Market overview

Coats remains well positioned to continue to deliver strong financial performance in a challenging global environment.

Overall

The global economy is likely to remain mixed and uncertain during 2013.  While some modest economic growth can be expected in North America and growth in Asian markets should remain relatively strong, activity in EMEA is likely to be subdued. It is expected that raw material costs will continue to trend marginally upwards, and payroll and other inflationary pressures will be a feature in many of the countries in which Coats operates.

Industrial division 

Year-on-year improvement in Industrial sales is expected during 2013, with contributions from both price and volume.  Underlying demand for clothing and footwear from consumers is expected to remain stable during the year and the expectation is that there will not be further material reductions in retailer inventories.  Growth is expected in the speciality (non-apparel and footwear) markets, which continue to grow globally.  

Crafts division 

Our Crafts Division achieved sales growth of 6% in 2012 at constant exchange rates and, while our reorganisation activity will deliver an improvement in profitability, it is expected that continued high customer inventory levels in Brazil will dampen growth in Latin America, contributing to year-on-year sales growth being more limited.  Further improvement in margins is anticipated in the second half as the benefits of price increases being implemented in the first half of 2013 and European cost reductions begin to take effect.