17 November 2015
Coats Group plc
Trading Update
Coats Group plc ('Coats' or the
'Company'), the world's leading industrial
thread and consumer textile crafts business, issues the following trading update for 1 July to 31
October 2015 ('the period').
Year-on-year sales
performance
|
|
July to October
|
Year to October
|
|
|
Like-for-like*
|
Reported
|
Like-for-like*
|
Reported
|
|
Group
|
3%
|
(6)%
|
3%
|
(4)%
|
|
Industrial
|
4%
|
(5)%
|
5%
|
(3)%
|
|
Apparel & Footwear
|
5%
|
(4)%
|
5%
|
(3)%
|
|
Speciality
|
0%
|
(9)%
|
8%
|
(1)%
|
|
|
|
|
|
|
|
Crafts
|
0%
|
(9)%
|
(4)%
|
(11)%
|
* Like-for-like restates 2014
figures at 2015 exchange rates
In the following commentary, all
comparisons are on a like-for-like currency basis for the period
unless stated otherwise. Year to date refers to 1 January to 31
October
Coats continued to trade in line
with management expectations. Group sales
for the period increased 3% year-on-year, consistent with year to
date growth. The 6% decline on a reported (actual currency) basis
reflected the strengthening of the US dollar primarily against the
Brazilian Real and Euro.
Industrial sales in the period
increased 4% year-on-year. This was largely driven by the continued
strong growth of the core Apparel & Footwear business (up 5%),
with Asia in particular generating good volume growth. Speciality
growth was impacted by the slowdown in the global oil & gas and
Chinese automotive sectors, along with tough year-on-year
comparators. Growth in other sectors remained robust contributing
to 8% Speciality sales growth year to date; Management expects to
deliver high single digit growth in Speciality for the full
year.
Crafts sales were stable in the
period following a 7% like-for-like decline in the first half of
the year. The business delivered increased sales in the needlecraft
category due to greater demand for fabrics within North
America.
Outlook
Management continues to expect to
deliver a year-on-year improvement in Group pre-exceptional
operating profit. Adjusted EPS growth is expected to exceed
pre-exceptional operating profit growth due to year-on-year
improvements in the underlying tax rate and lower interest charges
on borrowings; however, as previously indicated, non-operating
charges, such as discontinued items related to the sale of EMEA
Crafts in July, will materially impact full year reported
EPS.
Pensions
The UK Pension Regulator ('tPR')
responded during the period to our written representations to the
Warning Notices on the Brunel and Staveley Schemes, to which we are
preparing our further responses to the representations made
by tPR and by the trustees of those schemes. Coats'
position on the investigations, including the view on timing,
remains unchanged.
The March 2013 triennial funding
valuation for the Brunel scheme has now been agreed
with the trustee and
a deficit recovery plan put in place for £5.5 million per annum
(approximately $8.5 million at spot rates) over 10 years. The
Staveley and Coats scheme valuations are ongoing.
Delisting from the NZX and
ASX
As being separately announced today,
Coats has decided to simplify its listing structure and delist its
shares from both the NZX Main Board in New Zealand
('NZX')1 and the Australian Securities Exchange ('ASX').
The intended date for delisting is 24 June 2016, at which point
Coats shares would only be tradable on the Main Market of the
London Stock Exchange. More information can be found at
coats.com/investors/delistings.
Enquiry details
UK
media
Richard
Mountain
+44 20 3727 1374
New Zealand and Australian
media
Geoff Senescall
+64 9 309 5659
Investors
Jaideep
Thatai
+44 20 8210 5086
1.
Coats will seek shareholder approval to delist from
the NZX by way of an ordinary resolution (requiring approval of 50%
of votes cast) at next year's Annual General Meeting, scheduled for
18 May 2016.