16th Jul 2025 18:55
(Alliance News) - Coats Group PLC on Wednesday reported a growth in profit during the first half of its current financial year, and announced its proposed acquisition of insoles maker OrthoLite Holdings LLC.
The London-based manufacturer of materials for footwear and apparel said pretax profit was USD111.0 million in the six months that ended June 30, rising 4.5% to USD106.2 million the year before.
Revenue rose 0.2% to USD705.4 million from USD704.0 million, while cost of sales was reduced by 0.9% to USD429.1 million from USD433.2 million.
Distribution costs were up 1.9% to USD60.5 million from USD59.4 million, and administrative expenses were down 3.6% to USD87.4 million from USD90.7 million.
Coats Group declared an interim dividend of 1.00 US cents per share, 7.5% higher than 0.93 cents the year before.
The company also on Wednesday said it has signed a definitive agreement to acquire insoles firm OrthoLite for an initial enterprise value of USD770 million.
This represents a multiple of 10 times enterprise value to earnings before interest, tax, depreciation and amortisation, reducing to less than 8 times on a post-synergy basis, including USD20 million in initial joint annualised cost synergies to be delivered by 2028.
A further payment of up to USD10 million will be payable based on potential Ebitda performance in 2025.
The deal is expected to complete in the fourth quarter of 2025.
Coats Group said this will "accelerate Coats' strategy to create 'super tier 2' supplier for footwear components, strengthening Coats' existing footwear business through expansion into the attractive, high-growth premium insole segment."
The takeover will be part-funded by a placing and subscription to raise around GBP250 million, plus a retail offer for an undetermined amount. The issue price will be determined at the close of the bookbuilding process.
The remainder of the consideration will be funded through new debt facilities with Coats Group's existing lenders.
"We have continued to improve the quality of our portfolio, completing the exit from US Yarns, and made further progress against our strategic enablers. This includes increasing our revenue from 100% recycled thread products by 73% and delivering 30% growth in the attractive market adjacencies we set out earlier in the year," said Chief Executive Officer David Paja.
"We are fundamentally reshaping the quality and growth profile of the group by expanding into the growing insole segment of the footwear market with the agreed acquisition of OrthoLite...This exciting acquisition of a high quality, margin accretive business further consolidates our leadership position in footwear components, bringing into the group a business with deep brand relationships, a complementary market-leading portfolio and a business model that is very similar to our own."
Shares in Coats Group closed down 0.6% at 82.60 pence in London on Wednesday. The stock is down 5.0% over the past year.
CEO Paja continued: "We are excited about the group's growth, margin and cash generation potential over the medium-term. I am proud of what our teams have accomplished so far this year and view the rest of the year with confidence despite the continuing macro uncertainties."
By Emily Parsons, Alliance News reporter
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