Cobham PLC (LON:COB) is preparing to reinstate its dividend as it seeks to turn a corner after a difficult few years.
The FTSE 250 defence firm, which is the UK’s third largest behind BAE and Rolls-Royce, said it would pay out a dividend of 1p per share for the 2019 financial year, with 40% of this to come at the next set of interims.
READ: Cobham to take additional £160mln profit hit as it settles its aerial refuelling contract dispute with Boeing
The dividend will be the first that Cobham has paid out since 2016 as over the last few years it has been rocked by various upheavals including multiple profit warnings, an investigation by the Financial Conduct Authority (FCA) around handling insider information, two £500mln discounted rights issues less than a year apart, and an aerial refuelling tanker dispute with Boeing that ended up costing it £160mln to settle.
However, the group’s chief executive David Lockwood said some benefits of the company’s actions taken to rework the business were “starting to come through” and reiterated the firm’s guidance for the coming year.
“We continue to believe that there are considerable opportunities to improve the performance of the group over the medium term and our continuing focus on customers, culture, operational improvement, business simplification and cash will allow us to realise this potential."
Cobham’s underlying operating profit for the year was £196.1mln, down from £213.1mln the year before while revenues also fell to £1.8bn from £2bn.
The profit drop was blamed on a £5.5mln adverse currency translation as well as a £22.5mln lost contribution from divestments.
One area of improvement was the order intake for the group, which was up in the year at £1.95bn from £1.91bn in 2017.
In a note, analysts at UBS said the results had come in “slightly above consensus”, and the figures were “reassuring on the business turnaround”.
The Swiss bank added that Cobham’s free cash flow of £62.6mln in the year had “significantly exceeded expectations”.
The performance did mask a mixed performance across Cobham’s divisions, however, with the Advanced Electronic Systems arm underperforming in contrast to a “strong performance” from Mission Systems.
Looking forward, the firm said it expected most of its commercial end-markets would see volume growth; however, it cautioned that high levels of government debt and budget deficits in its largest defence markets, such as the US, would “constrain growth” in spending.
In late-morning trading Thursday, Cobham shares were down 1.5% at 118p.