Coats affirms guidance for modest annual profit growth, delisting from NZX, ASX

Part of the weakness in sales reflected adverse currency movements.

Coats Group [NZX: COA], once part of Guinness Peat Group, reiterated its guidance for a "modest" increase in annual earnings before one-time items and will delist from the NZX and the ASX but keep its London Stock Exchange listing.

The company says reported sales in the four months ended April 30 fell 5%, mainly reflecting a 23% slump in craft sales, which it attributed to weak demand in the US hand knitting market. Industrial sales fell 1%.

Part of the weakness in sales reflected adverse currency movements, particularly the stronger US dollar against the Brazilian real and Indian rupee, and in constant exchange rate terms, craft sales fell 18% and industrial rose 4%, leaving overall sales unchanged. Demand from the apparel and footwear industries drove industrial sales.

Coats had intended to return capital to shareholders, but this year agreed to retain the funds to settle a dispute over its UK pensions scheme obligations with the British regulator.

It had agreed the December 2013 triennial funding valuation with the trustee of the Staveley scheme which showed a technical provisions deficit of about £100 million, which would be covered by a £34 million upfront payment drawn from the parent company's cash holdings (£342 million as at December 31) and annual cash payments to the scheme of £4.4 million pounds for nine years.

It was still in talks about the April 2015 valuation.

Coats will delist from the NZX and ASX on June 24 following a 99% approval from shareholders at its annual meeting. New Zealanders and Australians now make up only 11% of the share register, down from 30% a year ago.

After June 24 all shares will automatically transfer to the UK main register.

Coats shares last traded at 63c on the NZX and have gained 15% in the past 12 months.