Coats

Coats announces 2017 full year results

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.

Highlights

  • Revenue growth of 4% to $1,510 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 $174 million (reported $167 million, up 9%); Group operating margin up 70bps 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 $87 million; which includes a $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 $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 $15 million net annualised operating cost savings.
  • Completed the Performance Materials acquisition of Patrick Yarn Mill in December 2017.
  • Successful $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 1.44c 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 $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’

A full copy of the results is available at www.coats.com/investors/fy17

ENDS

To download a high resolution image go to: www.coats.com/imagelibrary

For more information contact:
Kristina Blissett, Head of Communications kristina.blissett@coats.com
T +44 (0)208 210 5084, M +44 (0)7714 539887 

Notes to Editors

About Coats

Coats is the world’s leading industrial thread manufacturer and a major player in the Americas textile crafts market. At home in some 50 countries, Coats employs 19,000 people across six continents. Revenues in 2017 were US$1.5bn.

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 Performance Materials 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 is a FTSE 250 listed company 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