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17 Feb 17. Cobham shares nosedive after fifth profit warning. A fifth profit warning in less than a year, writedowns and provisions totalling £811m and the prospect of another rights issue just eight months after a £500m emergency fundraiser last year sent shares in the British defence group Cobham spiralling again. Within the catalogue of errors reported by the company is a reputation-shredding reverse on its biggest contract: selling its internationally lauded air-to-air refuelling technology to its most important customer, Boeing. This time two years ago Cobham was a star of the FTSE 100, with its shares trading at 345p. Last night the shares closed down 15 per cent, 20¾p lower at 114¾p, valuing the group at less than £2bn. In an unscheduled statement to the stock exchange, Cobham yesterday released a multilayered profit warning, the extent of which appears to have shocked even its new chief executive, Dave Lockwood, who arrived two months ago from Laird, the smartphone technology group. Despite not being there for 50 weeks of it, he called 2016 “an incredibly turbulent and disappointing year”, adding: “Execution failure in many businesses led us to miss expectation badly and provides a poor entry point into 2017.” With £1bn of net debt now standing at three times expected ebitda operating profits against bank borrowing thresholds fixed at a ratio of 3.5 times, the company added: “The balance sheet is clearly not strong enough to properly support the operations of the group.” Analysts took that as a signal that when the company reports its 2016 results in a fortnight Mr Lockwood will set out details on another rights issue. An 8 per cent cut in the expected underlying trading profit for 2016 to £225m, and a warning that 2017 could well be worse, was just the tip of the iceberg of Cobham’s latest bad-news day after profit warnings just a month ago, at an October trading update, at the first-quarter results in the spring and at the 2015 full-year results last March. Yesterday it revealed that the landmark £1bn deal to put its aerial refuelling equipment on the Boeing KC-46 Pegasus tanker plane will now actually cost Cobham £179m, turning it into an “onerous commercial contract” with “longstanding technical and conformance issues”. In addition to that, the spending splurge by previous chief executives — Allan Cook, up until the end of 2009, Andy Stevens, who quit at the end of 2011 with a bad back, and Mr Lockwood’s immediate predecessor, Bob Murphy — has unravelled with an unheralded £574m writedown in the value of five acquired business. The impairment charges effectively write off much of the company’s £548mi Aeroflex deal in 2014 that was overseen by Mr Murphy and John Devaney, then the Cobham chairman, who quit just before Christmas last year.
The writedowns revalue Cobham’s move into civilian wireless networks, its operations in battlefield communications for the US military and its electronics for the US space programme. The company said there were another £58m of charges covering further accounting revaluations as well as exposure to multiple legal and regulatory costs. Kepler Cheuvreux, the stockbroker said: “This is another major negative for the firm, with an alarming 2017 outlook. We understand . . . another rights issue is possible to plug a distressed balance sheet. [This is an] appalling company performance.” (Source: The Times)
15 Feb 17. Curtiss-Wright Corporation (NYSE: CW) reported financial results for the fourth quarter and full-year ended December 31, 2016.
Fourth Quarter 2016 Highlights
• Earnings per diluted share of $1.58;
• Free cash flow of $135m, resulting in free cash flow conversion of 192%, as defined herein;
• Net sales of $566m;