue decline in the low-to-mid single digits, with a
return to organic mid-single digit revenue growth in 2015.
Growth next year would come from a moderating rate of
decline in U.S. defence spending plus increasing revenue from
defence opportunities outside of the U.S., and strong commercial
growth, Cobham said.
"We've seen demand from the Middle East. We are continuing
to see as things progress, more demand in that region for
services," Chief Executive Bob Murphy told reporters on a call.
Cobham has also sought to expand its exposure to commercial
or non-defence markets, with a focus on providing technology to
the satellite and telecommunications sectors.
In May it announced a $1.46 billion acquisition of U.S.
communications equipment maker Aeroflex Holding Corp
which is due to complete in the third quarter.
Cobham shares were up 3.3 percent to 296.5 pence at 0837 GMT
with analysts saying it was reassuring that the company was
sticking to its guidance, following a month when the company's
shares lost 9 percent of their value.
"Having successfully managed expectations, these results
from Cobham are in line - which is a good achievement given the
plethora of issues that have been a headwind in the first half,"
said Royal Bank of Canada analysts, who hold a "neutral" rating
on the stock.
Cobham reported underlying pretax profit of 118 million
pounds ($199 million) in the six months to the end of June, down
from 137 million a year earlier. That beat a consensus forecast
of 111 million pounds from an analysts poll.
After stripping out currency changes the drop in profit
reduced to 10 percent. The British pound gained more than 3
percent in the first six months of the year against a
trade-weighted basket of currencies.
Cobham also faced a 10 percent decline in defence and
security revenues due to shrinking U.S. military budgets and a
delay to a new satellite network being launched by Inmarsat
, for which Cobham provides a linking terminal.
Organic revenue, Cobham's preferred metric, fell 4 percent
in the half year as the decline of the defence business outpaced
growth of 8 percent in its commercial business.
The FTSE 250 company said it would raise its interim
dividend by 10 percent to 2.904 pence per share.
($1 = 0.5938 British Pounds)
(Reporting by Sarah Young; editing by Jason Neely)