Coats Group Plc · LSE:COA
Coats — H1 2021 Earnings Presentation
29 slides from Coats's earnings presentation, Aug 3, 2021
Slide 1: Positive Momentum Continues; Strong Operational Performance
POSITIVE MOMENTUM CONTINUES; STRONG OPERATIONAL PERFORMANCE 2021 HALF YEAR RESULTS 3 AUGUST 2021
Slide 2: Disclaimer
DISCLAIMER Restricted distribution This presentation is not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction (the ‘Restricted
Slide 3: Agenda
AGENDA 01 Highlights 02 Purpose and strategy 03 Market and our performance 04 Strategic enablers 05 Financial performance 06 Key highlights and outlook 07 Appendices COATS GROUP PLC | 2021 HALF YEAR RESULTS 3
Slide 4: Highlights
HIGHLIGHTS Positive momentum continues, strong operational performance Organic revenue growth vs 2019, despite India lockdown Core A&F thread up 2%, PM organic growth 4% (vs 2019) Customer wins in both A&F and PM Innovation focus maintained – 12 new products Further progress on industry-leading sust
Slide 5: Our Purpose and Strategy
OUR PURPOSE AND STRATEGY TO CONNECT TALENT, TEXTILES AND TECHNOLOGY TO MAKE A BETTER, MORE SUSTAINABLE WORLD Profitable sales growth Underpinned by 01 A&F increasing our market share our strategic enablers PM leading with innovation, operational efficiencies Digital Continuing to strengthen the core
Slide 6: H1 2021 Market and Our Performance
H1 2021 MARKET AND OUR PERFORMANCE COATS GROUP PLC | 2021 HALF YEAR RESULTS 6
Slide 7: Apparel & Footwear: Market Overview H1 2021
APPAREL & FOOTWEAR MARKET OVERVIEW H1 2021: POSITIVE END MARKET SENTIMENT ACROSS ALL REGIONS Retail recovering Consumer sentiment mixed A&F global retail sales (US$tn) 1.70tn 1.60tn Source: 1.50tn Euromonitor 1.40tn A&F retail 1.30tn forecasts 1.20tn 1.10tn 2019 2020 2021 (forecast) Imports and inve
Slide 8: Apparel & Footwear: H1 2021 Performance
APPAREL & FOOTWEAR H1 2021 PERFORMANCE Continuing momentum and recovery Customer and programme wins Pricing actions offsetting inflationary pressures Winning with the Winners Quarterly sales trend (Vs 2019) 10% 0% Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 -10% -20% -30% -40% -50% A&F A&F without India imp
Slide 9: Performance Materials: Market Overview H1 2021
PERFORMANCE MATERIALS MARKET OVERVIEW H1 2021: SUPPORTED GROWTH ACROSS COATS’ PM END MARKETS Personal Household Energy Telecoms Transportation Protection & Recreation Industrial output Global Oil Rig count Continued strong fibre Car production (Mn cars) Strong consumer recovering; slower optic inves
Slide 10: Performance Materials: H1 2021 Performance
PERFORMANCE MATERIALS H1 2021 PERFORMANCE Growth vs 2019, pricing actions 2021 end market themes Customer and programme wins offsetting inflationary pressures Quarterly sales trend vs 2019 (organic) Personal Protection: slower recovery in military Multiple transportation wins with 10% demand, US lab
Slide 11: Strengthening Operational Delivery
STRENGTHENING OPERATIONAL DELIVERY TO MEET DEMAND AMID CONTINUED VOLATILITY Well placed to manage Covid disruptions Service levels maintained Cost and productivity Despite continued Covid Service - On Time in Full $9 million sourcing and disruptions, shutdowns 90% manufacturing productivity, and lab
Slide 12: Strategic Enablers
STRATEGIC ENABLERS COATS GROUP PLC | 2021 HALF YEAR RESULTS 12
Slide 13: Digital Technology
DIGITAL TECHNOLOGY DELIVERING VALUE CREATION FOR CUSTOMERS COATS GROUP PLC | 2021 HALF YEAR RESULTS 13
Slide 14: Innovation
INNOVATION CONTINUED FOCUS, RICH PIPELINE OF OPPORTUNITIES PERSONAL ENERGY SPORTS AUTO TELECOMS SUSTAINABILITY PROTECTION COMPOSITES COMPOSITES COMPOSITES – Armoren cut- – Anti-wick strength – Coatsknit Eco – range – High strength – First programme – German OEM protection and members of fibre blends
Slide 15: Sustainability: H1 2021 Highlights
