Coats Group PLC (LON:COA) shares moved lower on Thursday as the group saw its first half profits plunge by around two-thirds as a result of disruption caused by the pandemic.
For the six months ended June 30, the industrial thread maker reported an adjusted operating profit of US$34mln, down 67% year-on-year, while revenues dropped 24% to US$536mln.
The company said it had experienced “significant [coronavirus] disruption” during the period and that it had taken several actions to preserve cash including a 70% cut to capital expenditure and pay cuts in the second quarter for its 4,000 non-operational staff and senior management. The firm also cancelled its final dividend for 2019 and its interim payout for 2020.
Despite the downturn, chief executive Rajiv Sharma said the company had seen “an improving sales trend in recent, albeit low-season, month with organic sales declines reducing to 25% in June and 18% in July”.
“As we look to the remainder of the second half we are mindful of the ongoing wider macro-economic uncertainty caused by [coronavirus] and the importance of trading in the peak months of September, October and November”, the CEO said, although he added that the firm was “focused on seizing the short-term and longer-term opportunities that are presented” and that he was “confident that Coats will emerge even stronger and more valuable to our industry and shareholders in a post-[coronavirus] world”.
The profit plunge sent the company’s shares down 3.4% to 59.9p in early deals.