Coats Group reported group revenue of $837m for the six months ended 30 June, up 1% on an organic constant currency basis against $705m a year earlier.
The world's leading industrial thread and footwear components manufacturer said it outperformed core apparel and footwear markets, which it estimates declined by mid-single digits in aggregate amid customer destocking.
Apparel delivered 1% organic growth, helped by strength in China domestic and automotive thread markets, while Footwear was flat overall but accelerated in the second quarter despite a soft market. OrthoLite revenue fell year-on-year against a strong prior comparator, hit by temporary capacity constraints in Indonesia that the company says are being resolved.
Adjusted EBIT margin held at 19.8%, supported by OrthoLite accretion and cost discipline, though adjusted basic earnings per share slipped to 4.4 cents from 4.7 cents. Free cash flow was $30m, down from $38m, with net debt at $842m and leverage of 2.3 times net debt/EBITDA, which the company expects to fall to 2.0x or below by year end. The board declared an interim dividend of 1.05 cents per share, up 5%.
"We remain very excited by the enhanced capabilities and deeper customer relationships that OrthoLite has brought to the Group and we see substantial incremental value creation potential from sales synergies", said David Paja, Group Chief Executive.
Coats reiterated its full-year outlook, expecting continued market outperformance, around $15m of incremental cost benefits in the second half including OrthoLite synergies, and good year-on-year earnings growth alongside strong free cash flow toward its five-year cumulative target of approximately $1bn.
