Coats Group: Increasing Business Focus To Highlight Valuation
Edison | Aug 17, 2016 07:14AM ET
Operating performance for Coats Group (LON:COA) was more in focus in H116 given relatively lower-level distractions from non-trading items. Underlying margin increases were achieved by both divisions with little overall assistance from markets.
Greater clarity on the group pension position – and the implications for future strategic investment and dividend payouts – is edging closer. Valuation multiples are little changed and remain low on P/E and EV bases.
Underlying margins and free cash flow improved
Regional market conditions saw fairly wide variations ranging from positive in EMEA to patchy/weak demand in the Americas, with Asia somewhere in between. Divisionally, Industrial performed well, increasing revenue and making share gains with a meaningful improvement in EBIT margin. Ongoing Crafts operations in the Americas experienced a reduced top line, but maintained underlying profitability (and a small UK operation is to be exited in H2).
Coats sustained a healthy level of adjusted free cash flow generation on a rolling 12-month view. In the six-month period, the seasonal outflow on this measure was less than in the previous year, but after taking into account FX translation effects, acquisitions and payments on legacy items, the period-end group net cash position stood at US$59.1m.
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Coats Group - Increasing Business Focus To Highlight Valuation
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