Coats hails “robust” first-half performance despite fall in revenue

today Aug 1, 2019
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Sewing thread maker Coats has revealed a resilient performance for its first half of the year, against what it described as “mixed conditions” in the retail and industrial markets.

Coats Group

Whilst revenues fell by 3% to $705 million in the six months ended 30 June 2019 as a result of currency movements, turnover grew 2% on an organic CER basis. 

Operating profit rose from $80 million to $101 million during the period. On an adjusted basis, operating profit grew 3% to $102 million, driven by improved operating margins, strong cash flow generation and the cost-cutting measures implemented under the Connecting for Growth programme.

“I am pleased to report a robust performance in the first half despite mixed conditions in underlying retail and industrial markets. Our market-leading Apparel and Footwear thread business benefited from our continued focus on product innovation, digital solutions as well as our leading corporate responsibility and sustainability credentials. In our Performance Materials business, we saw strong growth in some emerging markets and key strategic focus areas, and an acceleration in the performance of recent acquisitions,” said group CEO Rajiv Sharma.

Due to conclude this year, Coats’ Connecting for Growth plan has helped the company achieve savings which have been reinvested in the areas of innovation, digital and talent. Coats said it will also continue to invest in further value-adding opportunities such as the acquisition of garment technology firm Threadsol.

Adjusted earnings per share fell 4% to 3.4 cents, but excluding temporary mark-to-market foreign exchange impacts, the initial impact of IFRS16, and legacy interest charges in the period, EPS growth was 4%.

And despite the company expecting full-year EPS to be impacted by the same issues, it announced a 10% increase in the interim dividend “as a reflection of our confidence in the future direction of the business."

Full-year adjusted operating profit is expected to be in line with expectations.

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