Zotefoams plc (LON:ZTF), a world leader in supercritical foams, today announced its unaudited preliminary results for the year ended 31 December 2024.
Financial Headlines
| Group | |||||
| 2024 | 2023 | Change | |||
| Revenue (£m) | 147.8 | 127.0 | 16% | ||
| Gross profit (£m) | 46.1 | 41.1 | 12% | ||
| Operating profit1 before exceptional items (£m) | 18.1 | 15.1 | 20% | ||
| Exceptional items | (15.2) | – | – | ||
| Operating profit1,4 after exceptional items (£m) | 3.0 | 15.1 | (80)% | ||
| Profit before tax1 before exceptional items (£m) | 15.3 | 12.8 | 19% | ||
| Profit before tax1,4 after exceptional items (£m) | 0.2 | 12.8 | (99)% | ||
| Cash generated from operations (£m) | 30.4 | 12.1 | 151% | ||
| Net debt (£m) | 33.0 | 31.6 | (4)% | ||
| Net debt ex IFRS16 (£m) | 24.1 | 30.2 | 20% | ||
| Leverage ratio2 | 0.9 | 1.2 | – | ||
| Final dividend3 (p) | 5.10 | 4.90 | 4% |
1 This is a reported number under UK adopted IAS and is after the deduction of amortisation of acquired intangibles amounting to £0.250m in 2024 and £0.257m in 2023
2 Leverage is that defined under the bank facility, with net debt at the end of the period divided by the preceding 12 months’ EBITDA, adjusted for the impact of IFRS2 and IFRS16
3 Final dividend is subject to approval at the May 2025 Annual General Meeting
4 After rounding
Results Headlines
| · | Record Group revenue of £147.8m, 16% higher than the prior year |
| · | High-performance product sales surpass those of Polyolefin Foams for the first time, reflecting the Group’s focus on mix enrichment |
| · | Record operating profit before exceptional items up 20% to £18.1m |
| – Includes £4.9m of non-recurring operating cost in the now paused ReZorce project | |
| · | Basic EPS before exceptional items up 37% to 25.95p |
| · | Non-recurring exceptional costs of £15.2m reflect the impairment of MEL and associated closure costs |
| · | Strong cash generation reinvested in growth opportunities |
| – Cash generated from operations up 151% to £30.4m | |
| · | Strong balance sheet foundation for refreshed strategy |
| – Net debt excluding leases down 20% to £24.1m | |
| – Leverage ratio down to 0.9x from 1.2x | |
| – Final dividend up 4% to 5.10p |
Strategic Progress
| · | The Group is today launching its new “Expanding Beyond the Core” strategy aimed at driving long term sustainable growth and shareholder value creation |
| · | Through increased focus on the customer, continued commitment to innovation, expanding capability to move up the value chain and enhanced organisational execution, the Group is targeting ambitious progress in the medium term: |
| – Organic growth of 7% CAGR to deliver FY2029 revenue of >£200m | |
| – Operating margin of over 18% by FY2029 | |
| – ROCE of over 20% by FY2029 | |
| – Cash conversion of >95% | |
| · | Medium-term targets reflect a longer-term ambition to grow revenues to >£300m and operating profit to >£60m, with the opportunity to accelerate progress through inorganic growth |
| · | Initial enabling investments for this transformation are underway: |
| – Access to new processing technology via a licensing agreement signed in May 24 extends technical capabilities and know-how | |
| – Capital project in USA to increase local expansion capacity running to budget and on target for commissioning in early H2 2025 | |
| – As announced on 10 March 2025, significant new production and innovation facilities being established in Asia to support the long-term growth of the Group’s Consumer & Lifestyle business |
Ronan Cox, Group CEO, said:
“We have made a positive start overall to 2025, with our Consumer & Lifestyle and Transport & Smart Technology verticals performing well across all regions. Demand in our Construction & Other Industries vertical remains more subdued, as expected, but we continue to anticipate some improvement in conditions as the year progresses.
“We have set out, and are executing, a refreshed, focused strategy, prioritising innovation and profitable growth. Our market realignment is progressing well as we transition from a product-centric to an industry-led approach. Our investment in manufacturing excellence is advancing, with continued good progress towards completion of our £10m expansion in the USA, which remains on schedule for early H2 2025 commissioning, and we are commencing with investments in our innovation centre of excellence in the UK, our innovation hub in South Korea, and our new manufacturing facility in Vietnam.
