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February 27, 2018updated 12 Apr 2021 2:16pm

Coats shares jump on FY18 guidance increase

Industrial thread maker Coats has credited the acquisition of Patrick Yarn Mill and its ongoing transformation programme with a rise in its profit forecast for the year ahead as footwear and apparel helped boost 2017 revenue.

By Beth Wright

Industrial thread maker Coats has credited the acquisition of Patrick Yarn Mill and its ongoing transformation programme with a rise in its profit forecast for the year ahead as footwear and apparel helped boost 2017 revenue.

For the twelve months ended 31 December, earnings reached US$103.5m from $76.6m a year earlier. Group operating margin was up 70 basis points to 11.5%.

Total sales, meanwhile, grew 4% to reach $1.51bn from $1.46bn thanks to 5% sales growth from footwear and apparel, and 12% growth from performance materials.

Momentum in industrial continued throughout the year with revenues climbing 6%, driven by share gains in footwear and apparel, which was achieved despite mixed demand from clothing retailers. The crafts division saw revenues decline by 10% on a reported basis, as North American market conditions remained weak throughout the second half of the year and a major customer introduced own-label handknitting products.

Geographically, revenue in Asia grew by 6%, while in the Americas there was a return to growth with a rise of 3% in the period following the anticipated improvement in the US consumer durables market and strong performance in certain key Latin America markets. Sales in EMEA rose 9%, which was a continuation of last year’s strong performance, with double-digit growth in certain key apparel and footwear markets and strong sales growth in performance materials.

CEO Rajiv Sharma said Coats delivered a strong performance in 2017 and has built a solid base for the future through its strong financial delivery and investment in growth initiatives.

The company recently completed the performance materials acquisition of Patrick Yarn Mill and launched the Connecting for Growth transformation programme, which it says will support its next phase of growth. Sharma adds the scheme is expected deliver increased productivity, with targeted net annualised operating cost savings of $15m by 2020.

Looking ahead, Coats expects 2018 adjusted operating profits to be “slightly ahead” of previous management expectations.

“We expect 2018 adjusted operating profits to benefit from the incremental full-year contribution from the Patrick Yarn Mill acquisition, and the anticipated first year benefits from the Connecting for Growth programme,” Sharma said.

Shares in the firm were up 11.38% today (27 February) following the announcement.

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