Coats first-half profits hit by Covid lockdown restrictions

Industrial thread maker Coats saw first half profits slump as the coronavirus pandemic hit demand and its supply chain.

The company reported pre-tax profits of $10.6m, down from $85.4m a year ago. Revenue fell 24% to $535.8m and no dividend was declared.

Second quarter revenues fell 45% but improved through the quarter with June underlying organic revenues down 25%.

Coats said it had seen “an improving sales trend in recent, albeit low-season, months with organic sales declines reducing to 25% in June and 18% in July” as lockdowns started to ease.

The company added that it expected a rise in net debt in second half as lower levels of collections in the third quarter, driven by lower sales in the preceding three months were exceeded by monthly recurring payments, as well as the impact of the deferral of $12 million indirect and direct tax payments under government help schemes.

“As we look to the remainder of the second half we are mindful of the ongoing wider macro-economic uncertainty caused by COVID-19 and the importance of trading in the peak months of September, October and November,' it added.

“We have seen an acceleration of digital adoption and sustainability in our industry and our recent investments in these areas have resulted in commercial gains during the period.”