Cobham is hit by delays on US contracts

DEFENCE company Cobham said continued delays in the award of US defence contracts would dent full-year sales and that it was uncertain about its growth prospects for the rest of 2010.

Cobham, led by Andy Stevens, said in a trading update: “Given the uncertainty over growth in the fourth quarter, the board recognises that the group could make only limited underlying progress in the full-year.”

Its share price went on a rollercoaster ride plunging 8.6 per cent to 213.8p on the news this morning before recovering to close 0.9 per cent up at 230p.

The Dorset-based firm, which makes fuel tanks for F-16 fighter planes and weapons release systems for the Eurofighter Typhoon, warned of delays in August and May but still increased its interim dividend by 10 per cent and expressed some hope that trading would pick up.

Cobham said that limited progress in the full-year would come largely as a result of cost savings, which would amount to around £10m.

Revenues at its manufacturing divisions, which account for 87 per cent of its turnover, were also slightly down in the first nine months, Cogham said.

However, it welcomed Britain’s move to beef up its cyber security following the strategic defence review and said its strong position in high technology defence and security markets “reinforces the board’s confidence of continuing progress over the medium term”.

Cobham said its net debt decreased to £319m at the end of September compared to £373m in the three months to 30 June as a result of strong operating cash conversion in and favourable exchange movements.