British defence supplier Cobham said it had voluntarily informed the U.S. Department of Justice (DOJ) of an internal investigation into potentially irregular practices in the sale to Asia of products made by a Cobham unit.
The company said on Tuesday that the products were made by Florida-based TracStar Systems Inc., part of Cobham’s SATCOM arm that makes, sells and supports satellite and radio communication equipment.
The company was alerted to the issue over the past week by an employee and the DOJ will conduct further investigations with which the company would cooperate, said Cobham spokesman Greg Caires.
“It would be premature to provide additional detail on the investigation as it is now ongoing,” he said. “Investigations of this sort could take several months and we will update the market as appropriate.”
At 1148 GMT, shares in Cobham were 2 percent lower at 289 pence against a FTSE 250 index down 0.45 percent.
Cobham bought TracStar, whose products include satellite tracking systems used by governments and commercial customers, in 2005.
TracStar’s worldwide revenue in 2012 was under 15 million pounds, or less than 1 percent of Cobham’s group revenue that year, the company said.
“We understand this is not systemic and won’t affect overall trading,” said Liberum Capital analyst Ben Bourne. He said such cases can lead to fines and some legal costs but that Tracstar was only a small part of the business.
Cobham has been trying to increase its exposure to commercial markets to make up for falling spending by its defence customers. In November it lowered its sales forecast for 2014, citing the impact of U.S. budget cuts.