Coats confirms guidance despite tariff uncertainty

(Sharecast News) - Coats Group said on Wednesday that it was on track to finish the first half up on the previous year, despite Donald Trump's global tariff regime causing a spike in uncertainty. The FTSE 250 firm, which makes industrial thread and footwear components, said revenues in the four months to 30 April had risen 2%, or 4% on a constant currency basis.

Within that, revenues at the apparel and footwear units were up 5%, while performance materials, excluding the US Yarns unit, were flat.

Coats agreed to sell its low-margin US Yarns business earlier this month, with completion expected in June.

Group-wide margins also continued to improve during the period, leaving the interim adjusted EBIT margin on track to meet the medium-term target of 19% to 21%.

Coats acknowledged that the US-led tariffs had created "elevated uncertainty" in a number of its markets.

"We continue to monitor this situation closely," it said. "This remains a dynamic backdrop and consequently challenging at this point to determine any indirect impact on future demand, but we have been encouraged by the continued positive momentum through the period."

David Paja, group chief executive, said: "We have traded well in the first few months of 2025, and we expect to finish the first half with performance ahead of the prior year, reflecting both growth and further margin expansion.

"It's too early to be definitive on any longer-term impact from tariffs and trade restrictions, but I am confident in the group's ability to navigate different scenarios with a well-honed playbook, while continue to invest in our growth initiatives."

Coats, which employs more than 16,000 people and traces its roots back 250 years, is due to release interim numbers on 31 July.

Peel Hunt, which has a 'buy' rating on the stock, said: "In the short term, there is likely to be weaker consumer demand. We make a small reduction to forecasts to reflect this and the sale of US Yarns.

"This should not deflect from the longer-term opportunity to deliver strong earnings growth, return on capital employed and free cashflow."

As at 0930 BST, shares in Coats were down nearly 2% at 77.4p.