News Column

Guinness Peat First Half Profit Up On Strong Industrial Performance

August 12, 2014

Anthony Tshibangu

LONDON (Alliance News) - Investment holding company Guinness Peat Group PLC Tuesday reported an increase in profit for the first half of the year, following a strong performance from its industrial operating unit.

The company, which owns industrial thread and consumer textile business Coats PLC, posted pretax profit of USD49.6 million for the six months-ended June 30, up from USD38.9 million a year earlier, even though revenue dipped to USD837.1 million from USD839.7 million.

Revenue from the Coats' industrial division increased to USD622.3 million, from USD606.7 million a year earlier. However, crafts revenue fell 8% to USD214.8 million from USD233.0 million a year earlier.

The company said industrial demand over the first half was "encouraging", especially in Asia, driven by apparel and footwear and speciality demand in both domestic and export markets, and within Europe, Middle East and Africa across both apparel and footwear and speciality categories.

However, it said crafts' sales were lower due to lower demand for fashion handknitting products in the Americas and Europe, the Middle East and Africa.

Guinness Peat said profit attributable to shareholders rose to USD21.0 million, on a reported pre-exceptional basis, from USD10.9 million a year earlier. The company said this was due to increased operating profits, lower pension finance costs, reduced finance costs resulting from lower year-on-year net debt and average interest rates, and a lower tax charge.

Looking ahead, the company said regional variations in consumer demand for Coats' products are expected to continue, with a broadly positive outlook in Asia tempered by softness in apparel thread demand from some US brands, solid growth in both North America and Europe and a relatively flat situation in Latin America.

In addition, raw material costs are expected to continue to trend marginally upwards and payroll and other inflationary pressures are set to continue in many countries in which Coats operates.

Coats expects the industrial division to deliver year-on-year sales improvement for 2014 with volume growth through market share gains, new market entry and underlying market volume growth. However, trading is expected to remain challenging for the Crafts division although the unit is expected to improve in the second half.

A strategy review is being undertaken in EMEA Crafts and is due for the fourth quarter 2014.

"At a group level it is expected that, while operating profit will continue to be impacted by Crafts, attributable profit will be in line with market expectations," Guinness Peat said in a statement.

The stock closed flat at 34.00 pence Tuesday.

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Source: Alliance News

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