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COBHAM – TOO LITTLE TOO LATE?

02 Dec 05. A flurry of activity continues around the restructuring of Cobham Plc after the flurry of profit warnings last year. The Management called in McKinsey’s who recommended slimming down of the Group and the creation of five key technology areas. The fluid and countermeasures Divisions have been pout up for sale with the announcement of the purchaser for the latter expected soon. Armtec is believed to be the favoured bides having won the order that created the requirement for the sale of the business. Cobham invested a great deal of money in the Wallop business including building a brand new countermeasures plant in the U.S. Armtec, who purchased BAE’s countermeasures business stole the order from under Cobham’s nose with its usual dynamism. Armtec’s countermeasures business is growing rapidly and a purchase of Wallop would set it up as a contender to Chemring, a business that continues to flourish with a raft of new orders this year for its advanced flare systems.

“The recent Hercules disaster in Iraq has called for new techniques to be used in the deployment of countermeasures,” a source told BATTLESPACE Editor, Julian Nettlefold. “In the early Iraq deployments the techniques used for low flying and landing required a ‘Christmas Tree’ effect as deployed by the doomed Hercules that was on a landing site search mission. The Hercules deployed its countermeasures after a missile locked on and the countermeasures deflected it. However when it flew on to the end of the valley it was met with a salvo of 15 missiles that gave the plane and its crew no chance. The flight had been vectored to the missiles by a radio scout on the airfield; it had only been airborne for 8 minutes. Crews are now trained to deploy countermeasures more sparingly.”

Cobham’s new management appear to be concentrating on developing the business into a more coherent and managed structure to provide better margins and new business. However the briefing given to journalists last week did not hold out much hope for huge surge in orders beyond the current £1bn turnover. The estimate for bringing these structures together to create better earnings per share was estimated at two years.

“What if there is another announcement, such as the cancellation for Eurofighter Typhoon Tranche 3, that would have a serious effect on your share price?” the Editor asked Andy Stevens COO of Cobham, “Would this cause further worries in the City and throw you into the arms of an predator such as Smiths or Textron?

“Firstly, the disposal of our fluid businesses lessened our dependence on Eurofighter and secondly the shares rose 16% on the announcement of the re-organisation,”

“We are actively working to communicate our new strengths and structure to the press and the City alike and have developed a new Public Relations strategy to do this with Weber Shandwick, thus there will be more visibility.” Said Julian Hellebrand, Group Director of Communications.

“We inherited a rag bag assortment of 80 companies, many of them, particularly in the U.S. turning over less than $1m. Not only were a number of them competing amongst themselves, there was no cohesion of communication between companies. The slimming down and rationalisation will mean more streamlined management and less overhead structure for such key areas as bidding for new business. We recently gave a presentation to Boeing showing them the Group capabilities, many of which they were unaware of. We aim to be Number 1 or 2 in these new areas”

Cobham employs 8000 people in the in the U.S., 4000 in the U.K. and 1800 in Australia. The U.S. accounts for 45% of turnover, Australia 10% the rest in U.K. and Europe. Turnover has trebled since 1997 and the civil: defence split is 50:50.

The Group, under Alan Cook, ex-GEC, is actively recruiting in key positions, Charles Hughes from Rolls, who developed the JSF business in the U.S. has been made VP Marketing, a new Washington Office has been established under B

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