(Bloomberg) -- Cobham Plc is reviewing its bid process for U.S. aerospace and defense contracts as part of a broader restructuring effort following a series of profit warnings and cost overruns on existing supply deals, people with knowledge of the initiative said.
Cobham, a U.K. specialist in aerial refueling equipment and electronic-warfare systems, plans to retrain key sales staff, modify the terms and conditions that it applies to new contracts and pare expenses to reduce bid prices, according to the people, who asked not to be named as the measures aren't public.
Chief Executive Officer David Lockwood is seeking to bolster his company's standing with defense contractors Lockheed Martin Corp., Raytheon Co., Northrop Grumman Corp. and Boeing Co. after a number of contract stumbles. Cobham missed out on the latest phase of a program to upgrade U.S. defenses against anti-ship missiles, while a wrangle with Boeing over a contract to supply refueling gear resulted in a 150-million pound ($187 million) charge.
Cobham is acting after a survey last year showed clients found the Wimborne, England-based company's terms onerous and difficult to accommodate, one of the people said. Its pricing structure is also hurting sales prospects, while poor program execution has led to more than 50 million pounds of delayed revenue from overdue orders, they said.
The measures come as Lockwood, who took over in December, implements a wider cost-cutting drive following a run of five profit warnings in 18 months. The earnings revisions culminated in writedowns and adjustments of more than 830 million pounds on Feb. 16 that included the Boeing hit and sent Cobham stock to its biggest intraday drop for at least 28 years.
Cobham referred Bloomberg to its March 2 earnings statement where the company highlighted “improved customer relationships” as a priority for 2017. In the release, Lockwood said he had “encouraging early engagements” with a number of clients. The company declined to comment further.
To contact the reporter on this story: Benjamin Katz in London at bkatz38@bloomberg.net.
To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Christopher Jasper
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