Cobham may sell wireless units in next stage of turnaround

* Reviewing Wireless and AvComm units in portfolio

* First (Other OTC: FSTC - news) -half pretax profit falls 8 pct

* Says still uncertain on the full-year outcome

* H1 sales beat expectations, shares rise 5 pct (Adds CEO comments, shares)

By Paul Sandle

LONDON, Aug 3 (Reuters) - British aerospace and defence electronics group Cobham (Other OTC: CBHMF - news) said it may sell two wireless businesses in the next stage of its turnaround plan.

Chief Executive David Lockwood, who took over in December after a string of profit warnings left the group in a precarious position, said there was little overlap between the Wireless and AvComm units and the rest of the business, and there were a number of options for the units, including a sale or a joint venture.

He was speaking after the group reported stronger-than-expected sales growth in the first-half on Thursday, sending its shares up 5 percent, although underlying profit fell.

The Wireless unit, which does 5G mobile network testing, and communications equipment maker AvComm, together account for around 10 percent of Cobham's revenue. The group acquired AvComm through its ill-fated Aeroflex acquisition in 2014, which increased the group's debt burden.

Lockwood said a 500 million pound ($662 million) rights issue earlier this year meant the company did not have to sell the units at any price.

"We could review the portfolio in an environment where no one could think we were under pressure for a fire sale," he told Reuters in a phone interview.

"Fundamentally, what's left is clearly core Cobham, and we are considering the best routes for those two."

Lockwood said Cobham, which is known for its air-to-air refuelling technology, had broadly met market expectations in the first half, but there was still work to do before it had the level of visibility normal in the aerospace and defence sector.

"We had to start hitting our numbers reliably, which we've done, albeit while we might look like a serene swan on the top we are paddling quite hard underneath," he said.

Cobham reported a 9 percent rise in revenue to just over 1 billion pounds for the six months through June, helped by favourable currency movements. Underlying pretax profit fell 8 percent to 69.5 million pounds.

The company has said it will be a challenge for full year profit to match last year's underlying pretax profit of 175.2 million pounds.

Lockwood said on Thursday the uncertainty remained.

"We are at a very early stage in the turnaround and we still have got the onerous contracts to work through and until we have got more evidence that we are improving our performance, it's very premature to change our view," he said.

He said margins would start to improve once the company consistently delivered contracts on time.

"You should have good line of sight in a company like ours with six months to go," he said.

"That in itself will improve margins just because it means we are delivering predictably to our customers so we won't have the cost of overruns."

Shares (Berlin: DI6.BE - news) in Cobham, which reached a high of 258 pence in 2015, were trading up 5 percent at 140.4 pence at 1007 GMT.

Analysts at Liberum, who have a "hold" rating on the sock, said there remained a wide range of possible outcomes but the longer term recovery potential remained attractive.

($1 = 0.7560 pounds) (Editing by Kate Holton and Susan Fenton)