Cobham warns on profits for fifth time in 15 months

And that makes five.

Troubled aerospace and defence group Cobham issued its fifth profit warning in less than two years on Thursday, reporting that full-year earnings will be even lower than previously predicted and saying it will be “challenging” to match even those disappointing results in 2017.

Cobham had already abandoned its dividend plans and predicted disappointing underlying trading profit of £245m in a trading update last month, but today the company said profits would be even lower, at £225m.

The further £20m reduction came after Cobham’s new management team undertook an “extensive balance sheet review”, and includes bad debt charges, IT security expenditure and amortisation.

The group’s full-year results will also include more than £800m of “exceptional” charges, including a £574m writedown on the value of intangible assets related to three of its business units.

The company also highlighted that discussions with Boeing over changes to a major contract had ended in disappointment, with Cobham taking a £150m charge related to the “onerous commercial arrangement”.

In a trading update on Thursday, the company said:

The group has many operational issues which require attention in addition to reversing the current negative performance trajectory. Some actions to address these have already commenced but are in an early stage.

Such actions may also have associated costs. Given these and the issues highlighted above the board considers that delivery of a similar performance to that of 2016 in 2017 may be challenging.

The balance sheet is clearly not strong enough to properly support the operations of the group, given the important role it plays in many customer programmes.

David Lockwood, Cobham chief executive, said:

2016 was an incredibly turbulent and disappointing year for Cobham. Execution failure in many businesses led us to miss expectations badly and provides a poor entry point into 2017.

The medium term provides significant opportunity with encouraging market dynamics and strong product and programme offerings. The route to realising this potential is strong operational performance and financial control, which will be the relentless focus through 2017. This has commenced and the potential to improve is clear.