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(Sharecast News) - Coats Group on Tuesday said fullyear expectations remain unchanged after the industrial thread and shoe component maker posted a rise in half-year profit, with the company expecting good yearonyear earnings growth despite continued softness in apparel and footwear markets.
The group said it anticipates only modest market declines in the second half, noting that supplychain inventories are now lean and could support demand above current assumptions. Management added that incremental cost actions, including OrthoLite synergies, should deliver around $15m of benefits in H2, underpinning confidence in meeting fullyear profit targets.
The company reiterated its mediumterm ambition to deliver over 5% annual revenue growth through the cycle, supported by ongoing share gains, secured pricing and new product launches. Coats also said it remains on track to generate around $1bn of cumulative free cash flow over five years.
In the first half, group revenue rose to $837m, up 1% organically, with adjusted operating profit up 19% to $166m, maintaining a 19.8% margin. Apparel delivered 1% organic growth, while footwear was flat, returning to growth in Q2. OrthoLite revenue was lower yearonyear due to strong comparators and temporary capacity constraints, but the business is expected to return to growth in H2.
Net debt rose to $842m, with leverage at 2.3x, still on track to fall to 2.0x by yearend. Coats declared an interim dividend of 1.05cents, a 5% increase, citing confidence in both the fullyear and mediumterm outlook.
Reporting by Frank Prenesti for Sharecast.com
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