27th Mar 2020 10:19
(Alliance News) - Coats Group PLC on Friday said it expects organic sales to fall by about a third in 2020 due to coronavirus outbreak.
The industrial thread manufacturer said sales in the first two months of 2020 were broadly in line with expectations, excluding the USD8 million adverse impact on the company's China business as a result of Covid-19.
Since the beginning of March, Coats said it has seen the global situation escalate within and beyond the industries in which it operates, with brands and manufacturers starting to cancel or defer orders, for example due to large scale store closures.
In addition, as of Thursday, due to enforced government closures, 15 of Coats' 50 manufacturing sites are currently subject to temporary shutdown.
As a result, the company said its organic revenue in the first quarter is expected to be around 8% lower year-on-year, with an accelerating organic decline in March, which is expected to be around 15%.
Due to current uncertainty over the level of demand reduction, Coats said it is not able at this stage to make accurate forecasts over full year revenue.
However, Coats said it performed scenario testing, including a significant decline in sales in the second quarter and the third quarter, with a gradual improvement in the final quarter of 2020, which equates to a 30% organic sales decline for the full year.
The company's committed debt facilities total USD575 million across its banking and US private placement group, with a range of maturities from late 2022 through to 2027.
At the end of February, this headroom was USD230 million, Coats said.
The company said it will provide further trading update on May 20.
The stock was trading 4.6% lower in London on Friday morning at 45.86 pence a share.
By Evelina Grecenko; [email protected]
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