Zotefoams plc (LON:ZTF), a world leader in supercritical foams, has provided 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 tax1 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 multiple3 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 [email protected].
Notice of results
The Group expects to publish its preliminary results for the year ended 31 December 2024 on Tuesday 18 March 2025.
