REG - Coats Group PLC - Trading Statement

CoatsAnnouncement

21/05/2025 07:00

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RNS Number : 4823J  Coats Group PLC  21 May 2025

21 May 2025

Coats Group plc

Trading Update

 

Continued trading momentum - full-year outlook in line with 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 four month period from 1 January to 30 April 2025
(the 'period') ahead of its Annual General Meeting to be held later today.

 

                           1 January to 30 April 2025 revenues vs same period in 2024
                           CER(2)                           Reported
 Apparel                   5%                               3%
 Footwear                  5%                               4%
 Performance Materials(1)  0%                               -3%
 Group(1)                  4%                               2%

( )

(1) Excluding US Yarns business

(2) Constant exchange rate (CER) figures are 2024 results restated at 2025
exchange rates

 

All following references are at CER unless specified.

 

The Group delivered a good performance in the period with revenue up 4%,
reflecting continued momentum in Apparel and Footwear which both achieved 5%
year-on-year growth, building further on the recovery seen in 2024.
Performance Materials traded in line with expectations, with revenue excluding
US Yarns at a similar level to the same period last year, as subdued
conditions continue to affect a number of key end markets.

 

In line with our medium-term financial framework, underlying Group EBIT
margins continued to improve, with further efficiency gains funding investment
in our growth drivers.

 

Following the closure of our plant in Toluca, Mexico in Q4 2024, we announced
in April 2025 our intention to fully exit from the low-margin US Yarns
business based in Kings Mountain, North Carolina. Earlier this month, we
agreed to sell the business and assets of US Yarns, and this will generate net
cash proceeds of around $16m, with completion expected in June 2025. The US
Yarns business had sales of $68m and EBIT of $3m in 2024, and this exit will
further improve the quality of the Coats portfolio as well as margins.

 

Outlook

 

Given the positive start to the year and our current order book visibility, we
expect the first half performance to reflect an adjusted EBIT margin within
our medium-term margin target range of 19-21%.

 

The recently announced US-led trade tariffs have created elevated uncertainty
in a number of markets and we continue to monitor this situation closely. This
remains a dynamic backdrop and consequently challenging at this point to
determine any indirect impact on future demand, but we have been encouraged by
the continued positive momentum through the period. The Group is a global
market leader with a proven and resilient business model - with a global
footprint, low capital intensity, a flexible cost base and proven pricing
power - which continues to position us strongly to navigate any market
volatility.

 

Whilst mindful of the dynamic backdrop, our full year expectations remain
unchanged, with a broadly equal profit weighting across H1 and H2. We expect
another year of strong free cash flow generation, supporting the Group's
active and flexible capital allocation strategy. We continue to build a
pipeline of attractive acquisition targets to further strengthen our
portfolio, with the capacity to take advantage of any opportunities created by
any disruption.

 

Commenting on the results David Paja, Group Chief Executive, said:

 

"We have traded well in the first few months of 2025 and we expect to finish
the first half with performance ahead of the prior year, reflecting both
growth and further margin expansion.

 

It is too early to be definitive on any longer-term impact from tariffs and
trade restrictions but I am confident in the Group's ability to navigate
different scenarios with a well-honed playbook, while continuing to invest in
our growth initiatives. Our client relationships, global footprint and
high-quality product portfolio will underpin the delivery of market leading
growth and profitability, together with substantial and increasing free cash
flow."

 

The Group will release its 2025 Interim Results on 31 July 2025.

 

 Enquiry details
 Investors        Anjali Kotak                    Coats Group plc  +44 (0) 7880 471 350
 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 2024 was $1.5 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 a spirit of
evolution to constantly stay ahead of changing market needs, Coats has
operations across some 50 countries with a permanent workforce of more than
16,000, serving its customers worldwide.

 

Coats connects talent, textiles, and technology, to make a better and more
sustainable world. Worldwide, there are four 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
validated 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
(https://nam11.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.coats.com%2F&data=05%7C01%7C%7Cd427f915c4a04c7a281808db0a8c12ed%7C048ff72770274cd0b672f075b0bdb973%7C0%7C0%7C638115368955536325%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=84xJl8cQryEvN50TOkTQnuGQiFTmWNiC4iTooOH29u0%3D&reserved=0)
.
(https://nam11.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.coats.com%2F&data=05%7C01%7C%7Cd427f915c4a04c7a281808db0a8c12ed%7C048ff72770274cd0b672f075b0bdb973%7C0%7C0%7C638115368955536325%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=84xJl8cQryEvN50TOkTQnuGQiFTmWNiC4iTooOH29u0%3D&reserved=0)

 

Cautionary statement

Certain statements in this trading update are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations
will prove to have been correct. Because these statements contain risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. We undertake no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise.

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