Statutory figures for Coats Group (COA) give a somewhat distorted view of performance through 2016 due to US dollar strength and a marked decline in one-off charges. Stripping out the now discontinued UK Crafts business, adjusted operating profits were up 16 per cent on a constant-currency basis, while return on capital employed increased by 600 basis points to 39 per cent.
Coats, which styles itself as "the world's leading industrial thread manufacturer", has made its way on to the dividend list; a final payout of 0.84ȼ a share was made possible by a settlement agreement with the trustees of the UK Coats and Brunel pension schemes, and the cessation of related regulatory action by the UK Pensions Regulator. The ability to fund the dividend was aided by a 10 per cent boost in adjusted free cash flow, as rationalisation benefits started to accrue.
The remaining crafts operations in the Americas suffered margin compression through 2016, partly due to a marked sales decline in US hand knitting sales. Post period-end, the distribution centre for the US crafts business in Georgia suffered significant damage following a tornado strike, although the group's insurance is expected to cover inventory and sale losses, plus the incremental costs of re-establishing operations.
Peel Hunt gives adjusted profits of $154m and EPS of 6.4ȼ for 2017, rising to $162m for 2018 (from 4.9¢ last year).
| COATS (COA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 58.3p | MARKET VALUE: | £820m | |
| TOUCH: | 57.5p-59p | 12-MONTH HIGH: | 62p | LOW: 22p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 4.9ȼ* | NET DEBT: | $265m† | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2012 | 1.04 | -93.1 | -7.8 | nil |
| 2013 | 1.09 | 14.0 | -1.6 | nil |
| 2014 | 1.56 | 96.9 | 3.0 | nil |
| 2015** | 1.47 | 80.3 | 1.8 | nil |
| 2016 | 1.46 | 123 | 4.6 | 0.84 |
| % change | -1 | +53 | +154 | - |
Ex-div: 4 May Payment: 30 May *Includes intangible assets of $292m, or 21ȼ a share **Restated †Excluding $343m in cash held as settlement with the Pensions Regulator. £1= $1.25 | ||||
