(Alliance News) - Coats Group PLC said Thursday that profit for the first half of 2019 was improved by a substantial fall in exceptional costs, despite a decline in revenue due to currency headwinds.
For the six months to the end of June, The FTSE 250 thread manufacturer said pretax profit increased by 23% to USD85.4 million from USD69.0 million.
Profit performance was helped by a reduction in exceptional and acquisition-related costs to USD1.2 million from USD19.5 million, with the year-earlier costs mainly coming from Coats's two-year Connecting for Growth restructuring programme.
The programme was focused on simplification across the group's businesses, including the transition from market-focused support functions to more global support functions.
Revenue however, declined by 2.8% to USD705 million from USD725 million the prior year, due to currency headwinds, notably the strengthening dollar against the Indian rupee, Turkish lira and Brazilian real.
On a constant currency basis, revenue grew by 2% in the first half, Coats said.
Coats declared an interim dividend of 0.55 cent per share, up 10% from 0.50 cent the year before.
Looking ahead, Coats expects a broadly neutral currency translation impact on the second half of 2019. Earnings per share for the year is expected to be affected by foreign exchange movements; however the group expects operating profit to be in line with expectations.
"I am pleased to report a robust performance in the first half despite mixed conditions in underlying retail and industrial markets," said Chief Executive Rajiv Sharma.
"Our improved operating margins, strong cash flow generation and underlying earnings growth reflect continued cost control and the benefits of Connecting for Growth. This programme is now mostly complete and will conclude this year. The savings achieved have funded reinvestments in the areas of innovation, digital and talent, which will benefit us in the future," Sharma added.
Shares in Coats were down 0.6% at 79.25 pence on Thursday.
Coats (COA)