Guiness Peat Group posted report for its biggest investment project Coats Group Limited (BVI)
Guiness Peat Group plc, an investment holding company having strategic interests in a number of businesses in Asia, Australia and Europe, has posted the unaudited consolidated results of Coats Group Limited for the first half of the year ended 30 June 2006.
The Coats Group, incorporated in the British Virgin Islands, is actually the biggest investment of GPG. It is the company making global operations in 67 countries, with over 25,000 employees engaged in manufacturing and distribution of threads and handknitting crafts. Guiness Peat Group bought the BVI company in 2004 for 226,1 million Euro. Coats Group is valued on its balance sheet at 246 million Euro, and is the most valuable stake of GPG’s assets estimated at 1 billion Euro.
The company results were released for information only and showed reduced profit, which followed falling sales of handknitted clothing in the U.S., as well as lower investment income. Because of these reasons, Coats Group was able to contribute to GPG just 13 million Euro, instead of 14,4 million Euro in the previous period. At the same time, the amounts of investment reorganisation have increased especially in North America.
From the statement of Coat’s chairman Gary Weiss it is clear that in the first half of the year the Coats Group made underlying progress despite more difficult trading conditions, which resulted in the decrease of BVI company’s operating profit at 10% to $US 61 million. The company’s achievements include improved performance from industrial thread offset by lower crafts sales, 17% sales growth in Asia and debt reduction by $78 million compared to previous half year. The rates in the other regions are 7% in UK and Europe, 1% in South America and 3% in North America. Due to cost savings in North America and strong growth in Asia, there was also a significant improvement in the profitability of industrial thread. The Group worldwide sales of industrial thread grew by 3%.
The improvement in industrial profitability of the Coats Group during the first half was encouraging and demonstrates that investments in reorganisation are starting to pay off. The market where the company is operating is extremely competitive, but global demand is reasonably stable, and second half results should continue to benefit from recent new plant and reorganisation investments.