SUSTAINABILITY H1 2021 HIGHLIGHTS SOCIAL LIVING SUSTAINABLY Target: external Social certifications, across all key sites, Target: by 2024, all premium polyester threads made from with over 80% of employees in certified sites by 2022 100% recycled material – H1: 44% of employees now covered (6% FY20)
Slide 16: H1 2021 Financial Performance
H1 2021 FINANCIAL PERFORMANCE COATS GROUP PLC | 2021 HALF YEAR RESULTS 16
Slide 17: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS POSITIVE MOMENTUM CONTINUES Organic sales Improving EBIT Operating Robust Strong balance growth vs 2019 margins profit ahead free cash sheet 0.8x of expectations flows leverage COATS GROUP PLC | 2021 HALF YEAR RESULTS 17
Slide 18: Key Financial Metrics
KEY FINANCIAL METRICS POSITIVE MOMENTUM CONTINUES; STRONG OPERATIONAL PERFORMANCE Reported Vs H1 2019 H1 2021 H1 2020 CER1 Organic1 change Organic1 Revenue ($ million) Apparel & Footwear 531 372 43% 41% 41% 0% Performance Materials 201 164 23% 22% 19% 4% Group 732 536 37% 35% 34% 1% Adj. operating P
Slide 19: Group Operating Profits and Margins
GROUP OPERATING PROFITS AND MARGINS UNDERPINNED BY VOLUME GROWTH 6.4% margin 13.0% margin ($m) COATS GROUP PLC | 2021 HALF YEAR RESULTS 19
Slide 20: Segmental Margins
SEGMENTAL MARGINS A&F margins in H1 2021 recovered to 15.5% as volumes normalise STRONG RECOVERY IN A&F MARGINS; PM MARGINS IMPACTED BY US LABOUR ISSUES - Excellent commercial and operational delivery underpinning service levels APPAREL & FOOTWEAR (%) PM margins in H1 2021 6.4% 15.5% - Margin progre
Slide 21: Income Statement
INCOME STATEMENT H1 2021 H1 2020 EPS RECOVERY DRIVEN BY HIGHER $m Reported Reported PROFITABILITY, LOWER FINANCE Adjusted operating profit 95 34 CHARGES AND NORMALISING TAX RATE Exceptional / acquisition related items 1 (5) Finance costs Operating profit 97 29 Lower in the year primarily due to: Sha
Slide 22: Cash Flow and Leverage
CASH FLOW AND LEVERAGE $m H1 2021 H1 2020 STRONG CASH GENERATION Adjusted free cash flow 48 (5) H1 2021 CASHFLOW ($m) Pensions (19) (9) Acquisitions - (37) Dividends paid to equity shareholders (15) - Exceptionals and other (1) (3) Free cash flow 13 (54) H1 2020 FX and other movements - (2) 51 2 (13
Slide 23: 2021 Modelling Guidance
2021 MODELLING GUIDANCE Area Guidance Raw material inflation c.$20 million (majority expected to be offset by price) Other non raw material inflation c.$15 million (mainly labour) Sourcing and productivity savings c.$18 million Freight cost inflation c.$20 million (expected to be offset by sourcing
Slide 24: Key Highlights and Outlook
KEY HIGHLIGHTS AND OUTLOOK COATS GROUP PLC | 2021 HALF YEAR RESULTS 24
Slide 25: Highlights
HIGHLIGHTS Positive momentum continues, strong operational performance Organic revenue growth vs 2019, despite India lockdown Core A&F thread up 2%, PM organic growth 4% (vs 2019) Customer wins in both A&F and PM Innovation focus maintained – 12 new products Further progress on industry-leading sust
Slide 26: Outlook
“ OUTLOOK In the second half of the year, we will continue to drive performance by focusing on profitable sales growth, our strong customer relationships, our digital, innovation and sustainability credentials and ongoing pricing and productivity actions. The company issued a post-close trading upda
Slide 27: The Q&A Session Will Begin Shortly
THE Q&A SESSION WILL BEGIN SHORTLY If you would like to ask a question, please dial United Kingdom 0800 640 6441 United Kingdom (local) 020 3936 2999 All other locations +44 203 936 2999 Participant access code 900435 COATS GROUP PLC | 2021 HALF YEAR RESULTS 27
Slide 28: Appendices
APPENDICES COATS GROUP PLC | 2021 HALF YEAR RESULTS 28
Slide 29: Geographical Revenue Split
GEOGRAPHICAL REVENUE SPLIT Vs H1 REVENUE CER1 Organic1 $m 2021 2020 change % change% 2019 Strong recovery across all regions: Organic1% Asia - Sales return to above pre-Covid levels despite India impact Asia 405 283 40% 40% 3% - Performance in key A&F markets (Vietnam, China and Bangladesh) was part