Coats group boosted by fashion sector as sales rise 2% in first four months

Global threads leader Coats Group issued a trading update on Thursday and said that sales in the first four months of the year rose 2% on both a currency-neutral/organic basis.


Coats Group

The fashion sector was key to the business in the period as the rise was driven by its strength in its Apparel and Footwear unit (the division was also up 2%), as well in Performance Materials (up 4%).

However, the company appears to have been hit hard by currency exchange issue because sales on a reported basis fell by 3%, as “currency translation headwinds”, notably the Indian Rupee, Turkish Lira and Brazilian Real, dented its turnover. These headwinds are expected to ease in the second half, as happened in 2018 too.

The Apparel and Footwear unit’s organic growth came as underlying retail markets “remained mixed but overall supportive.” It saw a “robust performance in the core thread business,” which grew 3%, as it “continued to deliver high service levels to our customers.”  Geographically, key Asian markets performed best, with “some offset” in Latin America. 
 
The Performance Materials growth was driven by double-digit rises in hi-tech end uses (for example, Wire and Cables, including Gotex), with “some ongoing offset from traditional end use segments in North America, as well as the phasing of certain customer programmes.”

And the company also said that while it remains “cautious around the current macroeconomic uncertainties,” based on its current assessment of business trends, “we anticipate delivering 2019 full-year performance in line with management's expectations.”

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