Coats, the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market, today announces its unaudited results for the year ended 31 December 2017.
– Revenue growth of 4 % to USD 1510 million; driven by Apparel and Footwear (up 5 %) and Performance Materials (up 12 %), with some offset due to a weak performance in North America Crafts.
– Adjusted operating profit up 11 % to USD 174 million (reported USD 167 million, up 9 %); Group operating margin up 70 basic points to 11.5 %.
– Adjusted EPS up 30 % to 6.4 cents (reported EPS of 5.8 cents, up 35 %) as a result of higher operating profits, a further reduction in effective tax rate and a reduction in finance costs.
– Adjusted free cash flow growth of 12 % to USD 87 million; which includes a USD 10 million year-on-year increase in capital spend predominantly in H2, as anticipated.
– Settlement concluded with all three UK pension schemes and Pension Regulator investigations now ceased with USD 348 million of parent Group cash paid to the schemes during the year.
– Launch of Connecting for Growth programme supporting the next phase of Coats’ growth; expected to deliver USD 15 million net annualised operating cost savings.
– Completed the Performance Materials acquisition of Patrick Yarn Mill in December 2017.
– Successful USD 225 million debut US Private Placement issue, alongside refinancing of existing bank debt facilities, providing diversification of sources and maturity of debt.
– Full year dividend per share increase of 15 % to 1.44 cents per share.
Rajiv Sharma, Group Chief Executive, Coats said: ‘Coats delivered a strong performance in 2017. Momentum in Industrial continued throughout the year in key Apparel and Footwear markets, where we continued to take share, and we saw double-digit growth in hi-tech end-uses in Performance Materials. This was partly offset by North America Crafts where market conditions remained weak. In an environment of rising input costs, we were able to grow our operating margins, through realising price increases, productivity and procurement gains, as well as tight control of our cost base. Following this strong performance in 2017 we have announced a full year dividend per share of 1.44 cents, which represents a 15 % year-on-year increase.
‘Through our continued strong financial delivery and investment in growth initiatives we have built a solid base for the future. However, the markets in which we operate are constantly changing. Our customers require an increased emphasis on speed, quality, value, innovation and corporate responsibility. To accelerate our transition from the industrial to the digital age, we launched the Connecting for Growth transformation programme, which will support our next phase of growth. We expect this programme to deliver increased productivity, with targeted net annualised operating cost savings of USD 15 million by 2020.
‘To further support our strategy delivery, we completed the Performance Materials acquisition of Patrick Yarn Mill, which extends our existing competencies and innovation capabilities. As with our previous acquisitions of Gotex, Fast React and GSD, we look forward to leveraging Coats’ unrivalled geographic footprint, breadth of global customer relationships and strong corporate brand to support Patrick Yarn Mill’s expansion.
‘We enter 2018 in a strong position, with continued momentum in our Apparel and Footwear and hi-tech Performance Materials businesses. Whilst market conditions in our North American Crafts business are expected to remain challenging, our new management team has commenced implementation of a refocused strategy. 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. As such, 2018 adjusted operating profits are expected to be slightly ahead of previous management expectations. We will also continue to focus on cash flow generation in order to allow us to continue to reinvest in both 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 19000 people across six continents. Revenues in 2017 were USD 1.5 billion.