Coats Group “trading in line with expectations”, sees signs of improvments
Threads and zips giant Coats Group is “performing to plan”, the company — which is also now a global footwear component manufacturer — said as still-tough trading conditions continue to colour its latest four-months, a trading update showed on Wednesday.
The business “trading in line with expectations” means a host of negative numbers characterised the 1 July-31 October operating period. However, the report did include “early signs of the anticipated gradual recovery” in its core Apparel operations, and Coats was witnessing an overall strengthening of margins and cash.
Although group organic revenue fell 12% for the latest period this was an improvement on H1’s 19% dip reflecting improvements in Apparel, where organic revenue was 5% lower. Footwear organic revenue was 18% lower year-on-year in the period.
Its Performance Materials division “continues to be impacted by the previously disclosed customer in-sourcing of production, as well as customer phasing issues in some US end markets”. As a result, organic revenue here was 20% lower.
“The group has continued to deliver significant benefits from its strategic projects which, together with agile and effective pricing, and the delivery of synergies from last year’s footwear acquisitions, have resulted in adjusted operating margins strengthening further in the period. This increases our confidence of achieving our 2024 goal of c.17%”, it said.
Meanwhile, cash generation “remained strong through the period, supporting the robust balance sheet”.
And with those early signs of a gradual recovery in Apparel, and adjusted operating margin continuing to strengthen, “we expect our full-year performance to be in line with the board’s expectations”, it added.
Coats will release its full-year 2023 results on 7 March 2024.
