Craft giant's chairman confident despite effects of recession

Global thread and crafts giant Coats Group has reported a drop in profit for 2009 and its chairman says the recession continues to haunt the company's bottom line.

Coats' pre-exceptional operating profit of $129 million was down $9.3 million on the previous year's figures.

Total revenue of $1.9 billion last year was down $320 million on 2008.

Exceptional items were worth $56 million, and included a $10 million profit on the sale of a property.

The company was acquired by NZX-listed Guinness Peat Group, chaired by Sir Ron Brierley, in 2003.

Coats Group director Tony Gibbs said that with clothing sales down globally, it was "only natural" the company's sales would also be down.

"Having said that, Coats has come through pretty well, and I think the analysts will pick up on that," he said.

Gary Weiss, chairman of Coats group, said the company had shown "much resilience" to the recession and de-stocking in supply chains.

"Coats' strong operational and financial position coming into the downturn has enabled it to withstand these recessionary pressures and to react quickly," he said.

The company, which has a history dating back to the 16th century, has 19,125 employees in 65 countries. Its products include apparel threads, speciality threads, zips and needlecraft supplies.

In 2007 Coats Group was one of seven companies fined $603 million after an investigation by the European Commission into a market sharing agreement on the Continent. The group has lodged an appeal against the fine with the European General Court, in Luxembourg.

Weiss said the company's industrial sales were driven largely by demand for clothing and footwear in North America, Western Europe and Japan.

The crafts component of the business returned to profitability, Weiss said, with a pre-exceptional profit of $33.8 million last year, up from a $9.6 million loss in 2008.

He said the consumer environment in Europe remained weak, with craft sales down 20 per cent on 2008 levels, although operating losses were reduced by $27.9 million, which helped with overall profitability.