Thursday, Cobham Plc (COB.L, CBHMF.PK) providing its interim results for the half year ended June 30, reported a double-digit profit growth, helped by strong organic revenue growth in all its divisions, as well as the impact of acquisitions.
Looking ahead to the full year, Cobham sees underlying organic revenue growth to be slightly higher than its Key Performance Indicators, and based on its strong order book and healthy state of its markets to be slightly ahead of its 2008 growth targets.
The Dorset, U.K.-based company's profit on continuing operations before taxation increased to GBP 84 million from GBP 68.2 million in the year-ago period. On an underlying basis, pre-tax profit jumped 24% to GBP 106.6 million from GBP 86.1 million last year.
First-half earnings per share were up at 5.46 pence, compared from prior-year's 4.40 pence. Underlying earnings per share increased 22% to 6.69 pence from 5.48 pence last year. The company attributed the double-digit rise in underlying earnings per share to the strong organic revenue growth in the Technology Divisions.
Underlying earnings per share at constant translation exchange were also up at 19.2% from 15.3% a year earlier. Excluding a GBP 3.3 million in net income relating to its UK Future Strategic Tanker Aircraft or FSTA project costs, the company said its earnings per share growth would have been 13.7%.
Cobham's total profit for the first-half period rose to GBP 62.5 million from GBP 50.6 million a year earlier, whereas profit attributable to equity shareholders increased to GBP 62.4 million from GBP 50.2 million in the last year period. On an underlying basis, profit increased to GBP 76.1 million from GBP 62.1 million in the year-ago period.
Profit from continuing operations rose to GBP 60.7 million from GBP 50.6 million in the prior-year period. The discontinued operations relate to the disposal of the Fluid and Air group in 2005, the company noted.
The British manufacturing company's first-half group trading profit or underlying operating profit increased 27.7% to GBP 106.5 million from GBP 83.4 million in 2007 first half, primarily due to a 12.5% Group organic growth, with acquisitions contributing an additional GBP 6.5 million. Underlying trading margin was 16.8%, which was broadly unchanged when compared with last year's trading margin of 16.9%. Underlying trading margin at its Technology divisions was down 1.2% points to 18% from last year.
For the half year ended June 30, total group revenue on an underlying and statutory basis increased 28% to GBP 632.3 million from GBP 493.8 million in the previous year. The company noted that revenue growth was driven by strong organic growth across all its divisions, as well as the impact of acquisitions.
Organic revenue growth in the first half benefited from particularly strong revenue from vehicle intercoms and the FSTA program and came primarily from its from the three Technology Divisions.
During the period, the Group completed or agreed the purchase of five strategic businesses for a combined price of approximately US$1.1 billion. The company stated that the acquisitions recently completed are being successfully integrated and are trading in line or ahead of expectations.
On a segmental basis, the Group's Technology Divisions's revenue rose to GP 525.9 million from GBP 400.3 million, with organic revenue growth of 14.3%. Trading profit for this division increased to GBP 94.9 million from GBP 76.9 million last year.
Of this, Cobham Avionics & Surveillance revenues grew 27.4% year-over-year to GBP 198.9 million, driven by organic growth of 9.2% and acquisition of Patriot Antennas, S-TEC, and MMI Research. Trading profit was GBP 31.5 million, higher than GBP 26.7 million last year.
Cobham Defence Systems, comprising Cobham Defence Electronic Systems and SPARTA, grew revenues at 41.6% to GBP 196.6 million, helped by organic growth of 13.2% and acquisitions of Sensor and Antenna Systems, Lansdale, and SPARTA. Trading profit was up at GBP 41 million, when compared with GBP 31.8 million last year.
Cobham Mission Systems' total revenue was up 22.4% at GBP 138.7 million, driven by organic revenue growth of 21.8%. Trading profit was up at GBP 22.2 million from GBP 18.4 million a year earlier.
At Cobham Aviation Services, revenue increased 13.5% to GBP 107.3 million, due to favorable currency translation impact and organic growth of 4.8%. Trading profit for the division was GBP 9.7 million, higher than GBP 9.1 million recorded last year.
The company further said that its Board has approved an interim dividend of 1.345 pence. The dividend will be paid on December 12 to all shareholders on the register as at November 14.
Looking forward, Cobham expects the underlying momentum in organic revenue growth for the full year to be slightly higher than its Key Performance Indicators target. Its Board is also confident of being slightly ahead of its growth targets in 2008, given the strength of the company's order book and the healthy state of its markets.
COB.L is currently trading on the LSE at 218.25 pence, up 1.00 pence, or 0.46%, with a volume of 2.63 million shares.
CBHMF.PK last traded on June 27 at $3.74.
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