“The emerging trade landscape, including recent trade tariffs, creates both challenges and opportunities for Zotefoams. While these may impact global supply chains and market dynamics, our diversified manufacturing footprint across the UK, USA, Poland and, soon, Vietnam positions us well to navigate these uncertainties and potentially capture market share from less adaptable competitors.
“Our new regional operating model, launched at the start of 2025, structures our business across EMEA, North America, and Asia. This enables us to better serve our customers’ complete needs through a global commercial team that coordinates decisions worldwide, while execution and delivery happens regionally. This product-agnostic approach creates a platform for accelerated growth. In 2025, we will target inefficiencies in overheads, with identified annualised savings to be in part reinvested in our refreshed strategy.
“Polymer and energy input prices remain relatively stable; however, we are monitoring these closely for the impact of tariffs, and our focus on improved asset utilisation, product mix, price increases and operational efficiency continues to be our key driver of margin enhancement.
“While we remain mindful of the uncertain economic backdrop and the evolving trade landscape, we are confident in our ability to deliver another year of good progress for Zotefoams. With a refreshed strategy and investment in significant growth enablers underway, we are excited by the potential for the Group to deliver both on its medium-term targets and longer-term ambition.”
Chair’s statement
A refreshed, focused strategy, prioritising innovation and profitable growth
Dear shareholders
2024 represented the beginning of a transition period for the Group as it sought to invest in its core business, backed by market-leading products, and prepared to expand both sector and geographic presence, underpinned by innovation and an enhanced leadership team. We finished the year in a strong position, with record revenues and profits and a strong balance sheet. The decision to pause our investment in ReZorce® circular packaging was difficult but necessary, having been unable to secure the important investing partner the Board considered essential to capture the commercial opportunity the technology offers. However, this frees up resources to invest behind an exciting, refreshed strategy to capture market opportunities where we believe we have the right to win and where there is a clear runway for growth. We are switching from a product focus to an industry focus, moving closer to our customers, increasing investment in sustainable innovation and actively assessing inorganic growth options to extend our capabilities. We are investing in our people and have strengthened our executive leadership team to execute our strategy. We believe that this strategy can deliver compelling returns for our shareholders over the medium term and put the Group firmly on the pathway to revenues of over £300m and operating profit of over £60m.
Board composition
The Zotefoams Board welcomed a new Group CEO to the business during the year. Ronan Cox joined the Board in April 2024 and became Group CEO following the Annual General Meeting held on 22 May 2024, replacing David Stirling. I would like to offer my personal thanks to David, as well as my thanks on behalf of everyone connected to Zotefoams for his significant contributions to the Group during his 23 years of leadership. On 3 March 2025, the Board announced that Gary McGrath, Group CFO, will retire from his role during 2025. He will remain in his existing role until 31 October 2025 or longer if required, as part of a managed succession process. I thank Gary for his ongoing contribution to the business and wish him the very best in his future retirement.
Dividend
The Board is proposing a 4% increase in the final dividend to 5.10p (2023: 4.90p) which, if approved by shareholders, would make a total dividend for the year of 7.48p (2023: 7.18p), an increase of 4.2%. This reflects the Board’s continued confidence in the Group’s future and is in line with its progressive dividend policy, recognising the importance to our shareholders of the dividend as part of their overall return. See the Group’s approach to capital allocation in the Group CFO’s review. If approved, the final dividend will be paid on 2 June 2025 to shareholders on the register on 2 May 2025.
Sustainability
Our purpose is to provide optimal material solutions for the benefit of society, reflecting our knowledge that, used appropriately, plastics are the best solution for a wide range of sophisticated, long-term applications typically delivered by our customers. The Board is focused on the importance of sustainability, and we are targeting an increase in our investment in sustainable innovation while continuing to consider the impacts of climate change in everything we do. Further progress was made in 2024 towards our sustainability targets. See the Group CEO’s review.
