Shares in Cobham plunged more than 20% early on Thursday (16 February), after the aerospace and defence group issued a fifth profit warning in just over a year.

The FTSE 250-listed said the warning on profits came following the completion of further write-downs, after an internal review found the company's balance sheet was "clearly not strong enough". On the back of a further £20m ($24.9m, €23.5m) profit write-down, the Dorset-based group said it expects underlying trading profit to amount to £225m, sharply below the £245m outlined in a trading update in January, which was itself revised down from the £255-275m predicted in October.

Cobham, which only issued its last profit warning in January, added it will recognise £574m worth of costs related non-cash impairment of goodwill and other intangible fixed assets. The company has also taken a £179m hit, including £150m from the KC-46 air tanker contract with Boeing, on the back of higher costs to complete contracts and lower recovery from some of its clients.

Over the past couple of weeks, Cobham, which has scrapped its dividend, successfully resolved a number of long-standing issues after holding a series of meetings with the aerospace giant to implement a host of changes into the KC-46 schedule.

However, despite the positive outcome of the negotiations, the company said it had taken the charge when it "became clear that the costs to complete the development schedule would fall largely to Cobham's account".

Group chairman Mike Wareing admitted the latest profit warning was a blow, although he remained confident the company would overcome its ongoing issues.

"Great progress has been achieved operationally and commercially in the last few weeks, with clarity gained that the costs falling to Cobham's account are far greater than the board understood last year," he said.

"Whilst the charge to finish the development phase is hugely disappointing, it is essential and does bound all historic liabilities, as well as appropriately funding the remaining work."

Neil Wilson, senior market analyst at ETX Capital, said Cobham's struggles could be traced back to the "bad investment" that was its acquisition of Aeroflex, the wireless business, for £900m in 2014.

"This was too high a price and Cobham has struggled ever since. A £500m rights issue followed and some of that was used to pay the dividend," he said.

"It's all a bit of a mess but the plunge in the stock might just about be the worst of it."