LONDON — Coats Viyella PLC said last week that it will quicken its disposal of underperforming assets as it reported a return to profit in the first half ended June 30, thanks in part to a gain on the sale of its precision engineering operations. Operating profits for the period fell 22.5 percent.
Profits for the six months came to $65.9 million after taxes and exceptional items on a 12.8 percent drop in sales of continuing operations to $1.23 billion.
The results compare with a loss of $42.4 million after taxes and exceptional items on sales of continuing operations of $1.41 billion a year earlier. Dollar figures are translated from the English pound at current exchange.
At the operating level, profits before exceptional items dropped to $42.7 million from $55.2 million a year earlier.
Coats Viyella earlier this year sold its precision engineering operations to focus on thread, textiles and apparel. It also bid in July for Hicking Pentecost PLC of the U.K. to boost its thread operations, and the offer was made unconditional this month.
Factors in this year’s return to the black included the absence of a deferred tax charge that amounted to $33.2 million last year, lower interest charges and the gain of $182.9 million from the sale of its precision engineering operations. In the first half, however, the firm took write-downs totaling $103.1 million at peripheral or underperforming businesses. Other reorganization charges totaled $31.6 million (19.5 million pounds). This compares with total write-offs, exceptional charges and other provisions of $50.7 million in the first half of last year, excluding the deferred tax charge.
All the firm’s operations reported lower profits or higher losses in the half. Sir Harry Djanogly, chairman said that over the last six months, the firm “has grasped the nettle of underperformance by embarking on a comprehensive profit improvement and rationalization program.” It gave no further details of its future disposal plans, however.