Acting responsibly
The Board leads an ongoing programme to ensure the highest standards of corporate governance and integrity across the Group and has remained abreast of developing governance standards. The Board’s interactions and communications with executive management continue to be excellent and, as a result, the Board is well placed to challenge, guide and support executive management in the delivery of the growth strategy. We continue to pay particular attention to the provision of a safe working environment for our staff across all global locations and to the empowerment of our employees. The Board also acknowledges the benefits of diversity, including that of gender and ethnicity, and is committed to setting an appropriate tone from the top in all diversity and inclusion matters.
Looking to the future
Zotefoams has well-invested and differentiated assets across EMEA and North America alongside committed, capable and passionate people and our refreshed strategy expands the Group beyond this core, supporting future profitable growth. Our recently announced investment in Vietnam, supported by a new innovation centre in Busan, South Korea will ensure that Zotefoams is in a strong position to amplify the success of its strategic move in the footwear market, which now represents the Group’s largest segment by revenue. While we are mindful of ongoing macroeconomic and geopolitical headwinds, we remain confident about our future prospects for sustainable growth, improving returns and strong cash generation.
L Drummond
Chair
18 March 2025
Group CEO’s review
Zotefoams has delivered strong business performance, reporting a 16% increase in revenue and 20% growth in operating profit before exceptional items, both of which are at record levels for the Group. As a result of this, and our continued investment to support capacity and innovation, the Group remains well positioned to take market share and capitalise on significant opportunities in our exciting supercritical fluid foams markets
Overview
In recent years and throughout 2024, the business has comprised two distinct elements: the manufacturing and sale of specialist foams, which is well-established, profitable and growing; and the MuCell business (MEL), which, over the past 5 years transitioned into a development project focused on ReZorce®, an innovative and sustainable barrier packaging alternative to existing composite solutions. Going forward, under my leadership, the Group will pivot from a product to an industry-led approach in order to support our wider growth ambitions.
Group revenue in 2024 was a record £147.8m, 16% higher than the previous year (2023: £127.0m), with significant growth in Footwear and modest growth in our ZOTEK® technical foams and North American polyolefin foams businesses. This performance demonstrates the strength of our core product portfolio and the success of an industry-focused strategy. MEL, at £1.2m, was a far smaller part of Group revenue. Our operating profit growth of 20% before exceptional items was pleasingly ahead of our revenue growth and, alongside improved cash generation, the business enters the 2025 financial year well positioned for continued profitable growth.
| 2024 | United Kingdom | Continental Europe | North America | Rest ofthe world* | Total |
| Change % | 7% | (6%) | 6% | 37% | 16% |
| Group revenue (£000’s) | 12,740 | 30,475 | 28,696 | 75,880 | 147,791 |
| % of Group revenue | 9% | 21% | 19% | 51% | 100% |
| 2023 | |||||
| Group revenue (£000’s) | 11,879 | 32,514 | 27,195 | 55,387 | 126,975 |
| % of Group revenue | 9% | 26% | 21% | 44% | 100% |
* Rest of the world comprises China: £34.9m (2023: £27.1m) and other countries: £41.0m (2023: £28.3m).
Our business strategy targets the expanding market for differentiated, high-performance foam materials, driven by three fundamental macro-trends:
1. increasing urbanisation and ageing demographics
2. enhanced safety regulations
3. growing demand for environmental sustainability.
These trends, combined with our commitment to sustainability and safety across all operations, position us well for future growth. Building upon our century-long heritage in specialist foam manufacturing, Zotefoams is embarking on a refreshed strategy that expands beyond our core capabilities through strategic investments and deeper customer partnerships. By leveraging our supercritical fluid 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. Our medium-term ambition is to grow Group organic revenue well in excess of £200m, operating profit in excess of £40m, cash conversion above 95% and ROCE beyond 20%.
Formative Impressions
I became Group CEO of Zotefoams in May 2024 and have spent significant time engaging with our teams, customers, and operations across the business. What I have found is a company comprised of dedicated teams with extraordinary technical capabilities and significant untapped potential for growth.
The foundation of our success lies in our talented workforce, particularly our concentration of STEM specialists, who have established Zotefoams as the clear market leader in cross-linked and low-density polyethylene block foams. This technical excellence has enabled us to build and maintain strong relationships with major Original Equipment Manufacturers across a range of sectors globally.
