Cobham scales back due to US spending cuts
UNCERTAINTY over US military spending has hit half-year profits at Cobham and forced the defence group to scale back its growth targets.
Cobham, which makes air-to-air refuelling systems and military communication equipment, blamed US government spending cuts of $37billion (£24billion) in 2013 for a 3 per cent fall in profit to £137million.
The US budget is set to shrink by $50billion (£32billion) annually in the next nine years, unless Congress acts to avoid such cuts.
Cobham now expects mid-single digit growth after 2014, compared to March, when it forecast expansion towards the high end of the single digit range.
Chief executive Bob Murphy said: “We’ve really not seen any real progress in the US as far as how they’re going to effectively deal with a declining budget.”
But orders increased 4.1 per cent to £2.5billion, benefiting from strong demand in its aviation services arm, which maintains civil and military aircraft. Cobham also increased its dividend a 10th to 2.64p.
It has bought Axell Wireless and took full control of FB Heliservices to reduce its reliance on defence and is looking out for other buys.