March 7, 2019 / 7:18 AM / a month ago

British engineer Cobham intends to reinstate dividend

LONDON (Reuters) - British engineer Cobham said it planned to reinstate a progressive dividend after it strengthened its balance sheet, settled a dispute with Boeing and forecast more progress in 2019.

Britain’s third-biggest defence and aerospace group behind Rolls-Royce and BAE Systems said it expected to see strong demand for its products in markets such as the United States, but government debt and budget deficits would put a focus on value for money.

Known for its air-to-air refuelling technology, Cobham had been in recovery mode since a string of profit warnings forced it into a rights issue in 2017.

In 2018 that recovery was disrupted by a dispute with Boeing, the world’s largest planemaker, over a refuelling programme delay. It was settled last month when Cobham took an additional exceptional charge of 160 million pounds to fix the problem.

Cobham said it succeeded in strengthening its balance sheet in 2018, moving from a net debt to core earnings ratio of 3.0x two years ago, to a figure of 1.5x now.

“We continue to believe that there are considerable opportunities to improve the performance of the group over the medium term and our continuing focus on customers, culture, operational improvement, business simplification and cash will allow us to realise this potential,” Chief Executive David Lockwood said.

It reported 2018 underlying operating profit of 196 million pounds ($258.1 million), down from 213 million pounds the year before. With 10.3 million pounds of net cash at the year end, it expects to pay a full-year dividend of 1.0 pence.

Cobham said it had seen progress across the group, apart from in the Advanced Electronic Solutions unit.

That division, which provides critical data communications on land, at sea and in the air and space, now had a new management team, a new strategy and a cost saving plan, it said.

Reporting by Kate Holton, editing by James Davey

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