Tough year-ago comparisons and a slowdown in customer demand meant Coats Group sales numbers took a hit in the three-month trading period to 30 April.
But at least there were no shocks as market conditions and trading in the quarter were in line with its expectations — as is its outlook — the industrial threads and global footwear component manufacturer said in a trading update Wednesday.
The overall constant currency revenue decline was 7%, underpinned by acquisitions, as organic revenues dipped 20%, “up against a very strong prior year comparator… [reflecting] the continuation of the widespread industry de-stocking in Apparel and Footwear”, it explained.
It gave only percentage figures for the period, rather than putting actual monetary amounts on them.
As also expected, Apparel revenues declined 22% in the period, reflecting a continuation of trends seen in Q4, “with de-stocking by customers adjusting to more subdued consumer demand and excess inventory levels”.
It was the same in its Footwear division, down 23% organically, hit by those similar de-stocking drivers. At least reported divisional revenue increased 58% year-on-year in the period, but that did include major first-time contributions from the recent acquisitions of Texon and Rhenoflex.
Revenue in Performance Materials dipped 13% in the period, largely the result of the customer insourcing of a significant PPE contract in H2 2022, its said.
Meanwhile, it described operating profit margins as “resilient… supported by strategic projects and tight cost control”.
Coats added: “With trading in the period in line with expectations we continue to anticipate full year 2023 performance consistent with the board’s expectations, with a second-half weighting, underpinned by the contribution from acquisitions, associated synergies and strategic projects.
“The group remains very well-positioned in its markets, as the global partner of choice for winning brands and with a clear leadership position in innovation and sustainability”.
Coats will release its interim results on 1 August.
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