Strong 2021 sales puts Coats Group on a positive footing
Coats is back with a bang. The industrial threads maker delivered an impressive set of full-year figures Thursday as the trials and tribulations of the pandemic look to be 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).
Strong thread market share gains in A&F came with a 2% rise to a 23% share, and customer share wins in PM continued “as customers prioritise reliability and flexibility of supply, sustainable products, quality, speed, and innovation”.
Add to that “particularly pleasing” further strong growth of its EcoVerde range of recycled threads (revenues up 159% to $96 million) and its continued innovation focus with 21 new products launched, contributing $37 million incremental revenue, and you have a robust picture of health.
Meanwhile, adjusted operating profit jumped 75% to $193 million (reported $179 million) as inflationary pressures were absorbed by “successful pricing actions and self-help productivity programmes”. Adjusted operating margins were 15% for A&F and 7% for PM, or 14% excluding the US.
Coats also saw strong cash generation with net debt (excluding lease liabilities) of $147 million and strong adjusted free cash flow of $113 million.
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”.
Coats said: “The group has commenced a number of strategic projects to improve margins by optimising the portfolio and footprint, improving the overall cost base efficiency, and mitigating structural labour availability issues in the US. The resulting benefits are anticipated to deliver incremental adjusted operating profit of $50 million by 2024. Total cash exceptional costs [are] expected to be around $35 million”.
CEO Rajiv Sharma added: "2021 was a strong year. Sales growth accelerated through the year, notably in the final quarter driven by demand recovery and good market share gains in threads. This was due to flexing our global supply chain, proactive inventory management, strong supplier relationships, strong local leadership and teamwork.”
He added: "The last two years have created opportunities to further improve customer service and margins. We have commenced a number of strategic projects that improve operational effectiveness and flexibility in key geographies while improving overall cost base efficiency. This will result in margin improvement over two years. Our focus is to accelerate profitable sales growth, and transform the company to be even more successful in a post-pandemic world.”
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