Coats Group sales hit by currency headwinds

Industrial thread and consumer textile crafts company Coats Group attributed a decline in sales in the year to date to strong currency headwinds

In the year to the end October, sales declined 4% year-on-year, while sales were down 6% in the period between 1 July and 31 October.

The group’s industrial business posted a 3% year-on-year decline in sales in the 10-month period, while sales fell 5% in the four months to the end of October, in line with management’s expectations.

Sales in the crafts business fell 11% and 9% in the 10-month and four-month period respectively, Coats added, indicating the decline across its divisions was due to the strength of the US dollar against the euro and the Brazilian real.

Despite the drop in sales, the London-listed company remained positive over its outlook and expects to deliver a year-on-year improvement in operating profit before exceptional items, while adjusted earnings are forecast to grow as a result of improvements in the underlying tax rates and lower charges on borrowings.

Meanwhile, in a separate statement, the company revealed it intends to delist from the NZX Main Board in New Zealand and from the Australian Securities Exchange on 24 June next year.

Over the last couple of years, the group, which is now headquartered in the UK, has moved away from its investment in New Zealand and it no longer has material operations or executive directors in Australia and New Zealand.

"These changes have contributed to a significant shift in our shareholder register, with more than 65% of shareholders now UK based and less than 20% in New Zealand and Australia,” said group chairman Mike Clasper.

“For these reasons the board believes the benefits of moving to a single London listing outweigh those of remaining on the NZX and ASX.”

Coats shares were down 4.83% to 27.60p at 1604 GMT on Tuesday.