A key observation has been the substantial value our products generate throughout the value chain. There is a clear opportunity to better structure and formalise relationships with distributors and fabricators, potentially capturing more of this value. This forms part of a broader opportunity I see for Zotefoams to create its next growth curve by expanding further beyond our UK core base and traditional block foam offerings. With much of the required investment already made in building capacity globally, this will be a key driver in delivering profitable growth in selected high-opportunity industries.
Our technical capabilities and market position give us a strong ‘right to win’ in several exciting growth industries. Many of these are already well served by our current product base; however, there is still scope to expand in these industries. To capitalise on these opportunities, in some instances we may choose to advance along the value chain and deploy new technologies. While M&A has not historically been a core focus for Zotefoams, we have begun to develop this capability during 2024 and view it as a complementary accelerator for growth alongside organic investment and strategic partnerships. Our M&A strategy is well defined and will ensure that we remain disciplined in our approach to this growth opportunity.
Innovation will be central to our future success. Our global leadership in foaming technologies enables us to work with an extensive range of polymers – from commodity materials right through to highly engineered materials – creating both rigid and flexible foamed products that can effectively compete against traditional plastics, metals, composites, and other performance materials.
Looking ahead, I see significant runway for both revenue and margin growth. Global trends favouring clean products, lightweighting, durability, sustainability, and enhanced technical performance align perfectly with our capabilities. Our emerging technology initiatives, and associated investment priorities, including new capacity in Vietnam, are designed to bring us closer to customers and move along the value chain, while making our core supercritical fluid foams business more cost-effective and sustainable.
Strategic Market Realignment
During 2024 and into 2025, we engaged a reputable global market research organisation to help us perform an extensive market mapping study. The current core business focuses on a portion of the £4bn polyolefin foams market, with some participation in select high-performance engineered polymer foam applications. This has historically limited our addressable market to approximately £0.8bn within these segments. However, with the strategic direction we intend to take, moving along the value chain and expanding Zotefoams’ technology platforms, we can now set our sights on a significantly larger £15bn market opportunity – £4bn polyolefin and £11bn engineered polymers.
To meet this opportunity, we are implementing a shift in how we view and serve our markets. Moving beyond our traditional product-centric structure of Polyolefin Foams and High-Performance Products (HPP), we are realigning our commercial teams around three core market verticals:
– Consumer and Lifestyle – encompassing our footwear business alongside other applications in sports, leisure and personal care
– Transport and Smart Technologies – includes our aviation, automotive and medical applications
– Construction and Other Industrial – captures our growing presence in building technologies and other industrial applications
This strategic shift recognises that most of our customers can benefit from products across our entire portfolio. By organising around market verticals rather than product lines, we can better serve our customers’ complete needs and unlock additional value through our comprehensive solutions offering.
This industry-focused approach, combined with our new regional operating model, creates a powerful platform for growth. Our regional teams can now leverage our full product portfolio to provide integrated solutions within each market vertical, whilst maintaining the technical excellence that underpins our success. This structure enables us to:
– Develop deeper market understanding and customer relationships
– Create more comprehensive solutions using our entire product range
– Identify cross-selling opportunities more effectively
– Drive innovation based on industry needs rather than product capabilities
– Streamline customer engagement through single points of contact
These market verticals each contain significant sub-segments with strong growth potential. For example, Consumer and Lifestyle encompasses our footwear business alongside other applications in sports, leisure and personal care, Transport and Smart Technologies includes our aviation, automotive and medical applications, while Construction and Other Industrial captures our growing presence in building technologies and other industrial applications.
This reorganisation aligns with our strategic focus on sustainable growth and value creation, enabling us to better serve customers locally, while leveraging our global capabilities and innovations across all product technologies. We believe that this transformed commercial strategy will enable sustained organic growth well ahead of underlying markets, with a target for Group revenues to exceed £200m by 2029.
