City File: Lot of losses in Brazil

COATS Viyella makes an awful lot of losses in Brazil - pounds 20m in the last year it appears. On Thursday, Coats should reveal that its new management team in Brazil, led by Bill Drummond, will be taking some drastic action to sort things out. Otherwise, Coats' results will be full of good news. The pre- tax profits - expected to be pounds 105m if you use FRS3 or pounds 118m by the old method - will be no surprise. But Neville Bain, the chief executive, should make some bullish noises about how the strong dollar is helping the UK clothing industry.

Julia Blake at BZW says rationalisation costs in Brazil should keep this year's profits down to pounds 140m. This would put the shares, at 229p, on 19 times earnings. Buy for recovery.