Coats Group PLC on Wednesday reported ‘early signs of a gradual recovery’ in the last few months, and said it expects to achieve its full-year guidance.
The Bristol, England-based industrial thread and footwear component manufacturer said group organic revenue was down 9% reported and 12% at constant exchange rates in the four months that ended on October 31.
This showed an ‘improving trend’ compared with the first half of 2023, when Coats said it was down 19%.
Apparel revenue was down 7% or 5% at CER in the four-month period, which Coats said showed ‘early signs of the anticipated gradual recovery’ for the division. Performance Materials revenue fell 21% at reported rates thanks to continued customer insourcing and phasing issues.
Footwear revenue, meanwhile, was flat at reported rates but down 18% at organic CER, thanks to a delay in the commencement of destocking.
The FTSE 250 company noted its ‘robust balance sheet’, saying cash generation remained strong throughout the period. However it also noted ‘modest’ foreign exchange headwinds for most of its major currencies against the US dollar.
Going forward, Coats expects to achieve its 2024 target of an approximate 17% adjusted operating margin, thanks to synergies from Footwear acquisitions last year and to ‘agile and effective pricing’.
‘With early signs of a gradual recovery in Apparel, and our adjusted operating margin continuing to strengthen, we expect our full year performance to be in line with the board’s expectations,’ Coats said.
‘We remain focused on delivering the significant operational and financial benefits of our strategic projects, acquisition synergies and delivering our other ongoing self-help actions...Over the medium term, our scale and global footprint, strong digital platform and technical support capabilities, alongside continued investment in innovation, sustainability and operational efficiency, will enable us to grow ahead of our market with strong profitability and cash generation.’
Shares in Coats were down 0.4% at 69.80 pence each on Wednesday around noon in London.
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