Coats Group PLC on Tuesday reported a fall in its half year revenue and profit in a difficult period, expecting full year results on the lower end of market expectations.

Coats is a Bristol, England-based manufacturer of industrial thread and footwear components.

Revenue in the six months ended June 30 fell 11% to $751 million, from $801 million the year before. Coats said this was driven by a lower group organic revenue of 19% which was impacted by industry destocking in apparel and footwear. This performance is also reflective of tough comparator numbers, with the peak of unprecedented growth from customer restocking in the previous period after the lifting of Covid restrictions.

Pretax profit collapsed 39% to $59.0 million, down from $96.8 million at the same point the year prior. This was partially due to net exceptional and acquisition related items before taxation of $35 million, up from $13 million the year before.

Adjusted earnings before interest, tax, depreciation, and amortization decreased 11% to $132.3 million, from $148.4 million year-on-year.

‘We have continued to make significant progress on our strategic objective of making Coats a stronger, fitter and more focused group. Our financial results demonstrate the effectiveness of our actions in driving our margin performance and free cash flow,’ said Chief Executive Rajiv Sharma.

Coats declared an interim dividend of $0.81 per share, up 16% from $0.70 in the year before. Coats said this reflected its ‘confidence in delivering progress’ for stakeholders.

The company said it expects full-year trading to be in line with market expectations, but on the lower end of the range. Coats expects to achieve a margin goal of around 17% in 2024.

‘On our strategic projects, we delivered a further $21.0 million of efficiencies in the half and are increasing our 2023 guidance from $20.0 million to $30.0 million, with overall project savings on track for $70.0 million by 2024,’ said Chief Executive Sharma.

‘Our leadership position in industrial threads and footwear components, when combined with our investment in innovation and sustainably-sourced and manufactured products, positions us well to grow our revenue and margin and deliver ongoing strong cash generation in line with our strategy.’

Shares in Coats Group were down 1.4% at 69.00 pence in London on Tuesday morning.

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