Coats Group reported a 1% increase in first-half revenue on an organic constant exchange rate (CER) basis, supported by market share gains, sustainable product demand and disciplined pricing, despite continued weakness in the global apparel and footwear markets.
The UK-based industrial thread and footwear components manufacturer posted revenue of $837 million for the six months ended June 30, while adjusted earnings before interest and tax (EBIT) remained stable at $166 million, maintaining an operating margin of 19.8%.
The company said the global apparel and footwear markets contracted by a mid-single-digit percentage during the first half due to cautious brand ordering, inventory destocking and ongoing supply chain adjustments. However, Coats outperformed the broader market through strategic execution and gains in key customer segments.
Revenue from the Apparel division rose 1% organically to $486 million, generating $92 million in EBIT. The company attributed the performance to continued market share gains, growing demand for its 100% recycled threads, and resilient business in China’s domestic market and automotive applications.
The Footwear division reported revenue of $351 million and EBIT of $74 million. Organic revenue was broadly flat before contributions from the recently acquired OrthoLite business, although the segment recorded a 6% year-on-year increase in the second quarter as customer orders improved.
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Coats said its manufacturing network across Asia, particularly in Vietnam and Indonesia, continued to support global apparel and footwear brands despite ongoing challenges from shifting tariffs, inflation and geopolitical uncertainties. The company acknowledged temporary capacity constraints in Indonesia but said expansion and operational improvements are underway to support stronger production in the second half.
The integration of OrthoLite is progressing as planned, with Coats expecting $5 million in cost synergies during 2026 and at least $20 million annually by 2028. The acquisition is also projected to generate more than $40 million in annual sales synergies by 2030 through expansion into safety insoles, supercritical foam midsoles and carbon plate technologies.
Sustainability remained a key growth driver during the period. Revenue from 100% recycled threads reached $297 million, while advanced materials including open-cell foam technology, composite tapes and carbon plates contributed approximately one percentage point to overall group revenue growth. The company also continued investing in digital research and development to accelerate product development and reduce customer lead times.
Looking ahead, Coats maintained its full-year 2026 outlook, expecting market conditions to remain challenging with cautious customer demand through the second half. However, the company forecast sequential improvements in EBIT, supported by further market share gains, pricing actions to offset inflationary pressures and approximately $15 million in additional cost savings expected during the second half of the year.