Pushed higher by the Advent bid

Cobham has unexpectedly published its H1 results this morning (a week ahead of schedule), in order to match today’s news of a takeover proposal of the company by US Advent at a £4bn EV. On the results side, the company confirmed its recovery, and continues to improve on the profitability side, while maintaining a healthy balance sheet.

Is the turnaround for 2019?

Order intake is up 13% yoy to £1.95bn. Revenues were down 2% yoy to £1.86bn, below the expectation of £1.89bn. Operating profit was up 5% to £112m. EPS was 3.1p, down from 3.7p in FY17. Positive net cash position of £10m vs. £383.5m net debt last year. Expectation of progress in 2019 remains unchanged, organic growth should reach c. +2% in FY19.

Slowly clearing up outlook

Cobham reported encouraging results, with lower revenues following the divestment of non-core activities recently. The operating profit on the contrary remained broadly flat yoy, leading to a higher operating margin. The outcome of the conflict with Boeing about the KC-46 tanker is leading to additional charges for Cobham but the final resolution is getting closer, good news. We expect a positive trend for the group in the future but remain cautious considering the challenges that the group stil

Half-time of the recovery as expected

Cobham reported mixed FY 17 results with a strong cash flow generation despite weak income statement figures. While the company was expecting 2017 to be the bottom in its performance, it reported strongly growing FCF thanks to a tight working capital management and lower interest charges. Organic revenues grew by 1%, while the operating margin dropped from 11.6% to 10.2%. Cobham keeps its expectations unchanged for FY18 but the divestment might affect the performance.

Long and tough recovery affected by some weak markets

Cobham reported lacklustre H1 results, with increasing reported revenues thanks to quite strongly positive currency effects but with flat organic growth. Similarly, the operating profit was supported by currency effects but every division saw its organic operating margin decreasing more or less due to operational issues, lower volumes, or lower cost control. Thanks to the reduction in debt after the rights issue, the net finance expense decreased, leading to a fairly limited 10% decrease in prof

Have we (finally) reached the bottom?

Cobham released its FY results, a few weeks after its last profit warning which had already given almost all the negative news (i.e. some impairments and exceptional charges). Today the company announced what we were expecting, a £500m rights issue to strengthen the balance sheet. Finally, and as was also expected, the company will not distribute any dividend in 2017 considering the low cash flow generation, the really uncertain outlook for 2017 and the remaining issues it faces.

Sombre 2016 and lost faith in the future

Cobham released today an umpteenth profit warning two weeks before it releases its annual results. This time it not only concerns the operational issues, but also gives colour to the impact of the weak company performance on the asset-carrying value in the balance sheet. Moreover, the company looks clearly worried about 2017 and expects a worse year than the already tough one that has just ended.

Process focused

History is likely to call 2016 Cobham’s annus horribilis. In 2015 the future looked bright, with the company delivering its first organic growth in 10 years. However, 2016 has seen three profit warnings and both the CEO and CFO resign. Two recent acquisitions, Axell Wireless and Aeroflex, have proved extremely challenging to integrate into Cobham, taking the wireless business from a 15% margin to significantly loss making. The company is in a hiatus as it awaits new management – CEO David Lockwo

Yet another profit warning in a weak demand context

Cobham released a profit warning today, right before its Q3 results, mentioning a challenging environment. Underperformance has been driven by the SATCOM and Wireless business units both in the Advanced Electronic Solutions sector. Also, the Mission systems sector, despite being in line with expectations, remains at risk because of the US KC-46 tanker.

Back to the future

The FY16 profit warning and rights issue announced with the Q1 trading statement reflect the limited progress Cobham has made in recent years. The main problem appears to be a lack of core organic performance and reliance on an M&A-driven strategy to instil growth. These are similar criticisms to those levelled at previous management teams. Cobham now appears vulnerable as the technology positions and assets are attractive, but it looks like a slow process to drive value recovery in its current

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