UK thread manufacturer Coats Group (LON:COA) saw an increase in both revenue and profit over the course of 2016, despite “challenging” market conditions.

Revenue rose 2 percent on a CER basis to $1,457 million, with reported revenue falling 1 percent.

Adjusted earnings per share for 2016 were up 23 percent to 4.91c, with the Group’s board recommending a final dividend of 0.84 us cents per share payable in May 2017.

Operating profit grew 16 percent to $158 million, with free cash flow up 10 percent to $78 million.

Rajiv Sharma, Group Chief Executive, said market conditions were “challenging” but that Coats delivered a “strong performance”.

“We delivered productivity and procurement gains, and tightly managed our overheads which had a positive operational gearing effect in the Industrial Division.

We also completed the acquisitions of Gotex and Fast React during the year, both of which have leading positions in their markets and which are already delivering strong growth ahead of management expectations under Coats’ ownership.

“We enter 2017 on a solid footing however remain cautious about market conditions. We expect to continue to deliver growth in line with management’s expectations through our initiatives to deliver market share gains, productivity improvements and tight cost control.”

After the results financial analyst Peel Hunt raised its price target on Coats Group to £0.70 per share. Peel Hunt currently have 2 buy ratings on the stock.

Share in Coat Group fell 5.58 percent on the news, currently trading at 55.00 (1036GMT).