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Summary
- The UK's Financial Conduct Authority provided a breath to car finance borrowers by reducing debt repayments by further three months.
- As reported by the Office for National Statistics, Consumer Price Inflation (CPI) in the UK increased to 0.6 percent in June 2020 from 0.5 percent in May 2020.
- Coats Group acquired Pharr High Performance Yarns and exited non-core North America crafts business.
- Coats Group revenue declined by 17 percent year on year on a constant exchange rate for four months ended 30 April 2020.
- Motorpoint suspended the final dividend for FY2020.
- Motorpoint opened the first sales-only site in Swansea and a preparation centre in Peterborough.
Given the above market conditions, we will review two stocks - Coats Group PLC (LON:COA) & Motorpoint Group PLC (MOTR). The shares of both COA and MOTR were up by 3.63 percent and 6.19 percent, respectively, against the previous day closing (as on 15 July 2020, before the market close at 3.09 PM GMT+1). Let's walk through their financial and operational updates to understand the stock better.
Coats Group PLC (LON:COA) – Paid final dividend of US 1.30 cents per share for FY19
Coats Group PLC is a UK based industrial thread Group. The Group categorizes business into Apparel & Footwear and Performance Materials. Apparel & Footwear segment offers product, such as accessories thread for footwear & apparel, zips & crafting and software solution for Companies. The Performance Materials segment manufactures protection layers and safety gears using threads and yarns. The Company is included in the FTSE-250 index.
FY2019 Annual results (ended 31 December 2019) as reported on 5 March 2020
The reported revenue increased by 1 percent year on year on a constant exchange rate (CER) to USD 1,389 million. The adjusted operating profit increased by 5 percent year on year on a CER basis. The adjusted earnings per share were US 7 cents per share, which increased by 1 percent year on year on CER basis. The adjusted free cash flow was USD 107 million. The Group paid a final dividend of US 1.30 cents per share for FY19, reflecting a full-year dividend payment of US 1.85 cents per share. The Apparel & Footwear segment revenue was USD 1,063.1 million, which was up by 1 percent on a CER basis. The core thread sales drove the apparels & footwear sales. The Performance Materials revenue grew by 1.4 percent on a CER basis to USD 325.6 million. Asia region contributed 58 percent of the total revenue followed by the Americas and EMEA, which added 23 percent and 19 percent, respectively. In November 2019, the Group acquired Pharr High Performance Yarns for USD 37 million that has been integrated with the Personal Performance business. The Group sold the non-core North America crafts business for USD 34 million to Spinrite Acquisition Corp in FY19. Coats Group completed it's two-year connecting for growth programme under which the Group achieved net annualized savings of USD 28 million after planned reinvestment of USD 31 million.
Four months trading update (ended 30 April 2020) as reported on 20 May 2020
The Group sales were down by 17 percent year on year on a CER basis where April sales alone were down by 50 percent year on year due to supply and demand disruption. Apparel & Footwear revenue declined by 23 percent year on year on a CER basis; however, the Performance Materials revenue increased by 6 percent year on year. The management took actions due to the pandemic that would reduce the costs by close to 40 percent in Q2 FY20. As on 30 April 2020, the Group had net debt of USD 253 million.
Performance by Segment and Region in FY2019
(Source: Company Website)
Share Price Performance
1-Year Chart as on July-15-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Coats Group PLC's shares were up by 4.97 percent against the previous day closing and trading at GBX 54.90 (as on 15 July 2020, before the market close at 3.12 PM GMT+1). Stock 52-week High and Low were GBX 84.00 and GBX 35.90, respectively. The Company had a market capitalization of £756.52 million.
Business Outlook
The Group would continue to identify companies for acquisition and leverage the global footprint for new contract wins. The Group is now a pure industrial B2B business with an explicit strategy and seeks options to yield cost-related benefits. The Group would start the payments under Coats UK Pension Scheme in mid-April 2021 that have been deferred for the period between April to December 2020.
Motorpoint PLC (LON:MOTR) - Halted the share-buyback of £10 million due to the pandemic
Motorpoint PLC is a UK based independent vehicle retailer Company. The Company sells close-to-new vehicles that are less than two years old and are driven less than 15,000 miles. Motorpoint sells cars from brands such as Ford, Hyundai, BMW, Audi among the other top reselling brands. The Company operates 13 retail sites in the UK. The Company is included in the FTSE-All Share index.
FY2020 Annual results (ended 31 March 2020) as reported on 14 July 2020
The Company reported revenue of £1,018 million, which declined by 3.8 percent year on year due to site closures in March, which is the busiest trading month. The profit before tax was down by 15.3 percent year on year to £18.8 million. However, the gross margin increased by 0.30 bps to 7.8 percent following improvement in the operational processes. The basic earnings per share were 16.4 pence. The Company generated cash from the operations of £33.2 million with operating cash conversion of 148.9 percent. The Company suspended the final dividend payout for FY20; the total dividend paid in FY20 was 2.6 pence per share. The Company paused the share-buyback of £10 million due to the pandemic. As on 31 March 2020, the Company had net assets of £20.2 million and agreed on an additional uncommitted overdraft facility of £15 million that would help to cope up with in the uncertain times. The Company opened a preparation centre in Peterborough that would improve the speed for preparation of the vehicle. The Company opened the first sales-only site in Swansea, which is the 13th retail store.
Financial Performance in FY2020
(Source: Company Website)
Share Price Performance
1-Year Chart as on July-15-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Motorpoint PLC's shares were up by 6.19 percent against the previous day closing and trading at GBX 240.00 (as on 15 July 2020, before the market close at 3.09 PM GMT+1). Stock 52-week High and Low were GBX 324.00 and GBX 170.00, respectively. The Company had a market capitalization of £203.83 million.
Business Outlook
The trading volumes have improved since the retail stores opened in June, and it has been better than expected. The web traffic has increased enormously with the improved conversion from enquiry to sales since 1 June 2020. The Company would open two more sites in Glasgow and Stockton-on-Tees, and the final opening date is under review. The Company expects that the new preparation centre in Peterborough would improve margin through operational excellence.
