Coats Group upgrades FY expectations after strong first half
Updated : 10:33
Industrial thread maker Coats Group upgraded its full-year expectations on Wednesday following a "strong" first half.
In an update for the six months to 30 June, the company said a strong operational performance and demand recovery have continued, despite the impact of lockdowns in India in May and June, which have now subsided.
Group sales for the period rose to $732m from $536m in the first half of 2020 and $705m in 2019. Organic group sales grew 34% year-on-year but just 1% versus 2019. Coats said that excluding the impact of the recent lockdown in India, organic growth would have been 3% compared to 2019.
First-half adjusted operating profit for the group is now expected to come in at around $95m, up from $34m in the same period a year ago but down from $102m in 2019.
Coats said pricing actions and self-help productivity programmes continue to offset heightened inflationary pressure and that its 2021 performance is now anticipated to be "moderately ahead" of its previous expectations.
At 1030 BST, the shares were up 2.7% at 69.60p.
Broker Peel Hunt upped its price target on the buy-rated stock to 85p from 80p after the update.
"We are upgrading our earnings per share forecasts by circa 10%, which follows a 6% increase in May. This has been achieved despite the negative impact of recent lockdowns in India, which have now subsided.
"Assuming no further material Covid impacts, we expect the positive trends to continue and and are increasingly confident that Coats will emerge from the Covid period with an accelerating sales performance, driven by digitisation, new product development, and sustainability."