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Coats posts FY profit rise despite tough US conditions

Thread maker Coats said full year adjusted operating profit increased 11% to $174m.
Revenues increased by 4% to £1.5bn with a neutral foreign exchange impact. On an organic basis, which excludes a 1% contribution from the acquisitions of Gotex, Fast React, and Patrick Yarn Mill, revenue growth was 3%, Coats said.

The full year dividend was increased 15% to 1.44 cents a share. Coats said it expected 2018 profits to be slightly ahead of expectations as it benefited from an incremental full year contribution from the Patrick Yarn Mill acquisition, and anticipated first year benefits from its 'connecting for growth' programme.

"We enter 2018 in a strong position, with continued momentum in our apparel and footwear and hi-tech performance materials businesses. Whilst market conditions in our North American crafts business are expected to remain challenging, our new management team has commenced implementation of a refocused strategy," the company said.

On the reported year, Coats said industrial revenues grew at 6%, driven by share gains in apparel and footwear despite mixed demand from clothing retailers.

"Geographically, our organic growth of 5% continued to strengthen during the year in the key geographies of Asia (6% growth) and Europe, Middle East and Asia (9% growth), although the US consumer durables market (e.g. bedding and quilting) remained soft in the second half," Coats said.

The company's crafts division saw revenues decline by 11% on a constant currency, as the North American market conditions remained weak throughout the second half of the year, alongside an adverse impact from the introduction of own-label handknitting products at a major customer.

This came after the first half business disruption caused by the tornado strike at the main crafts distribution centre in the US in January 2017 which hit sales by an estimated $10m.

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