Coats Group Stock Earnings Reports

Key points for investors: Coats delivered a resilient 2025 despite a softer end‑market backdrop. Organic revenue was broadly flat (CER) while the group outperformed its apparel and footwear markets and gained share. EBIT was $290m and group operating margin expanded 80bp to 19.8%. Free cash flow (pre-dividends) reached a record $160m and year‑end net debt (ex leases) implied pro‑forma leverage of 2.2x after the OrthoLite acquisition; management expects leverage to fall below 2.0x by end‑2026. Strategic portfolio moves included the acquisition of OrthoLite (EV $770m) and the divestment of the U.S. Yarns business, improving portfolio quality and adding higher‑margin, cash‑generative capacity. Management upgraded medium‑term targets: revenue CAGR >5% through the cycle, group margin target raised to 21–23%, and cumulative free cash flow over the next five years increased from $750m to $1bn (now defined after exceptionals). Target adjacencies (Safety Fabrics, energy tapes, Coats Digital, ProWeave, lifestyle trims) contributed ~ $45m sales in 2025 and added ~1 percentage point to group growth; OrthoLite integration carries $20m of identified synergies by 2028 (c.$5m in 2026). Sustainability remains a differentiator (EcoVerde recycled thread scale, Scope 1&2 reductions, zero waste to landfill). Capital allocation: disciplined capex ($32m in 2025; guide $40–45m including OrthoLite), progressive dividend (FY dividend up 5%), continued focus on deleveraging, organic growth and selective M&A / buybacks. Main near‑term risk noted: potential disruption from the Middle East conflict, which management is monitoring.