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Coats sees no material impact from Iran war, holds guidance
(Sharecast News) - Industrial thread and footwear component maker Coats Group held full-year guidance and reported the Iran war had not caused a material impact on trading. The company on Wednesday said revenue for the four months to April fell 1% on a constant currency basis against a solid pre-US tariff comparator period.
Group operating profit margin was slightly higher than the same period last year, reflecting the benefits of the 2025 footprint consolidation in its footwear division and the positive contribution from OrthoLite, the maker of open-cell foam insole technology for $770m last year.
Apparel revenue was up 1%, strongly outperforming the core thread end market, with the division continuing to win market share across its portfolio including in China domestic and posting strong growth in automotive thread, Coats said in a trading statement.
Footwear revenue was 4% lower on an organic basis, as expected, as customer caution persisted and inventory levels remained low.
"OrthoLite revenue was lower than the same period last year on a proforma basis against a very strong prior year comparator and temporary capacity challenges in Indonesia, where we are expanding our footprint," the company said.
"Our plans to realise cost synergies are on track and we are increasingly positive on sales synergies. We remain confident in OrthoLite's growth prospects."
Coats added that while the ongoing tensions in the Middle East had not had a material impact on trading to date and it was "monitoring conditions closely".
"We have promptly enacted our well-honed operational and commercial playbook ensuring optimal pricing and cost discipline. We will continue to take action as required to mitigate supply chain pressures and raw material and energy cost increases."
The full year outlook remained unchanged with a modest second half profit weighting due to expected inflation cost recovery timing and expected full-year free cash flow generation to remain strong, enabling the group to continue to reduce leverage into its target range of 1-2x by year-end.
Reporting by Frank Prenesti for Sharecast.com
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