Coats Group sells Brazil, Argentina business

By

Nigel TAYLOR

Published
May 10, 2022

Threads manufacturing giant Coats Group has signed an agreement to sell its businesses in Brazil and Argentina to Reelpar SA, backed by a Sao Paulo Private Equity Firm.

Terms of the agreement weren’t revealed although Coats said it expects the disposal to have a positive effect on its margins. The deal is expected to complete in May, following customary completion procedures.
 
As a result of the disposal Coats said there will be a positive annualised impact to the group's adjusted operating margins by around 50bps. 

Under the terms of the disposal, Coats will also fund $10 million to Reelpar to support restructuring of the business.
 
It said the exit from the Brazil and Argentina business is in line with its strategic initiatives, announced in March, “to accelerate profitable sales growth and transform the company”.
 
The quote comes on the back of an impressive set of full-year figures, leaving the tough pandemic period well behind it.
Audited results for the year ended 31 December 2021 showed “accelerating” group sales growth of 29%, compared to the 6% gain delivered in pre-Covid 2019. 
 
By division, Apparel & Footwear (A&F) sales jumped 33% (+5% vs 2019) on demand recovery as well as “positive end-market sentiment” across the US, Europe and Asia.
 
Meanwhile, its Performance Materials (PM) segment also scored highly, with organic sales growth of 19% (8% vs 2019).
 
And with “continued momentum” seen in the current fiscal year, the group said it expects more growth with its FY22 performance “anticipated to be modestly ahead of our previous expectations”.