Acqusitions boost threads giant Coats as it builds share in footwear components
Coats Group, the UK stock exchange-listed global threads giant, has reported its results for 2022 and said that revenue rose, 9% to $1.58 billion. That translated into a 16% increase currency-neutral (CN) and a 10% organic increase.
Adjusted operating profit rose 19% to $235 million and 27% CN. However, reported operating profit was up only 2% at $181 million, a 9% CN increase.
The company hailed another year of “excellent strategic progress” alongside what it said, were “strong” results, and said that the acquisition of Texon and Rhenoflex during the period established it as a market leader in footwear components. Those acquisitions are trading in line with expectations and the integration and delivery of expected cost synergies are on track.
Coats also made continued competitive gains in its core threads operation with its market share up around 100 bps to an estimated 24%.
In its apparel & footwear division, it saw full-year organic revenue growth of 9%, driven by an “exceptional” first-half performance, although it also saw some industry destocking later, particularly in Q4.
Its performance materials division saw organic revenue growth of 13% with all three sub segments in positive territory.
As for this year, it expects to deliver another 12 months of strategic and operational progress even though destocking by customers has continued into the early part of the year, primarily in apparel markets, but to a lesser extent in footwear.
It continues to anticipate a full-year performance in line with expectations, although with a weighting towards the second half, underpinned by the contribution from acquisitions, associated synergies and strategic projects.
CEO Rajiv Sharma said: “Coats produced a strong set of results in 2022, a year which was characterised by high inflation and supply chain disruption. Organic revenue growth was above our targeted medium-term growth of around 6%, and organic adjusted operating profit increased 22%.
“We made further excellent progress in transforming the group during the year, and this has made Coats a stronger, fitter and more focused group, enhancing our leading market positions in industrial thread and footwear component markets.
“The 2022 acquisitions of Texon and Rhenoflex have not only significantly strengthened our position in the attractive footwear market but also increased our medium-term organic growth and margin potential.”
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