Coats Group celebrates latest "first-half outperformance"

Coats Group PLC on Tuesday reported double-digit revenue growth and an increased dividend for its first half.

Shares in Coats were 7.7% higher at 83.55 pence in London on Tuesday.

The London-based manufacturer of footwear and apparel materials said pretax profit came to USD104.3 million for the six months ended June 30, down from USD111.0 million the previous year.

Finance costs increased to USD35.4 million from USD20.7 million, and administrative expenses grew to USD125.4 million from USD87.4 million.

Revenue, however, increased 19% to USD836.9 million from USD705.4 million. Growth at constant exchange rates was 18%, with an organic CER growth rate of 1%.

Earnings before interest and tax increased to USD135 million from USD128 million. Basic earnings per share, however, decreased to 3.2 US cents from 4.1 cents.

Coats declared an interim dividend of 1.05 cents, up from 1.00 cents the previous year.

"We are pleased with our first-half outperformance relative to the market and confident in our second half outlook, despite the prolonged period of industry de-stocking," commented Chief Executive David Paja. "We continue to prove the resilience of our business model by maintaining margins and generating good free cash flow during periods of adverse market conditions.

"Our increased focus on operational excellence and product innovation is delivering significant share gains and accelerating our growth in adjacencies, increasing the group's structural growth potential."

Going forward, Coats said its full-year expectations are unchanged. Previously, in May, it forecast a "modest" second-half profit weighting due to expected inflation cost recovery timing, and continued "strong" free cash flow generation.

It expects "good" year-on-year growth in earnings, and to continue outperforming the market and delivering "growth through share gains, secured pricing, target adjacencies and new product launches.

Additionally, it said that incremental cost actions will deliver around USD15 million in benefits for the second half, including cost synergies from its acquisition of OrthoLite.

"We remain very excited by the enhanced capabilities and deeper customer relationships that OrthoLite has brought to the group and we see substantial incremental value creation potential from sales synergies," Paja said. "Against this backdrop, we reaffirm our confidence to deliver full year results in line with market expectations."

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