Strategic Investment in Technology and Innovation
Zotefoams invests in assets and technology with the capability to support the growth opportunities afforded by its diverse and often unique products. During the year, we continued to pursue a strategy of mix-enrichment and increasing asset utilisation and, for the first time, revenue generated from our High-Performance Product business unit (ZOTEK and T-FIT brands) exceeded that in our Polyolefin Foams business (AZOTE). We made good progress preparing to install our second low-pressure autoclave in the USA, which will provide additional expansion capacity and supplement an aging asset in a critical region where we see significant growth opportunities. We also partnered in May 2024 with Suzhou Shincell New Materials Co., Ltd (“Shincell”) of Suzhou, China, accessing Shincell’s technology via a licensing agreement and thereby extending our technical capabilities and know-how, enabling a wider scope of products and processes in both new and existing markets and enhancing the Group’s technology platform for new products to deliver growth.
During the year, we also began the transition to a new internal, regional operating model. This model marks a fundamental shift in how we approach and serve our markets, moving us beyond our traditional product-centric structure to an industry-oriented organisation that can better capture global opportunities whilst maintaining our technical leadership. The new structure is organised across EMEA, North America and Asia and enables us to align our capabilities more closely with customer needs and regional market dynamics. There has been significant recruitment of new talent to support this reorientation, and the operating model became effective from the beginning of the new year.
This strategic evolution delivers two key advantages:
Firstly, it enables us to manage key customer relationships on a truly global scale. Many of our most significant customers operate across multiple regions and require a diverse range of material solutions, and our new structure allows us to serve them more effectively with coordinated account management and consistent service levels. This is particularly valuable in sectors such as aviation, automotive and footwear, where global programmes require seamless coordination across regions and where our customers require diverse material solutions that can be satisfied from across our portfolio of products.
Secondly, our regional model creates platforms for accelerated growth through organic expansion, partnerships and strategic M&A opportunities. Each region now has the autonomy to pursue market opportunities whilst leveraging our global leadership in technology and innovation. This structure positions us to better identify and implement downstream activities that can enhance our market presence or technical capabilities within specific regions.
Our industry approach is supported by well invested assets and capacity. We also see significant opportunity for accelerated growth through increased investment in new technology and manufacturing capabilities. A planned facility in Vietnam, alongside our existing operations in the UK, USA, and Poland, demonstrates our commitment to positioning our manufacturing capabilities closer to key customers and growth markets, which in this case is our important Footwear market, and capitalises on innovation within our own technology. Zotefoams will also establish a small purpose-built footwear innovation centre in Busan, South Korea, that will allow us to work more closely with key partners and allow a more rapid and responsive product development capability in this rapidly evolving industry. See ‘capacity and investment’ below, for further information.
Our primary focus is on driving organic growth, but we do see opportunity to use targeted M&A as a new growth lever where it meets our stringent criteria. We plan to enhance value through either market consolidation, where we expand our portfolio with complementary products, acquire technologies to deepen our expertise, or through downstream extension, where we will shorten the value chain, gain machining and processing capabilities and get closer to our customers, while respecting our existing customers, many of whom are active in this area.
Cultural Transformation
Underpinning this strategic shift is a significant cultural transformation centred on our new values of Courage, Impact and Respect. These values reflect both our heritage of technical innovation and our ambition to become an even more customer-centric organisation.
Courage enables us to challenge conventional thinking and pursue ambitious goals. This should manifest itself in developing innovative solutions for customers, entering new markets, or implementing organisational change to drive operational efficiencies. Our teams are encouraged to think boldly about how we can better serve our markets and customers.
Impact focuses our attention on delivering meaningful results for all stakeholders. Whether through product innovation, operational excellence, or customer service, we measure success by the tangible value we create. This value-driven approach guides our investment decisions and strategic initiatives across all regions.
Respect acknowledges the importance of collaborative relationships – with colleagues, customers, suppliers, shareholders and communities. In our new regional structure, this translates into stronger local partnerships and a deeper understanding of market needs, whilst maintaining strong global coordination.
These values are being embedded through comprehensive leadership programmes, regular cross-regional forums, and enhanced communication channels. Our new regional structure provides additional opportunities for career development and knowledge-sharing across markets, strengthening our global capability whilst maintaining local market expertise.
