Coats Group Plc · LSE:COA
Coats — Shareholder Meeting (May 2013)
23 slides from Coats's shareholder meeting presentation, May 23, 2013
Slide 1: GPG Annual General Meeting presentation
GPG Annual General Meeting presentation Paul Forman, Coats CEO 23 May 2013
Slide 2: Disclaimer
Disclaimer Restricted distribution This presentation is not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction (the "Restricted J
Slide 3: Coats – the way forward
Coats – the way forward Value • How does this translate into value? 3 2 Action • What are we doing to deliver that? 1 Proposition • Global • Expert • Pioneering © Coats plc | GPG Annual General Meeting ‒ 2013 Page 3
Slide 4: Five elements to our value
Five elements to our value 5. Experienced 1. Global leader management Experienced and robust Global leader and management business model robust model 4.Cash Cash generative; generative 2. Organic margin and margin growth Organic enhancement enhancement growth Well 3. invested Well invested asset bas
Slide 5: Global market leader
Global market leader Coats Coats 1 in 5 75million produces 300million produces garments car airbags are enough yarn pairs of enough thread around the made using to knit shoes are to reach world are held Coats’ thread made every around the together using every year 65million year using Equator every
Slide 6: Three times larger than next competitor
Three times larger than next competitor Industrial thread sales, by competitor 2012 ($m) 1,200 1,000 800 $m 600 400 200 0 Coats A&E1 Amann2 Vardhman Gutermann Fujix Gruschwitz Textilwerke Global competitors AG 1. A&E estimate based on 9 months actual sales 2011 2. 2010 data. Note: Converted from loc
Slide 7: GDP correlation = market stability, underlying growth
GDP correlation = market stability, underlying growth Strong link between clothing retail sales and GDP growth. For the US, clothing retail sales growth is approximately 1.5 times GDP growth Year (over 10 year period) Source: GDP: Actual - Consensus forecasts; Projected – IMF / CRS: US - Census Bure
Slide 8: Barrier to entry – strong brand relationships
Barrier to entry – strong brand relationships We work with the world’s leading brands across our apparel, footwear and speciality businesses, our long standing relationships present significant barriers to entry © Coats plc | GPG Annual General Meeting ‒ 2013 Page 8
Slide 9: Barrier to entry – embedded CR reliability
Barrier to entry – embedded CR reliability Seven strategic CR themes A part of the communities where we operate and we work to develop close relationships with local people, business partners and community groups Our Manufacturing Our Products Our People Our Environment Our Standards Our Communities
Slide 10: Margin stability
Margin stability Coats operating profit1 margins since 2004 10 9.4 8.4 8.4 8 7.7 7.6 7.7 6.8 6.2 6 5.7 % 4 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 1 Pre-exceptional items Source: Coats Annual Report 2011, 2012 – Pre-exceptional operating margin © Coats plc | GPG Annual General Meeting ‒ 201
Slide 11: Sales growth from 2009 to 2012
Sales growth from 2009 to 2012 Q1 2013: Reported 5% like for like sales growth4 Revenue 09-12 – Industrial1, 2 Revenue 09-12 – Crafts2, 3 1400 350 309 1200 1,166 1,173 300 288 281 274 1,086 1000 937 250 800 200 $m $m 600 150 400 100 200 50 0 0 2009 2010 2011 2012 2009 2010 2011 2012 1. In line with
Slide 12: Market stability and incremental share growth
Market stability and incremental share growth Market share increase in key segments and core markets delivered over last three years Coats market share 2010-2012 (%) Industrial Division Crafts Division 26.0 26.5 25.1 21.0 21.2 21.2 22.0 20.2 19.3 18.0 16.0 16.0 Apparel Footwear Speciality Crafts & A
Slide 13: Our three Market Goals
Our three Market Goals The Coats of 2015… The leading global The leading player in global player in speciality textile crafts threads and yarns The leading value added partner to the global apparel and footwear …based on a core of industries world class skills and infrastructure in the enabling unit
Slide 14: Supportive market fundamentals
Supportive market fundamentals Speciality Brand Volume Advisory Textile Crafts thread and yarn relationships demand services trends • Very large • Want speed • Footwear and • Growing need • Growth in Asia ($20bn+) and reliability apparel in footwear for textile demand and apparel crafts • Fragmented
Slide 15: Innovation pipeline
Innovation pipeline Gaining market share Partnerships through product and Fulcrum – commercial service innovations agreement with a world leader in innovative Coats Colour Express – world’s nanotechnology for enhanced fastest, most accurate web based colour sampling service composite materials
Slide 16: Global manufacturing footprint
Global manufacturing footprint Coats has a truly global manufacturing footprint with more than 70 facilities across the world © Coats plc | GPG Annual General Meeting ‒ 2013 Page 16
Slide 17: Footprint evolution
Footprint evolution Manufacturing facilities by region Manufacturing facilities have been consolidated from more than 110 in 2003 111 to 72 in 2013 60 72 53 51 19 2003 2013 Rest of the World Europe/ N America Source: Internal data © Coats plc | GPG Annual General Meeting ‒ 2013 Page 17
Slide 18: Capital investment
Capital investment Focused on upgrading plant and systems to world class standards Total spend 2005 to 2012 of c.$440m 100 81 78 80 0.7 x depreciation 69 60 54 51 $m 37 39 40 27 20 0 2005 2006 2007 2008 2009 2010 2011 2012 Crafts Industrial © Coats plc | GPG Annual General Meeting ‒ 2013 Page 18
Slide 19: Margin improvement actions
Margin improvement actions Global Increased Successful Central Improved centralised employee reorganisation cost growth product purchasing productivity programmes control mix across • Lean Six • EMEA Industrial Sigma • Latin America • Information Technology © Coats plc | GPG Annual General Meeting ‒
Slide 20: Cash generative profitable growth
Cash generative profitable growth 2009-12 CAGR Like for like sales1 Net Working Capex below sales growth of growth of Capital as % sales depreciation, driven by 5% pa and 5% in Q1 2013 reduced operating profit from 17.6%: 2011 historic growth of to 17.1%: 20122 investment 10% pa Planned Robust capit
Slide 21: Health and safety record
Health and safety record Smoothed (Quarterly) global recordable accident rate v OSHA average (US textile mills) (Period: January 2006 – March 2013) OSHA average recordable accident index for textile mills (USA) Coats smoothed recordable accident index © Coats plc | GPG Annual General Meeting ‒ 2013
Slide 22: Global employee engagement
Global employee engagement Upper quartile performance Employee Employee Employee Employee Engagement Survey Engagement Survey Engagement Survey Engagement Survey 2010 2011 2012 Norm (Kenexa) 66% Employee 72% Employee 77% Employee 69% Employee Engagement Index Engagement Index Engagement Index Engage
Slide 23: Five elements to our value
Five elements to our value 5. Experienced 1. Global leader management Experienced and robust Global leader and management business model robust model 4.Cash Cash generative; generative 2. Organic margin and margin growth Organic enhancement enhancement growth Well 3. invested Well invested asset bas