Coats, an industry leader providing apparel, accessory and footwear threads, structural components for footwear and accessories, fabrics, yarns, and software applications, announced an increase in yearly earnings, fuelled by its garment and footwear divisions, and upgraded its medium-term forecasts.
With an 8 per cent increase in revenue to US $ 1.5 billion, operating profit climbed from US $ 184 million to over US $ 200 million. Pre-tax earnings increased from US $ 155.8 million to US $ 172.1 million in the previous year.
Revenues from clothing and footwear increased by 13 per cent and 10 per cent, respectively, as consumer inventory and purchasing habits stabilised.
According to Coats, the performance materials division “remains an attractive growth business with exposure to multiple industrial end markets which are showing improving trends and good prospects longer term”, while the company is witnessing “attractive opportunities arising with Chinese and Indian domestic brands.”
However, it warned that destocking at certain US telecom customers and structural problems in the North American Yarns sector had an impact on the results.
The business recently revised its medium-term goals, aiming for operating profit margins to increase to 19–21 per cent and average organic sales growth of above 5 per cent. Over the next five years, Coats anticipates generating over US $ 750 million in adjusted free cash flow before dividend payout and after interest and taxes. This will support an “active” capital allocation program that aims to accelerate compound earnings growth.
