30 Aug 2012

GPG 'driving hard' to improve Coats performance

10:43 am on 30 August 2012

The investment concern, Guinness Peat Group, says the performance of its threadmaking Coats business is not acceptable, but it's on track.

The company in the process of selling all assets other than Coats and returning the proceeds to shareholders.

It lost $70 million in the six months to June, a turnaround from the $25 million profit it made in the same period a year ago.

The result includes a $148 million charge against Coats for price-fixing in Europe.

GPG chairman Rob Campbell says Coats underperformed due to lower sales and, though trading conditions are tough, its management are under notice to lift the firm's game.

He says Coats is a large and globally spread organisation which is not easy to turn around quickly, but the first half was not an acceptable outcome and the company's driving hard to make the second half considerably better.

GPG generated $328 million from selling stakes in assets like Turners and Growers, Young's Brewery and Daniel Thwaites.

Mr Campbell says GPG has another $40 million in asset sales underway that should be completed by the end of the year, but he expects further sales that should return substantially more by then.

He says the company is not running a fire sale and it's confident that it will get positive outcomes for Coates and ClearView Wealth.

Meanwhile, Rob Campbell says GPG will initially spend about $20 million buying shares as a way of returning capital to shareholders.

GPG shareholders on Wednesday agreed to sell its holding in ClearView Wealth to Crescent Capital.

Australian company Crescent Capital sweetened the initial offer, raising it 18% to A59 cents a share.