Sustainability
Sustainability remains integral to both our operations and value proposition. Our products typically serve long-term, multiple-use applications and many can be recycled at end-of-life, contributing positively to our customers’ sustainability objectives. In 2024, we observed an accelerating trend towards lighter-weight foams across several markets, particularly in our Polyolefin Foams business. This evolution aligns with our commitment to resource efficiency, reducing material usage while delivering cost benefits to our customers.
We continue to make progress against our environmental targets for Scope 1 and 2 emissions through focused initiatives in energy consumption, material efficiency, and waste reduction. In 2024, we maintained our momentum in reducing energy consumption and waste while increasing our recycling rates, often incorporating recycled material into new foam products. Our core markets increasingly demand ‘best in class’ solutions that align with our purpose of delivering optimal material solutions for the benefit of society.
Following our commitment made in 2023, we conducted a comprehensive review of our environmental strategy during our 2024 Board strategy session and are now developing science-based targets. We maintain our adherence to ISO 14021:2016 guidelines for environmental claims, ensuring independent certification where appropriate.
Notably, in 2024, 89% of our revenue came from products classified as “green” based on resource efficiency criteria, demonstrating substantial improvements in resource utilisation during either manufacture or use. This metric underscores our commitment to sustainable innovation and our ability to meet evolving market demands for environmentally conscious solutions.
Our planned investment in Vietnam is scalable and transitions manufacturing from larger flat sheets to individual 3D foam parts, which particularly suits the demands of the footwear customer, significantly reducing the skeleton of waste. Being close to the customer, it also significantly reduces transport. Our planned investment in an innovation centre of excellence in the UK will build on our supercritical fluid foaming technology, which demonstrates its green credentials through the absence of chemical foaming agents, foams that carry lighter weight and thus use less material, and forms that are durable and last longer. This facility will help us to further evolve existing technology, and invest in new technology, to reduce the energy used in manufacture and improve the Group’s sustainable offering.
Executing the strategy
We expect this strategy to grow sustainable cash flows and increase shareholder returns. We will:
– Transform from a position of strength to get closer to the customer
– Orientate our activities to where we have the greatest runway for growth and the right to win
– Innovate to create the next generation of supercritical foams, doubling down on weight and waste reduction and bringing new technical performance
– Target M&A to move the Group along the value chain and/or introduce new technology
We have invested into the Group Executive Team in order to deliver on our strategic priorities and drive profitable growth. To be fit for the future, and with a new operating model and structure realigned for growth, we will remove waste from our processes and automate, using AI where possible and appropriate. In 2025, we will target inefficiency in sales, general and administration spend as well as in indirect manufacturing overhead spend, with possible annualised savings of up to £3-4m, £1-2m of which will be reinvested in this refreshed strategy.
Through increased focus on the customer, continued commitment to innovation, expanding capability to move up the value chain and enhanced organisational execution, the Group is targeting ambitious progress in the medium term:
· Organic growth of 7% CAGR to deliver FY2029 revenue of >£200m
· Operating margin of over 18% by FY2029
· ROCE of over 20% by FY2029
· Cash conversion of >95%
These 2029 targets reflect a longer-term ambition to grow revenues to >£300m and operating profit to >£60m, with the opportunity to accelerate progress through inorganic growth.
HIGH-PERFORMANCE PRODUCTS (HPP)
ZOTEK®
T-FIT®
Segment revenue: £79.6m
Change +37%
2023: £58.1m
Segment profit margin: 26.9%
2023: 26.5%
Segment profit: £21.5m
Change +39%
2023: £15.4m
In 2024, our HPP business unit performed very well, with volumes up 39% and sales growing significantly to £79.6m (2023: £58.1m), after an FX headwind of £2.4m. The year marked a key milestone at Zotefoams, with sales in the HPP business unit surpassing those of Polyolefin Foams for the first time. The business unit comprises three main product groups: footwear, ZOTEK fluoropolymer foams and T-FIT technical insulation.
The footwear segment, primarily serving the performance running shoe market with specialist midsole materials, delivered robust growth with sales reaching £66.1m (2023: £45.3m), an increase of 46%. In addition to strong underlying growth in the platforms we supply foam for, this growth also benefitted from an Olympic year, supply chain reconfiguration of our end customer, a rebuild in inventory at the beginning of the year by our direct customers related to Red Sea logistical challenges and, later in the year, additional demand as Nike embarked on its strategy of building back the trust of wholesale partners in line with their CEO’s strategy. Longer term, our investment in Asia will increase our total addressable market in the footwear industry by bringing us to the heart of the athletic footwear manufacturing base, supplying 3D parts and being more cost effective by reducing customer material waste and leveraging a lower cost of production.
