Coats, the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market, announces its unaudited results for the six months ended 30 June 2017.

Highlights

• Revenue up 5% on a CER basis to $740 million (4% reported).  Strong growth of 7% in Industrial Division across both Apparel and Footwear (5%), and Performance Materials (18%).
• Adjusted operating profit up 14% on a CER basis (12% reported) with Group revenue growth further underpinned by margin increase across both Industrial (50bps) and Crafts (260bps).
• Adjusted EPS up 38% to 3.06c (reported EPS of 2.89c) with higher operating profit, reduction in effective tax rate, and mark-to-market foreign exchange gains. 19% underlying EPS growth.
• Strong adjusted free cash flow for the last twelve months of $109 million (June 2016: $84 million).  As expected, second half capital expenditure to increase to $30-40 million ($50-60 million full year spend).
• Return on capital employed increased 400bps to 34% (2016: 30%) mainly as a result of higher profitability.
• Good operational progress on the identified focus areas of simplification, innovation and enhancing our digital capabilities.
• Settlement concluded with all three UK pensions schemes and Pension Regulator investigations now ceased.
• The Board has declared an interim dividend of 0.44 US cents per share payable in November 2017, representing 7% growth (2016 pro-forma 0.41 US cents).

Rajiv Sharma, Group Chief Executive, Coats, said: ‘Coats continued its strong start to the year, with CER sales growth of 5% and adjusted operating profit growth of 14%, of which the primary contributor was the Industrial Division. We have continued to increase our market share in the Apparel and Footwear segment despite continued mixed demand from clothing retailers through maintaining our customer-led approach to innovation, digital solutions and corporate social responsibility. We continue to leverage our global footprint and customer base in our Performance Materials business, develop new product solutions for our customers, and see a good contribution from our Gotex business which was acquired in 2016. In Crafts, the North American market remains weak despite recent stabilisation. Our strong cash generation allows us to service our various stakeholder capital demands, whilst allowing for increased investment in our existing asset base which, as previously indicated, is scheduled in the second half of the year.

‘We will look to build on the strong first half of the year, and expect to deliver performance in line with management’s expectations for the full year. This is expected to be achieved through our initiatives to deliver market share gains and productivity improvements, maintaining a tight control of our cost base, whilst investing in our growth opportunities.’

ENDS