Cobham issues fresh profits warning after 'turbulent and disappointing year'
Struggling aerospace and defence firm Cobham has issued another profits warning after revealing that it would book a mammoth £574 million writedown and take a £150 million hit from a US military contract.
The writedown includes costs linked to its acquisition of Aeroflex in 2014 and the group said delays and an "onerous commercial arrangement" for its KC-46 air-to-air refuelling tanker have resulted in soaring costs for the project.
It will also take a £33 million charge against other assets in the balance sheet.
As a result, it expects full-year underlying trading profits to come in at £225 million, down from the £245 million it forecast in January.
Thursday's profits warning is the company's fifth in just over a year.
Boss David Lockwood, who was drafted in last August following the departure of Bob Murphy, said 2016 had been an "incredibly turbulent and disappointing year", and warned that the next 12 months would also be challenging.
"Execution failure in many businesses led us to miss expectations badly and provides a poor entry point into 2017," he said.
Last year the beleaguered firm was forced to issue an emergency £506.7 million rights issue to reduce its debt pile.
Mr Lockwood added: "The medium term provides significant opportunity with encouraging market dynamics and strong product and programme offerings. The route to realising this potential is strong operational performance and financial control, which will be the relentless focus through 2017. This has commenced and the potential to improve is clear."
Shares in Cobham plunged over 20% in morning trading off the back of the news.
Neil Wilson, s enior market analyst at ETX Capital, said: " We're getting used to dire news from the group these days and today it was a £150 million charge on the KC-46 Tanker programme with Boeing.
"Investors are ditching the stock as it looks like the problems at Cobham go further than anyone realised when all this started.
"There is every reason to think that management's review of the business may throw up further concerns and more write-downs. Chief executive David Lockwood has a bit more tidying up to do after the Bob Murphy years of acquisitions and diversification."