Coats Group affirms outlook but revenue down amid 'subdued' conditions

Coats Group PLC on Friday said its performance in the last few months was in line with expectations, despite ‘sustained macroeconomic and tariff uncertainty’.

In response, shares in Coats traded 1.1% higher at 80.08 pence each on Friday morning in London.

The London-based manufacturer of materials for footwear and apparel said that in the four months ended October 31, group revenue decreased by 1% at constant exchange rates compared with the prior year. Revenue for the Apparel division was down 2%, Footwear revenue fell 4%, and Performance Materials revenue rose by 4%.

‘Market conditions in the period remained subdued, with continued caution in customer ordering patterns as a result of sustained macroeconomic and tariff uncertainty,’ Coats said. ‘Against this backdrop, the group delivered a resilient performance, in line with our expectations.’

Its operating profit was ‘at a similar level’ to last year’s, while margins were ‘consistent’ with the first half and ‘improved’ on-year, ‘in line with our group medium term margin target of 19-21%’.

Coats also said cash generation remained strong, and leverage increased due to completing its acquisition of OrthoLite last month.

Going forward, Coats expects leverage to reach around 2.2x, in line with previous forecasts, and to fall below 2x next year due to sustained improvement in cash generation.

Its full-year outlook ‘remains unchanged, with trading performance in line with market expectations,’ Coats said, adding: ‘As a result we are on track to continue our outperformance of underlying market growth supported by expansion into target adjacencies and deliver strong cash generation and further margin progression in the medium term.

‘Our confidence is underpinned by our unrivalled global footprint, proprietary technology and sustainability-led innovation.

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