Coats delivers faster than expected savings

Net benefits from the industrial thread manufacturer’s two-year 'Connect for Growth' programme are now predicted to come in at $10m (£7.6m) in 2018, doubling initial estimates. This swift progress prompted management to guide that the full-year performance will be "slightly ahead" of previous expectations.

The fruits of Coats’ self-help strategy were visible throughout the first half. Productivity and procurement improvements, cost control, price increases facilitated by better focusing on customer needs, stronger sales of higher-margin core threads and robust volume growth, particularly from the Patrick Yarn Mill acquisition, saw the group’s core industrial unit register a 16 per cent rise in adjusted operating profit at constant currencies.

Management is hopeful that Connecting for Growth will soon spark a turnaround for the group’s small craft division, too. Chief Rajiv Sharma tells us he’s confident that the struggling unit can lift revenues, aided by a new product pipeline, and growing online sales in North America, and that this will have an immediate impact on divisional profits.

Peel Hunt upgraded its adjusted pre-tax profit and EPS forecasts by 3 per cent and 2 per cent to $181m and 7.7ȼ, respectively, up from $161.4m and 6.9ȼ in 2017.