Coats, the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market, today announces its unaudited results for the year ended 31 December 2016.
- Revenue up 2% on a CER basis to $1,457 million (down 1% reported). Continued solid growth of 4% in Industrial Division achieved through market share gains, offsetting 8% decline in Crafts Americas.
- Adjusted operating profit up 16% (up 13% reported) through market share gains, cost productivity, controlled overheads and raw material price benefits.
- Adjusted EPS up 23% to 4.91c (reported EPS of 4.28c) with higher operating profit and reduction in tax rate partially offset by unrealised losses on foreign exchange hedges.
- Adjusted free cash flow of $78 million (2015: $71 million) as net working capital continues to be controlled effectively.
- Return on capital employed increase of 600bps to 39% (2015: 33%) mainly as a result of higher profitability.
- Acquired Gotex and Fast React; both performing well and ahead of management expectations ($3m operating profit contribution in 2016).
- Cessation of regulatory action for UK Coats and Brunel pension schemes, representing approximately 90% of UK pension liabilities and scheme members.
- Rajiv Sharma became Group CEO on 1 January 2017, previously CEO Industrial Division.
- The Board recommends a final dividend of 0.84 US cents per share payable in May 2017, subject to shareholder approval, which represents a pro forma full year 2016 dividend of 1.25 c per share.
| * Denotes a KPI | 2016 | 2015 2 | Change | CER change 1 | Organic change 1 | |||
| Revenue | reported | $1,457m | $1,472m | (1)% | 2% | * 1% | ||
| Operating profit | reported | $153m | $111m | 38% | ||||
| adjusted 1 | $158m | $140m | 13% | 16% | * 14% | |||
| Basic earnings per share | reported | 4.28c | (3.61)c | n/a | ||||
| adjusted 1 | 4.91c | 4.00c | * 23% | |||||
| Free cash flow | adjusted 1 | * $78m | $71m | 10% | ||||
| Return on capital employed (ROCE) 1 | * 39% | 33% | 600bps | |||||
| Dividend per share (pro-forma full year) | 1.25c | – | ||||||
| 1 | Non-statutory measures (Alternative Performance Measures) are reconciled to the nearest corresponding statutory measure. | |||||||
| 2 | Restated to reflect the results of the UK Crafts business as a discontinued operation. | |||||||
Rajiv Sharma, Group Chief Executive, Coats, said: ‘Coats delivered a strong performance in 2016 with operating profit growth of 16%, despite challenging market conditions. Uncertainty, volatility and pricing pressures characterised 2016. Group organic sales growth of 1%, was delivered by share gains in the Industrial Division, which was supported by the introduction of new products and adoption of our digital tools. We delivered productivity and procurement gains, and tightly managed our overheads which had a positive operational gearing effect in the Industrial Division. We completed the acquisitions of Gotex and Fast React during the year, both of which have leading positions in their markets and which are already delivering strong growth ahead of management expectations under Coats’ ownership. In the Crafts division, challenging market conditions continued, especially within the handknittings segment, although showed an improving trend in the second half of the year, and cost actions were taken to manage margins.
‘Following the pensions settlement agreement with the Trustees of the Coats UK and Brunel pension schemes and the cessation of regulatory action by TPR related to those schemes, we have recommended a final dividend of 0.84 US cents per share for 2016, which equates to a pro-forma full year dividend of 1.25c per share. It is our intention to pursue a progressive dividend policy.
‘We enter 2017 on a solid footing however remain cautious about market conditions. We expect to continue to deliver growth in line with management’s expectations through our initiatives to deliver market share gains, productivity improvements and tight cost control. We will also continue to focus on cash flow generation in order to allow us to continue to reinvest in organic and inorganic growth opportunities.’
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