Coats Group (COA) H2 2025 earnings summary

Executive summary

• Achieved significant strategic progress in 2025, including the OrthoLite acquisition, US Yarns disposal, and resilient trading in challenging markets, improving portfolio quality and positioning for 2026 and beyond.

• Gained further market share in Apparel and Footwear, with strong organic growth led by Safety Fabrics and record free cash flow of $160 million, exceeding the previous decade's combined total.

• Streamlined into two divisions (Apparel and Footwear) for sharper focus and efficiency, with continued market share gains and growth in sustainable threads.

• Announced more ambitious medium-term targets, including upgraded revenue, margin, and cash flow goals.

• Outperformed core end markets, gaining share despite market declines.

Financial highlights

• Revenue reached $1.465 billion, up 2% year-over-year and flat on an organic constant exchange rate basis, outperforming end markets that declined low to mid-single digits.

• EBIT rose to $290 million (+7% year-over-year), with operating margin up 80 bps to 19.8%.

• Adjusted EPS was $9.03, in line with expectations, with higher EBIT offset by increased finance costs; reported as 9.3c, down from 9.7c in 2024.

• Free cash flow pre-dividends was $160 million, a record for the group.

• Proposed full-year dividend of $3.28, up 5% year-on-year.

Outlook and guidance

• Upgraded medium-term targets: revenue CAGR above 5%, EBIT margin 21%-23%, cumulative free cash flow target of $1 billion over five years, and EPS CAGR above 10%.

• Leverage expected to fall below 2x by end of 2026, supported by strong cash generation.

• Guidance for 2026: working capital ~12% of sales, capex $40-$45 million, effective tax rate ~29%.

• Anticipate further EBIT margin expansion and strong free cash flow in 2026, with OrthoLite expected to outperform the footwear market.

• Effective tax rate expected to reduce slightly over the medium term.