Zotefoams
plc
("Zotefoams" or "Group")
Trading Update
"Strong performance in a
volatile market - profit in line with market
expectations"
4
November 2024 - Zotefoams, a world leader in
supercritical foams, today provides a trading update for the nine
months ended 30 September 2024 ("year to date") and in respect
of its financial year ending 31 December 2024.
The Group's strong performance
announced at the interims has continued into Q3, with year-to-date
sales up 23% to £110.7m against the comparative prior year period
(YTD 2023: £90.3m).
Q3 sales were up 54% to £39.7m (Q3
2023: £25.7m) against a relatively weak prior year comparator. Q3
volumes increased significantly year-on-year in both Footwear and
ZOTEK® technical foams, alongside solid growth in
polyolefin foams, while T-FIT® advanced insulation saw
reduced volume from a small base. On a year-to-date basis, Footwear
volumes were up 60% against the prior year comparative, benefiting
from an Olympic year, the addition of basketball sales, and
increased orders from Tier 1 suppliers resulting from a rebuilding
of inventory. Volumes in ZOTEK were up 29% and T-FIT up 1%.
Polyolefin foams volumes were up 1% overall, as a 6% decline in
EMEA, mostly in Germany, has offset 18% growth in the
USA.
Q3 Footwear revenue, which
represented 48% of sales in the period (Q3 2023: 32%), was higher
than anticipated as ongoing supply chain re-configuration at the
Group's largest customer led to a continuation of elevated
short-term demand for our foams. As described in the interim
results, we expect the exceptional level of demand in Footwear to
return to normalised patterns during 2025. Over the longer term,
our customer's evolving supply chain structure may present further
growth opportunities for the Group, and we are engaging with them
to assess how Zotefoams is best positioned to support and build on
its strong Footwear offering.
Strong margins have been maintained
year to date, with the Group's ongoing focus on effective pricing
and mix improvement and a normalisation of operating costs offset
by higher people costs from inflation-linked pay increases and
further investment in our wider geographic footprint.
Zotefoams has continued its
investment in the development of ReZorce® recyclable
barrier technology, with year-to-date operating costs slightly
higher than the prior-year comparative period. We continue to work
towards the key technical milestones, including endurance and
sterility testing, which we are targeting to complete before the
year end. The commercial scale production of ReZorce requires
significant capital investment and, therefore, the priority of the
Board and executive management has been to find a strategic partner
that will enable the commercial development of this transformative
technology. The process to identify a such a partner has been
underway since May this year and we will provide a further update
to the market when appropriate.
Outlook
With the exception of T-FIT, which
is generally heavily weighted to Q4, the Group has good visibility
of confirmed orders across most business units for the remainder of
the year. As a consequence, and while we remain mindful of the risk
of some continued demand volatility in certain sectors, we expect
to deliver significant revenue growth in 2024 over 2023.
Across our two foams business units,
margins are expected to be in line with the prior year, with mix
and growth benefits offset by our investment in Shincell and
increased people costs.
In our MEL business unit, the full
year loss will be slightly above that of the previous year, as
expected, reflecting further ReZorce development costs.
The Board is confident in the
Group's ability to carry positive momentum through the remainder of
the year. Based on its current sales forecasts and foreign exchange
rates, and subject to there being no material disruption to the
business, it expects revenue and adjusted profit before tax to be
in line with current market expectations.*
Commenting on the update Ronan Cox, Group CEO
of Zotefoams, said:
"As world
leaders in supercritical foams, our positive Q3 performance further
validates the strength of our core technology and market position.
The 23% year-to-date sales growth demonstrates our ability to
leverage this foundation across multiple markets, particularly
evident in our exceptional Footwear performance and continued
progress in technical foams.
We are building from this position
of leadership and technical excellence to expand our reach and
impact. The recent technical agreement with Shincell represents an
important strategic step, enhancing our capabilities in the
footwear market and providing new opportunities to extend our
manufacturing footprint internationally. We are also strengthening
our organisation with key appointments expected by the year end
that will accelerate our transition to a market-led approach,
allowing us to identify and capture new opportunities that build
naturally from our core capabilities.
While we continue to progress the
development of ReZorce and explore potential strategic partnerships
for its commercialisation, our primary focus remains on expanding
our leadership in our core supercritical foam technologies, where
we see significant growth opportunities. This focus, combined with
increased investment in innovation and operational excellence, will
enable us to extend our leadership in supercritical foams into
adjacent markets and applications.
Looking ahead, our order book
provides good visibility for the remainder of 2024. While we expect
Footwear demand to normalise during 2025, we are actively engaging
with our key footwear customer to capture emerging opportunities
from their evolving supply chain strategies. Despite ongoing
inflationary pressures, our operational discipline and market
leadership continue to deliver value. As a result, the Board
remains confident in its ability to meet market expectations for
the full year."
* Current Zotefoams-compiled
consensus expectations for revenue is £145.5m and adjusted profit
before income tax and separately disclosed items, for the year
ending 31 December 2024, is £14.9m.
- Ends -
Enquiries:
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Zotefoams plc
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+44
(0) 208 664 1600
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Ronan Cox, Group CEO
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Gary McGrath, Group CFO
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IFC
Advisory
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+44
(0) 203 934 6630
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Graham Herring
Tim Metcalfe
Zach Cohen
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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 (MuCell Extrusion)
and Jiangsu Province, China (T-FIT).
AZOTE®,
ZOTEK®, ReZorce® and
T-FIT® are registered trademarks of Zotefoams
plc.
www.zotefoams.com