Industrial thread sales up 2% in Asia at Coats Group

25 Mar '09

5 min read

The crafts result was below expectations, with a loss overall of $7.1 million (2007 - $25.5 million profit). In the Americas, crafts sales were 2% up on 2007 and profits were broadly in line. Overall this was a good performance, given the downturn in the North American consumer environment. Profits of $34.5 million (2007 - $44.5 million) were generated from the crafts business in the Americas and Asia. In Europe, where the consumer environment was fragile, crafts sales were 11% down on 2007 levels, primarily due to the weak demand for crafts products, particularly handknittings. On a like-for-like basis, Europe crafts sales were 14% down on 2007, following a 16% like-for-like decrease reported in 2007.

Prospects
The present economic situation clearly holds great challenges for all businesses. The world is in economic turmoil, which makes the outcome for the next year difficult, if not altogether impossible, to predict. What is known is that the prices of many commodities and materials used by Coats have decreased and the current strength of the US dollar compared to the currencies of many of the countries Coats operates in is improving the competitiveness of these countries. In respect of the industrial business, there are no signs of improvement in consumer demand and the pressures on sales seen in the last quarter of 2008 are expected to continue in 2009. Sales in US dollar terms are also expected to show further decreases due to the weakness of local currencies in Coats' major domestic markets.

In crafts, profitability improvement in 2009 is expected, which is almost entirely dependent on Europe crafts. The European crafts market is expected to continue to decline, but benefits will flow through from the restructuring initiatives taken, including reducing the cost base. In the Americas, it is anticipated that current sales and profit levels will be maintained.

The Americas continued to be affected by increased penetration of apparel and footwear imports from Asia, further compounded by weak retail demand.

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Coats is the world's largest manufacturer and supplier of industrial sewing and embroidery threads. Coats' wide product range delivers solutions for every conceivable application - be it jeans and trainers, or automotive airbags and bullet-proof vests.

Coats Group Ltd

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