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Cobham trading in line but outlook still uncertain

The troubled KC-46 tanker programme has already seen heavy provisions

Air tanker
In-flight refuelling is one of Cobham's specialities

Cobham Group PLC’s (LON:COB) recovery to full health is not going to be quick, the aerospace parts maker repeated today.

Trading the first quarter at the ongoing business was in line with expectations said David Lockwood, chief executive, but the focus remains on mitigating the material risks and uncertainties facing the group.

This includes onerous contracts and other legacy issues such as getting sign-off on the troubled KC-46 tanker programme, which has already seen heavy provisions.

The Aviation Services Sector's UK Defence Helicopter Flying School contract concluded on schedule at the end of the first quarter of 2018. 

Cobham sold its AvComm and Wireless business for US$455mln in March following which the company paid back US$573mln of senior debt and cancelled a US$75mln credit agreement.

Lockwood said the AvComm disposal had removed one element from 2018’s performance, but there remained a range of possible outcomes.

“As previously announced, the Group anticipates limited cash generation in 2018. This is partly due to the pattern of receipts and payments relating to its onerous contracts with a weighting of cash outflows in H1 2018. 

“The board continues to have confidence in the group's medium-term prospects.”

Cobham had to be bailed out by shareholders last year after a series of profit warnings. The engineer posted a statutory operating profit of £104.1mln for the year to December, compared to a loss of £779.1mln in 2016.

Quick facts: Cobham PLC

Price: 157.5 GBX

LSE:COB
Market: LSE
Market Cap: £3.77 billion
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