The U.K.-based maker of industrial yarns and structural components for footwear and apparel faced H1 headwinds due to difficult year-over-year comparisons and widespread industry destocking. Adjusted operating profit slipped by 14 percent to $107 million from $125 million for the six months ended June 30. Revenues fell by 11 percent to $715 million from $801 million. Footwear revenues rose by 60 percent year-over-year to $184 million in H1 and generated a 17 percent gain in adjusted operating profit to $38 million. Apparel revenues declined by 25 percent to $354 million, with a 29 percent drop in adjusted operating profit to $53 million. Regionally, only the EMEA showed H1 sales improvement, rising by 20 percent to $185 million. Sales in Asia were off by 16 percent to $398 million and down by 23 percent in the Americas to $133 million.
Coats said it generated $5 million in integration efficiencies from its 2022 acquisitions of Texon and Rhenoflex, with full-year synergies projected to reach $15 million. Overall, the group is moving toward an objective of creating $20 to $30 million in efficiencies in 2023 and $70 million by 2024. For the remainder of the FY, Coats is predicting gradual improvement in H2 market demand as it moves forward to reach market expectations for annual results, albeit at the lower end of analyst forecasts of the annual adjusted operating profit of $240 to $261 million.
Besides striking an agreement to divest its low-margin European Zips business for $1 million in July, the group, in H1, opened a new sustainability hub in Madurai, India, that will work with repurposed Shenzhen, China hub to create next-generation materials for sustainable threads.
