UPDATE: Cobham Set To Meet Forecasts, Expects Growth Revival In 2015
LONDON (Alliance News) - Cobham PLC (LON:COB) Thursday said trading in the first nine months of the year has been in line with its expectations, though further progress would be needed in the final part of the year to meet all of its engineering targets, and it expects revenue growth to revive in 2015.
The FTSE 250-listed manufacturer said trading in the nine months to the end of September had been in line with its expectations, boosted by good order momentum in its short cycle businesses. It said it has made progress on meeting aerial refuelling engineering milestones in the year, but said its performance would have to continue in the remainder of the year to meet the rest of these targets.
The group said it is focusing on cost reduction across the business and expects to meet its targets for cost savings for the full year, with integration and rationalisation work to be substantially completed by the end of the year.
In line with its previous expectations, Cobham expects organic revenue to fall by low-to-mid-single digits for the full year, dragged lower by the ongoing difficult conditions in defence and security markets but partially offset by a stronger commercial market performance.
The group does expect to generate mid-single digit organic revenue growth next year, on the back of a stabilisation in the US defence and security market, increasing revenue from non-US defence and security markets and continued growth in commercial.
During the period, it won two big contracts for its Aviation Services arm. The first was awarded by the Australian Maritime Safety Authority to provide an airborne search and rescue service from 2016 and is worth in excess of AUD700 million over its 15 year duration. The second was a contract extension with Chevron Australia Pty Ltd, a unit of US oil group Chevron Corp, to provide flights to support its operations. That contract is potentially worth more than AUD160 million.
Cobham said will post its results for 2014 on March 5, 2015.
Shares in the company were trading flat at 289.6 pence in early afternoon trade on Thursday.
Liberum said the results were in line with its expectations, saying it expects no change to its full year estimates for the company. It noted some had feared the results could be worse.
The broker said its progress on its aerial refuelling projects means cash conversion for the company should improve and added that along with the "encouraging" recent contract wins for its Aviation Services arm, there remains scope for improvement in the Communications & Connectivity market.
Liberum reiterated its 330 pence price target on the stock.
By Sam Unsted; email@example.com; @SamUAtAlliance
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