Industrial thread maker Coats Group PLC on Thursday hailed its annual results, as revenue and underlying profit improved during a year marred by ‘high inflation and supply chain disruption’.

Coats shares were 8.1% higher at 79.00 pence each in London on Thursday morning, among the best FTSE 250 performers.

Revenue in 2022 rose 9.5% to $1.58 billion from $1.45 billion in 2021. Pretax profit, however, declined by 4.2% to $151.3 million from $158.0 million. Exceptional and acquisition-related items were higher at $53.9 million last year from $19.5 million in 2021.

Without these costs, pretax profit would have risen 16% to $206.3 million from $177.5 million.

‘Coats produced a strong set of results in 2022, a year which was characterised by high inflation and supply chain disruption. Organic revenue growth was 10%, above our targeted medium-term growth of around 6%, and organic adjusted operating profit increased 22%,’ Chief Executive Rajiv Sharma said.

‘We made further excellent progress in transforming the group during the year, and this has made Coats a stronger, fitter and more focused group, enhancing our leading market positions in industrial thread and footwear component markets. The 2022 acquisitions of Texon and Rhenoflex have not only significantly strengthened our position in the attractive footwear market but also increased our medium-term organic growth and margin potential.’

Last June, Coats bought Texon International Group Ltd for $211 million in net cash, which was based on an enterprise value of $237 million. Texon provides components for athleisure footwear.

In August last year, it agreed to buy Rhenoflex GmbH, a maker of sustainable structural materials for the footwear industry, for an enterprise value of €115 million.

Coats lifted its final dividend by 15% to 1.73 cents per share. This takes its full-year dividend to 2.43 cents, also up 15%, from 2.11 cents in 2021.

For 2023, Coats expects ‘another year of strategic and operational progress’, though it said customer destocking has continued early into 2023, largely in apparel markets and to a lesser extent in footwear.

‘[We] continue to proactively respond to macroeconomic environment and inflationary pressures using our well-defined and tested playbook, focusing on cash, costs, self-help initiatives, deep customer relationships and tactical pricing actions,’ Coats said.

It expects a 2023 performance in line with board expectations and weighted to the second half.

Copyright 2023 Alliance News Ltd. All Rights Reserved.