2018 Full Year results
(07.00 GMT) Coats Group plc, the world’s leading industrial thread company, today announces its unaudited Full Year results for the year ended 31 December 2018.
- Revenue growth of 6% on a CER basis (4% reported), with 3% organic growth and a 3% contribution from the acquisition of Patrick Yarn Mill.
- Continued organic revenue growth in Apparel and Footwear (thread up 4%) and accelerated organic growth in Performance Materials (up 7%).
- Adjusted operating profit up 24% on a CER basis; adjusted operating margin up 200bps to 13.8%.
- Adjusted EPS up 21% to 6.9 cents as a result of higher adjusted operating profits, a further reduction in effective tax rate, a lower pension finance charge, with some offset from foreign exchange and interest.
- Adjusted free cash flow of $96 million; up 26% on prior year due to increased adjusted operating profits and controlled NWC, whilst maintaining capital expenditure ahead of depreciation.
- Reported operating profit of $147 million (down 5%) and basic EPS of 3.9 cents (down 25%), primarily due to increased exceptional costs of $48 million (mostly not tax deductible) in relation to Connecting for Growth, the UK guaranteed minimum pension equalisation, and Lower Passaic River legal costs.
- Sale of non-core North America Crafts business completed on 20 February 2019 for $37 million, with resulting exceptional impairment to recognise net assets at fair value.
- Connecting for Growth programme benefits being realised faster than initially anticipated; $15 million net benefits delivered in 2018 (reorganisation cost of $23 million incurred in year).
- Agreement in principle of Coats UK Pension Scheme triennial valuation with agreed annual deficit contributions (including estimated administrative expenses) of $31 million p.a. from 1 April 2019 (currently $24 million p.a.)
Commenting on Coats 2018 Full Year results Rajiv Sharma, Group Chief Executive, said:
‘Coats delivered a strong performance in 2018. Our Apparel and Footwear business delivered continued market share gains by providing on-going high service levels, and we saw increased momentum in our Performance Materials business. In an environment of rising input costs, we were able to grow our operating margins, through realising price increases, delivering productivity and procurement gains, as well as keeping tight control of our cost base and delivering significant savings from our Connecting for Growth programme in its first year. Following this strong performance in 2018 we have announced a full year dividend per share of 1.66 cents, which represents a 15% year-on-year increase, and reflects the Board’s confidence in our strategy.
‘To further support delivery of our strategy, we completed the acquisition of Threadsol whose cloud-based software solutions incorporate artificial intelligence and provide an excellent fit with the existing Coats Global Services business. We now have a complementary suite of software solutions for the apparel and footwear industries that will enable brands, retailers and manufacturers to drive productivity gains, supply chain control and speed to market. In addition to Threadsol, we also made a strategic investment in Twine Solutions, who have developed a revolutionary digital thread dyeing system, which aims to address the key needs of our customers of speed, innovation and sustainability.
‘We enter 2019 in a strong position, with continued positive momentum in our core Apparel and Footwear and hi-tech Performance Materials businesses. The exit of our non-core North American Crafts business will ensure complete focus on growing our remaining businesses organically and identifying further value-add bolt-on acquisitions.
‘Whilst we are cautious around the current macroeconomic uncertainties, based on our current assessment of business trends we remain confident in delivering another year of improving performance through effective execution of our strategy.’