Coats Group sales rise, says it will beat profit expectations
UK industrial threads giant Coats Group said sales in the four months to the end of April said rose 5% in its Industrial division, or 7% at constant exchange rates and 4% on an organic basis. Reported sales were up 2% in the apparel and footwear sub-division and 17% in performance materials. But the crafts division saw sales falling 3%.
The good results came despite continued mixed demand from clothing retailers and manufacturers while the Performance Materials strength reflected continued strong growth in Asia and EMEA, as well as an improvement in the US consumer durables markets. The contribution of Gotex, acquired in June 2016, also helped.
Craft sales fell largely due to the business disruption caused by the tornado strike at the main Crafts distribution centre in Albany, Georgia, in the US during January. The estimated adverse sales impact from the Albany tornado is $10m, however the impact of lost profits and incremental costs of re-establishing operations there are expected to be covered in full by the group's insurance cover.
The 4% growth in total group sales on a reported basis, which is lower than the 5% constant exchange rate growth, reflects the stronger US dollar, primarily against the Turkish Lira, Mexican Peso and Egyptian Pound, compared to the same period in 2016.
Coats said it has had a strong start to the year, and therefore now expects to deliver 2017 full-year results ahead of management's previous expectations.
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