Coats announces 2016 full year results
Coats, the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market, today announced on February 24, 2017 its unaudited results for the year ended 31 December 2016
– Revenue up 2 % on a CER basis to USD 1457 million (down 1 % reported). Continued solid growth of 4 % in Industrial Division achieved through market share gains, offsetting 8 % decline in Crafts Americas.
– Adjusted operating profit up 16 % to USD 158 million (up 13% reported) through market share gains, cost productivity, controlled overheads and raw material price benefits.
– Adjusted EPS up 23 % to 4.91c (reported EPS of 4.28c) with higher operating profit and reduction in tax rate partially offset by unrealised losses on foreign exchange hedges.
– Adjusted free cash flow of USD 78 million (2015: USD 71 million) as net working capital continues to be controlled effectively.
– Return on capital employed increase of 600bps to 39 % (2015: 33 %) mainly as a result of higher profitability.
– Acquired Gotex and Fast React; both performing well and ahead of management expectations (USD 3 million operating profit contribution in 2016).
– Cessation of regulatory action for UK Coats and Brunel pension schemes, representing approximately 90 % of UK pension liabilities and scheme members.
– Rajiv Sharma became Group CEO on January 1, 2017, previously CEO Industrial Division.
– The Board recommends a final dividend of 0.84 US cents per share payable in May 2017, subject to shareholder approval, which represents a pro forma full year 2016 dividend of 1.25c per share.
Rajiv Sharma, Group Chief Executive, Coats, said: ‘Coats delivered a strong performance in 2016 with operating profit growth of 16 %, despite challenging market conditions. Uncertainty, volatility and pricing pressures characterised 2016. Group organic sales growth of 1 %, was delivered by share gains in the Industrial Division, which was supported by the introduction of new products and adoption of our digital tools. We delivered productivity and procurement gains, and tightly managed our overheads which had a positive operational gearing effect in the Industrial Division. We completed the acquisitions of Gotex and Fast React during the year, both of which have leading positions in their markets and which are already delivering strong growth ahead of management expectations under Coats’ ownership. In the Crafts division, challenging market conditions continued, especially within the handknittings segment, although showed an improving trend in the second half of the year, and cost actions were taken to manage margins.
‘Following the pensions settlement agreement with the Trustees of the Coats UK and Brunel pension schemes and the cessation of regulatory action by TPR related to those schemes, we have recommended a final dividend of 0.84 US cents per share for 2016, which equates to a pro-forma full year dividend of 1.25c per share. It is our intention to pursue a progressive dividend policy.
‘We enter 2017 on a solid footing however remain cautious about market conditions. We expect to continue to deliver growth in line with management’s expectations through our initiatives to deliver market share gains, productivity improvements and tight cost control. We will also continue to focus on cash flow generation in order to allow us to continue to reinvest in organic and inorganic growth opportunities.’
Coats is the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market. At home in some 60 countries, Coats employs 19,000 people across six continents. Revenues in 2016 were USD 1.5 billion.
Coats’ pioneering history and innovative culture ensure the company leads the way around the world: providing complementary and value added products and services to the apparel and footwear industries; applying innovative techniques to develop high technology Speciality threads and yarns in areas such as automotive, composites and fibre optics; and extending the crafts offer into new markets and online.
Headquartered in the UK, Coats has a premium listing on the London Stock Exchange.
• Each year we make enough thread to go into 8 billion pairs of jeans – that’s one for every person on the planet
• Every month Coats produces enough thread to stretch all the way to the sun
• More than 450 million pairs of shoes are made every year using Coats’ thread
• More than 100 million car airbags are made using Coats’ Performance Materials thread every year
• In 1879 Thomas Edison used Coats’ thread in his experiments to invent the light bulb
• Our Red Heart knitting and crochet yarn brand has been named ‘America’s Most Recommended’ by the Women’s Choice Award for three years running
• Our flame retardant Performance Materials threads can withstand temperatures as high as 1,000 degrees Celsius
• Coats is the second largest supplier of zips to global brands