Nov. 14 (BusinessDesk) - Guinness Peat Group, the investment firm liquidating its portfolio, said it is accelerating its reorganisation of the Coats thread-making business, its biggest asset, which will drive up costs and dent profit this year and next.
Full-year profit before interest and tax at Coats would be in line with market expectations before reorganisation costs, which were expected to be between 16 million pounds and 19 million pounds higher than in 2011, it said in a statement. Charges in 2013 would be 13 million pounds to 19 million pounds.
“In order to position Coats strongly for the future, the board and management continue to identify actions to optimise the footprint and cost base of the business,” GPG said in a statement to the London Stock Exchange.
“This accelerated programme brings forward projects planned for future years and one consequence of this is that management do not envisage incurring separately identifiable reorganisation expenditure from 2014 onwards,” it said.
The general economic environment for Coats is ‘expected to remain fragile for the rest of the financial year,” it said.
Coats sales rose 5 percent in the third quarter from a year earlier, made up of a 3 percent gain for its industrial division and 9 percent gain for its crafts division. Despite some margin improvement, the company is seeing gains in commodity prices, which will squeeze margins into 2013.
Behind Coats, GPG’s biggest
remaining assets are is 33.6 percent holding of insurer
Tower, 22 percent of Ridley Corp, 73 percent of CIC
Australia, 11.6 percent of PrimeAg Australia and 47 percent
accelerated its wind-down this week with some $125.9 million in asset sales.
The investment company will rename itself Coats "at the point when GPG shareholders’ investment is predominantly represented" by the UK threadmaker's business. That's expected to happen in the second half of next year.
Shares of Guinness Peat last traded at 59 cents and have gained 0.9 percent this year.