Coats Group suspends dividend, expects revenues to slide

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Sharecast News | 27 Mar, 2020

Industrial thread manufacturer Coats Group said on Friday that it was scrapping its dividend and that it expects revenues to slide due to the coronavirus outbreak.

Aside from the previously stated $8m hit to its China business as a result of the virus outbreak, Coats said sales in the first two months of 2020 were broadly in line with expectations.

However, since its full-year results on 5 March, the escalation in the global situation has begun to affect demand as brands and manufacturers cancel or defer orders, for example due to large scale store closures. In addition, due to the government closures imposed earlier this week, 15 of its 50 manufacturing sites have been temporarily shut down.

"Indications from those governments are that these sites will return to production in the coming weeks, however we cannot rule out further enforced government closures in these and other geographies," it said.

As a result, 2020 organic revenues will be down around 8% on the first quarter of 2019, with an accelerating organic decline in March, which is expected to be around 15% lower year-on-year.

"Due to current uncertainty over the level of demand reduction across the group, we are not able at this stage to make accurate forecasts over full year 2020 revenues," it said.

Coats also said it has decided to cancel the proposed 2019 final dividend but will keep the 2020 interim dividend under review.

"Despite these uncertain times, the board remains confident in the group's ability to successfully manage through this difficult period and our actions are the prudent ones to take at this time."

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