Troubled aerospace and defence firm Cobham's shares dropped more than 20 per cent this morning after it issued its fifth profit warning in less than two years.
The FTSE 250-listed company downgraded its 2016 trading profit to £225m after deducting £20m of year-end adjustments from last month's forecast. In January, the firm lowered its guidance to £245m after previously anticipating £255m to £275m.
Cobham said it would pay a £150m charge on its work with Boeing's struggling KC-46 tanker programme.
Mike Wareing, chairman of Cobham said "clarity" has been gained that the costs falling to Cobham's account for the project are "far greater than the board understood last year".
The engineering group will also pay non-cash impairment charges of £574m, generated as a result of lower production and growth in 2016.
And the board's outlook of 2017 is grim. The Dorset-based group said it's difficult to predict the year ahead due to "undoubted" uncertainties, but even matching its disappointing 2016 figures would be "challenging".
David Lockwood, chief executive of Cobham called 2016 a "turbulent and disappointing" year.
"Execution failure in many businesses led us to miss expectations badly and provides a poor entry point into 2017."
He said gaining strong operational performance and financial control will be the "relentless focus" in 2017. "This has commenced and the potential to improve is clear."
Insult to injury
Today's announcement added insult to injury at a time when shareholders must have thought it couldn't get any worse, said Mike van Dulken, head of research at Accendo Markets.
"Today’s update suggests not only will 2016 profits miss targets, but 2017 will remain tough," said van Dulken. "Back trading near 14-year lows, the shares have breached eight-month support at 130p, ignoring May lows of 125p on the way down."
Preliminary results for the year ended 31 December will be announced on 2 March.