US defence cuts spark Cobham crash

epa03966770 (FILE) An US Air Force B-52 aircraft during the opening of the III Aeronautical Fair, a five-day exhibition in Medellin, Colombia, 28 June, 2006. The US military on 26 November 2013 flew two B-52 aircraft over islands in the East China Sea under dispute between Japan and China, joining a long-brewing fray in the region as it called for a diplomatic solution. The action came just days after China declared an air defence identification zone (ADIZ) in the East China Sea that includes the islands, claimed by China as the Diaoyu islands and Taiwan as the Tiaoyutai. China declared that aircraft were required to give notice of their intention to fly through the zone or face possible retaliation. While the United States has long refused to take sides on the question of sovereignty over the islands, the US criticized China's move. EPA/Edgar Dominguez

Mark Leftly

6 March 2014

Strained US defence budgets have hit another British manufacturer, with missile launcher maker Cobham suffering a 38% crash in full-year pre-tax profit to £127 million.

The 80-year-old group joins military aircraft engineer Meggitt, engine-maker Rolls-Royce and defence champion BAE Systems in a who’s who of UK manufacturing wounded by budget cuts at the Pentagon.

Chief executive Bob Murphy today warned that “trading conditions are expected to remain challenging in 2014”, with yet more pressure on security and defence budgets over the pond.

However, investors were treated to a 10% dividend hike and will receive 9.68p for every share they own in the group. Revenue was also up 2% to nearly £1.8 billion, but Murphy warned Cobham’s sales — boosts from any acquisitions aside — was likely to decline by “low-to-mid single digits” this year.

Concerns over the Dorset-based group’s recent decision to self-report to the Department of Justice remain over “potentially” irregular sales practices at its tiny satellite tracking systems arm TracStar in Asia last month.

Shares in the firm today rose 5.8p to 306p.