Cobham slips despite plane demand

Mars RoverA leading defence and aerospace firm whose equipment played a role in this week's mission to Mars has reported a drop in profits, despite better demand from a resurgent plane-making sector.

Dorset-based Cobham, which is best known for making systems that allow planes to refuel in mid-air and antennae for fighter jets, has been affected by lower military spending, particularly in the run-up to the US election.
It is looking to offset the downturn through its commercial business, which has been boosted by supplying antennae, oxygen systems and communications kit to aircraft makers. Its customers include Boeing and Airbus, which are ramping up output this year in order to meet airline demand for more efficient planes.

Cobham, which employs 11,000 people worldwide, reported a 4% fall in profits to £142 million in the first half of 2012 after it sold a defence-focused business in the US.

Strong demand from civil aviation helped its commercial business account for nearly a third of its revenues in the first half of 2012 - up to 32% from 27% the previous year. There is 150,000 dollars (£96,000) of Cobham kit on a typical Boeing 787 and 300,000 dollars (£192,000) of its equipment is found on an Airbus A380 superjumbo.

The group warned the US presidential elections later this year have the potential to cause delays to orders in the second half of 2012 or even a 10% cut in spending next year, although this was an unlikely outcome. And orders taken in the period were down 21% to £768 million, partly driven by the sale of the US business, but even stripping this out, underlying orders still fell 8% lower as it came up against strong comparatives from the previous year.

Chief executive Bob Murphy, who joined the group as chief executive from BAE Systems in June, said: "We remain positive on the outlook for our commercial and non US defence/security businesses, which now represent 60% of revenue."

Meanwhile, it is growing sales of military equipment to emerging markets and said Asian defence spending is forecast to exceed that of Europe for the first time this year.

The group makes a diverse range of hi-tech products, including video transmitters on the helmets of competitors in the winter Olympics and video technology used to guide army bomb disposal robots. It also made antennae for the Mars Rover which landed on the Red Planet this week.

Shares fell after the group said it expected underlying earnings for the full-year to be flat, whereas it had previously expected to make slight gains.

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