REG - Zotefoams PLC - Trading Update & Notice of Capital Markets Day

ZotefoamsAnnouncement

23/01/2025 07:00

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RNS Number : 3497U  Zotefoams PLC  23 January 2025

Zotefoams plc

("Zotefoams" or "Group")

 

Full Year Trading Update and Notice of Capital Markets Day

 

Strong revenue growth and record profitability ahead of market expectations

 

23 January 2025 - Zotefoams, a world leader in supercritical foams, today
provides a trading update for the Group's financial year ended 31 December
2024 (unaudited).

The Board is pleased to report that, following a strong performance in Q4, the
Group expects to report full year revenue of £147.8m (2023: £127.0m). This
is slightly ahead of current market expectations and represents a significant
increase (+16%) compared with the prior year.

Adjusted profit before tax(1) for the year is expected to be £15.6m (2023:
£13.1m), up 19%, which is a Group record and also ahead of current market
expectations.(2)

The improved profit performance comprises two distinct elements:

 ·   An 18% increase in the combined profitability of polyolefin and HPP business
     units (the "foams business units") to £20.3m (2023: £17.2m), led by 46%
     growth in Footwear sales and further progress on efficiency savings, and after
     a £1.0m inventory provision following an in-depth assessment of
     recoverability
 ·   An adjusted segment loss of £4.7m in the MuCell Extrusion (MEL) business unit
     (2023: £4.1m loss), reflecting Group expenditure during the year to progress
     the ReZorce(®) circular packaging opportunity, which has now ceased

Year-on-year performance for the Group's core foams business units were as
follows:

 ·   37% growth in High Performance Product (HPP) sales to £79.7m (2023: £58.1m),
     led by the Footwear performance
 ·   AZOTE(®) polyolefin sales were down 1% to £66.9m (2023: £67.6m), reflecting
     weaker market conditions in a number of industrial markets

In December, the Group announced its intention to cease investment in ReZorce,
having been unable to secure an investing partner to realise the commercial
potential of the technology. While this was disappointing, and the Board
continues to believe in the potential for this technology, it will allow the
Group to focus resources on opportunities in the core foams business units,
where the Board sees significant opportunity. The MEL business unit assets
will be impaired and closure costs of up to £1.5m accrued, which will be
accounted for as an exceptional item in our 2024 results.

Zotefoams is currently investing approximately £10m in a second low-pressure
vessel and related additional warehouse space at its US subsidiary, to
increase capacity and reduce reliance on the current vessel which was
installed in 2000. The process is on track and to budget, with expected
commissioning in H2 2025.

 

The Group balance sheet remains strong, with significant financial headroom
and a year-end leverage multiple(3) expected to fall to approximately 0.9x
(2023: 1.2x), affording flexibility to execute on our strategic plans.

 

Commenting on the update Ronan Cox, Group CEO of Zotefoams, said:

"We are delighted to close the year strongly, with sales growth and, for a
second year running, record profits ahead of current market expectations. The
Group has, for the first time, achieved higher sales with its higher-margin
HPP products than its polyolefin foams, supported by a very strong performance
in Footwear.

"We are disappointed that we were unable to find a partner to commercialise
ReZorce, our award-winning packaging solution that offers significant
sustainability benefits. The cash savings we will capture will be directed to
growth in our refreshed strategy and I am excited to present this to the
investor community with my executive team on the afternoon of 18 March as part
of a capital markets day.

"Building upon our century-long heritage in specialist foam manufacturing,
Zotefoams is expanding beyond our core capabilities through strategic
investments and deeper customer partnerships. By leveraging our supercritical
foam technology and investing in innovation and customer-focused manufacturing
capabilities, we will strengthen our position to capture long-term growth
opportunities driven by the increasing demand for sustainable, innovative,
lightweight and durable materials."

(1) The adjustment to reported numbers is related to amortisation on acquired
intangibles of £0.3m (2023: £0.3m), exclusively from MuCell Extrusion LLC
and the exceptional item arising from the impairment of MEL

(2) Zotefoams-compiled consensus expectations, for the year ending 31 December
2024, are £145.5m for net revenue and £14.9m for adjusted profit before
income tax as at 22 January 2025

(3) Leverage multiple is calculated as Group net debt divided by EBITDA
(before exceptional items), where Group net debt is adjusted from IFRS by the
impacts of IFRS2 and IFRS16 under the bank facility definition.

Notice of Capital Markets Day

Zotefoams intends to hold a capital markets day for analysts and institutional
investors at 2.30pm on Tuesday 18 March 2025 at the offices of Peel Hunt, its
joint broker. Ronan Cox, CEO, and Gary McGrath, CFO, will be joined by other
members of the senior leadership team to provide insights into the Group's
business units and key growth drivers. Parties interested in attending are
requested to contact IFC Advisory on zotefoams@investor-focus.co.uk
(mailto:zotefoams@investor-focus.co.uk) .

Notice of results

The Group expects to publish its preliminary results for the year ended 31
December 2024 on Tuesday 18 March 2025.

 

Enquiries:

 

 Zotefoams plc                         +44 (0) 208 664 1600
 Ronan Cox, Group CEO
 Gary McGrath, Group CFO

 IFC Advisory (Financial PR & IR)      +44 (0) 203 934 6630
 Graham Herring

 Tim Metcalfe

 Zach Cohen                            zotefoams@investor-focus.co.uk

 

About Zotefoams plc

Zotefoams plc (LSE - ZTF) is a world leader in cellular materials technology
delivering optimal material solutions for the benefit of society. Utilising a
variety of unique manufacturing processes, including environmentally friendly
nitrogen expansion for lightweight AZOTE(®) polyolefin and ZOTEK(®)
high-performance foams, Zotefoams sells to diverse markets worldwide.
Zotefoams uses its own cellular materials to manufacture T-FIT(®) advanced
insulation for demanding industrial markets. Zotefoams also owns and licenses
patented microcellular foam technology to reduce plastic use in extrusion
applications and for ReZorce(®) mono-material recyclable barrier packaging.

Zotefoams is headquartered in Croydon, UK, with additional manufacturing sites
in Kentucky, USA and Brzeg, Poland (foam manufacture), Oklahoma, USA (foam
products manufacture and conversion), Massachusetts, USA, Stilling, Denmark
(microcellular foam technology) and Jiangsu Province, China (T-FIT).

www.zotefoams.com (http://www.zotefoams.com)

AZOTE(®), ZOTEK(®), ReZorce(®) and T-FIT(®) are registered trademarks of
Zotefoams plc.

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