Coats Group PLC (LSE:COA) shares jumped 8% to 83.79p after the industrial thread maker maintained its full-year outlook and reported market share gains despite weak demand.
First-half revenue rose 19% to $837 million following the acquisition of footwear materials business OrthoLite. Organic revenue increased 1% at constant exchange rates even though Coats estimated its underlying markets contracted by mid-single digits.
Adjusted operating profit increased 19% to $166 million, while the margin was unchanged at 19.8%. Adjusted earnings per share declined 6% to 4.4 cents.
Apparel delivered 1% organic growth, supported by share gains and stronger demand in China's domestic and automotive thread markets. Footwear revenue was flat organically but accelerated significantly in the second quarter.
OrthoLite sales declined against a strong comparison period and were affected by temporary capacity constraints in Indonesia. Coats said the integration was progressing well, with $5 million of cost savings expected this year and at least $20 million annually by 2028.
The company also expects OrthoLite sales synergies to generate at least $40 million of additional annual revenue by 2030, which was not included in its original acquisition case.
Net debt increased to $842 million from $815 million at the end of 2025, while free cash flow declined to $30 million from $38 million.
Chief executive David Paja said Coats was "confident in our second half outlook" despite prolonged industry destocking. Full-year earnings are expected to show good growth, supported by around $15 million of additional cost savings.
The interim dividend rose 5% to 1.05 cents a share.
House broker Peel Hunt said underlying profits of $166 million were ahead of its forecast of $163 million, but with management expecting organic growth in the full year against background of market declines, "we make no changes to our forecasts".
Second-half comparatives are "materially easier" and Coats is continuing to take market share, analysts noted.
