Coats Group (COA) H2 2024 earnings summary

Executive summary

• Revenue grew 9% in constant currency, with strong momentum in apparel and footwear, while performance materials faced challenges in the Americas but improvement plans are underway.

• Adjusted EBIT margin increased 120-130 basis points to 18%, exceeding the 2024 target.

• Adjusted EPS rose 18% to $0.095, and free cash flow reached $153 million.

• Proposed final dividend of $0.219, up 10% on 2023.

• U.K. pension liabilities fully de-risked, requiring no further cash contributions and freeing up future cash flow.

Financial highlights

• Group EBIT up 18% to $270 million, with overall margins up 130 basis points to 18%.

• Adjusted EPS of $0.0949 per share, significantly up year on year.

• Free cash flow of $153 million, leverage at 1.5x year-end.

• Apparel division revenue grew 13%, footwear up 10%, performance materials down 1%.

• Final dividend per share increased to 2.19c from 1.99c.

Outlook and guidance

• Medium-term targets: organic revenue growth >5% per year, EBIT margin 19%-21%, EPS CAGR >10%.

• Apparel: 3%-4% annual revenue growth, EBIT margin ≥19%.

• Footwear: 7%-9% revenue growth, margin 24%-26%.

• Performance materials: 6%-8% revenue growth, margin 13%-15%.

• Free cash flow expected to exceed $750 million over five years.

• 2025 guidance: strong cash generation, continued organic growth in apparel and footwear, modest growth in performance materials, and $8m incremental EBIT from strategic projects.