Cobham (COB) reported weak results driven by a decline in defence-related businesses. Revenue of £892 million was down 7% from the first half of 2010 and operating profit of £113 million was down 15% from the prior period. The company is shuffling its reporting segments following announced divestments of multiple divisions and expects to complete them in 6 months to 9 months.
However, the important metric is that the company continues to generate 42% of sales from U.S. defence, an area that is seeing significant pressure on spending levels. Our estimates call for low-single-digit growth for the year, and we are maintaining our fair value estimate at this time. That said, we are currently in the process of a broader defence spending review following the recent legislation to raise the debt ceiling in the U.S. and we may revise our fair value estimates at the conclusion of this process.
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