Cobham reported reasonable results as sales declined 5.7% during the year, mainly due to divestment and operating profits dropping by 8.7%. Its costcutting initiatives that began in 2010, Excellence in Delivery, did soften the blow and saved GBP 14 million during the year.
The company continues to generate 66% of sales from defense and security, areas that are seeing significant pressure on spending levels. Still, its acquisition of Thrane & Thrane helped decrease the portion from 73% in 2011. Analysts estimates call for sales to decline again in 2013, but we had initially hoped margins would hold up.
However, analysts were disappointed by commentary that operating profit margins would be down in 2013 as the savings from its costcutting program would be reinvested in the business. Looking out further into 2014 and 2015, sales should rebound as tanker programs begin to ramp up along with stabilization in overall defense budgets worldwide.
The company spent nearly GBP 180 million in share repurchases over the last two years and raised its dividend to 0.088 per share from 0.08. With debt of GBP 624 million and cash of GBP 264 million, Cobham continues to have ample flexibility for managing the business.
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