REG - Coats Group PLC - Trading Statement

CoatsAnnouncement

17/05/2023 07:17

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RNS Number : 6443Z  Coats Group PLC  17 May 2023

 

 

 17 May 2023

Coats Group plc

 

Trading update

Trading in line with full year expectations

 

Coats Group plc ('Coats', the 'Company' or the 'Group'), the world's leading
industrial thread and global footwear component manufacturer, today
announces a trading update for the period 1 January 2023 to 30 April 2023
('the period').

 

·      Market conditions and Group trading in the period were in line
with our expectations

·      Constant currency revenue decline of 7%, with organic CER
revenues down 20%, against a very strong prior year comparator

·      Operating profit margins were resilient, supported by strategic
projects and tight cost control

·      Full year expectations unchanged

 

                        1(st) January to 30(th) April 2023 vs same period in 2022
                        Reported                 CER                   Organic CER
 Apparel                -27%                     -22%                  -22%
 Footwear               58%                      62%                   -23%
 Performance Materials  -16%                     -13%                  -13%
 Total                            -12%           -7%                   -20%

 

All following references are on an CER basis unless specified.

 

The organic revenue decline of 20% in the period, against a very strong prior
year comparator, reflects the continuation of the widespread industry
destocking in Apparel and Footwear, together with previously disclosed
customer contract in-sourcing in Performance Materials. This was in part
offset by the annualised contribution from the prior year acquisitions in
Footwear, with overall revenue declining by 7%.

 

As expected, Apparel revenues declined by 22% in the period reflecting a
continuation of trends seen in Q4 2022, with destocking by customers adjusting
to more subdued consumer demand and excess inventory levels.

 

Footwear revenue decreased by 23% organically, with similar destocking drivers
to those seen in the Apparel markets. Reported divisional revenue increased by
58% year-on-year in the period, including the first time contribution from the
acquisitions of Texon and Rhenoflex. The integration of both businesses is
progressing to plan, with the realisation of synergy and efficiency benefits
increasing, in line with expectations.

 

Revenue in Performance Materials reduced by 13% in the period. This was
largely the result of the customer insourcing of a significant PPE contract in
H2 2022.

 

Our strategic projects remain on-track and are delivering significant
operational and financial benefits. These actions, alongside dynamic pricing,
have supported operating margins at the beginning of 2023 and will continue to
do so. Cash generation continues to be positive and a focus for the Group.

 

 

Outlook

 

With trading in the period in line with expectations we continue to anticipate
full year 2023 performance consistent with the Board's expectations, with a
second-half weighting, underpinned by the contribution from acquisitions,
associated synergies and strategic projects.

 

With a significantly strengthened commercial and operational platform, the
Group remains very well-positioned in its markets, as the global partner of
choice for winning brands and with a clear leadership position in innovation
and sustainability. Consequently, we remain excited about the growth and
margin opportunities across the Group over the medium term, with improved cash
generation providing an additional catalyst to our strategic ambitions.

 

The Group will release its interim results on 1 August 2023.

 

 

 

 

 Enquiry details
 Investors         Chris Dyett / Victoria Huxster  Coats Group plc  +44 (0)797 497 4690
 Media             Richard Mountain / Nick Hasell  FTI Consulting   +44 (0)20 3727 1374

 

About Coats Group plc

Coats is a world leader in thread manufacturing and structural components for
apparel and footwear, as well as an innovative pioneer in performance
materials. These critical solutions are used to create a wide range of
products, including ones that provide safety and protection for people, data
and the environment. Headquartered in the UK, Coats is a FTSE250 company and a
FTSE4Good Index constituent. Revenue in 2022 was $1.6 billion.  Trusted by
the world's leading companies to deliver crucial, innovative, and sustainable
solutions, Coats provides value-adding products including apparel, accessory
and footwear threads, structural footwear components, fabrics, yarns and
software applications. Customer partners include companies from the apparel,
footwear, automotive, telecoms, personal protection, and outdoor goods
industries. With a proud heritage dating back more than 250 years and spirit
of evolution to constantly stay ahead of changing market needs, Coats has
operations across some 50 countries with a workforce of 17,000, serving its
customers worldwide. Coats connects talent, textiles, and technology, to make
a better and more sustainable world. Worldwide, there are three dedicated
Coats Innovation Hubs, where experts collaborate with partners to create the
materials and products of tomorrow. It participates in the UN Global Compact
and is committed to Science Based sustainability targets for 2030 and beyond,
with an aspiration of achieving net-zero by 2050. Coats is also committed to
achieving its goals in Diversity, Equity & Inclusion, workplace health
& safety, employee & community wellbeing, and supplier social
performance. To find out more about Coats visit www.coats.com.

 

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