Let’s hope that managers at Coats (COA) have been granted the serenity to accept the things they cannot change. January’s tornado strike at its Georgia-based US crafts business put a dent in half-year revenue, while the low-yield environment has exacerbated its pension challenges. The industrial thread manufacturer could do nothing to allay an act of God, but it did reach agreement to make an initial £270m upfront payment to its three UK pension schemes ahead of next year’s triennial funding valuation.
Despite the impact of the hurricane on an already struggling division, group revenue was up 5 per cent on a constant currency basis. The performance of Coats’ industrial division pleased management, particularly the materials segment, where revenue was up 18 per cent at fixed currencies on the back of geographic expansion and gathering demand for specialist product lines such as automotive composites and fibre optics. There was continued strong growth in Europe and Asia, while the US consumer durables market improved.
The materials performance, along with recouped profit through the US crafts segment's insurance cover, underpinned a one percentage point increase in the adjusted operating margin to 12.1 per cent, helping adjusted profits up 14 per cent at fixed currencies to $89m.
Peel Hunt gives adjusted pre-tax profits of $156m for the December year-end, leading to EPS of 6.8ȼ, against $141m and 5.8ȼ in 2016.
| COATS (COA) | ||||
| ORD PRICE: | 79.2p | MARKET VALUE: | £ 1.12bn | |
| TOUCH: | 78.5-79.5p | 12-MONTH HIGH: | 79.3p | LOW: 29p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 12ȼ* | NET DEBT: | 132% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2016 | 713 | 60.2 | 2.11 | 0.00 |
| 2017 | 740 | 75.8 | 2.89 | 0.44 |
| % change | +4 | +26 | +37 | - |
| Ex-div: | 26 Oct | |||
| Payment: | 17 Nov | |||
| £1 = $1.31 *Includes intangible assets of $291m, or 21ȼ a share | ||||
