The company also reported a strong growth of 7% in Industrial Division across both Apparel and Footwear (5%), and Performance Materials (18%). Adjusted operating profit is up by 14% on a CER basis (12% reported) with Group revenue growth further underpinned by margin increase across both Industrial (50bps) and Crafts (260bps).       

Strong performance

“Coats continued its strong start to the year, with CER sales growth of 5% and adjusted operating profit growth of 14%, of which the primary contributor was the Industrial Division. We have continued to increase our market share in the Apparel and Footwear segment despite continued mixed demand from clothing retailers through maintaining our customer-led approach to innovation, digital solutions and corporate social responsibility,” said Rajiv Sharma, Group Chief Executive, Coats.

Adjusted EPS is up by 38%, with higher operating profit, reduction in effective tax rate, and mark-to-market foreign exchange gains. Strong adjusted free cash flow for the last twelve months is US$ 109 million, compared to US$84 million in June 2016. As expected, second half capital expenditure to increase to US$ 30-40 million (US$ 50-60 million full year spend).    

 Positive outlook

“We continue to leverage our global footprint and customer base in our Performance Materials business, develop new product solutions for our customers, and see a good contribution from our Gotex business which was acquired in 2016,” said Rajiv Sharma.

“In Crafts, the North American market remains weak despite recent stabilisation.  Our strong cash generation allows us to service our various stakeholder capital demands, whilst allowing for increased investment in our existing asset base which, as previously indicated, is scheduled in the second half of the year.”

“We will look to build on the strong first half of the year, and expect to deliver performance in line with management’s expectations for the full year.  This is expected to be achieved through our initiatives to deliver market share gains and productivity improvements, maintaining a tight control of our cost base, whilst investing in our growth opportunities.”

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