Our exclusive partnership with Nike until 2029 continues to yield benefits beyond pure sales, enabling deeper collaboration on supply chain optimisation, production efficiency and environmental sustainability. A notable achievement has been the near elimination of waste in our foam production process, with most scrap in our manufacturing process being successfully reintegrated into the footwear supply chain. Our pricing mechanism with Nike maintains transparency, reflecting material input costs, production efficiencies and foreign exchange movements. We also recognise the opportunity to reduce foam waste in our Tier 1 partner manufacturing processes, which currently sits as high as 50%, and the move to a new production technique in an Asian facility will reduce this waste by as much as 90%.
Beyond footwear, our ZOTEK brand offers advanced foamed sheet materials for technically demanding applications globally. The aviation sector remains a key market, where our materials meet critical requirements for insulation and fire performance whilst minimising weight- major factors in both safety and sustainability. The portfolio serves additional sectors including space, automotive, technical packaging, military and personal protection through a diverse range of foams with specific properties, achieved through our unique combination of material selection and proprietary foaming technology.
ZOTEK F materials, our largest product offering within the portfolio, experienced a 7% increase in sales value to £7.0m (2023: £6.5m). Whilst the aviation sector, particularly Boeing, continues to face challenges despite robust order books, we anticipate significant growth as these issues resolve and we diversify our offering with other aircraft manufacturers. The high input cost inflation reported previously began to impact profitability as we consumed previously purchased inventory. We implemented pricing adjustments from 2024, carefully balancing full cost recovery against our long-term growth ambitions. ZOTEK F foam sheet sales represented 9% of HPP segment sales (2023: 11%).
T-FIT insulation, manufactured using our HPP products and specifically designed for clean processing environments, saw sales decline marginally to £5.8m (2023: £5.9m). Performance varied by region, with China showing growth in food processing but experiencing slower activity in biotech and pharmaceutical sectors, alongside lower conversion rates on larger targeted projects. India demonstrated strong growth across our portfolio. We are strengthening our position in other markets through strategic staff investments and enhanced sales processes. Our manufacturing strategy combines local production-either at Zotefoams facilities or through trusted partners-for North American and European markets, whilst our Chinese facility supplies other markets and the complete dimensional range globally. T-FIT sales accounted for 7% of HPP segment sales (2023: 10%).
Segment profit reached £21.5m (2023: £15.4m), delivering a margin of 26.9% (2023: 26.5%). The majority of the increased inventory provision made in 2024 affected slow-moving HPP foams, without which, the segment margin was 28.5%, an increase of 200 bps.
POLYOLEFIN FOAMS
AZOTE®
Segment revenue: £66.9m
Change -1%
2023: £67.6m
Segment profit margin: 8.2%
2023: 11.1%
Segment profit: £5.5m
Change -27%
2023: £7.5m
In 2024, the Polyolefin Foams business experienced mixed performance across regions and market segments, with overall volumes showing modest growth globally. Whilst North American volumes increased by 23%, EMEA saw a decline of 5%, resulting in 4% lower overall volumes compared with 2023.
Sales performance varied significantly by region and market segment. In Europe, which represents the majority of segment sales, sales were down 8%, with performance impacted by economic headwinds, particularly in Germany where automotive and construction markets reached their lowest levels since 2008-2009. The UK showed resilience with a 4% revenue growth despite lower volumes, driven by strong average selling prices and new projects in construction and industrial applications. The Far East demonstrated robust growth with an 18% revenue increase, driven by new electric vehicle battery applications and strong performance in high-margin aviation, semiconductor, and medical segments. Overall, the EMEA region saw a 3% sales decline.
Sales in the North American business grew 3%, but there were significant shifts in market mix, with automotive volumes increasing by 55% whilst higher-margin segments such as medical and military experienced declines. The medical segment faced temporary challenges due to inventory adjustments at key customers, whilst military sales were impacted by reduced aircraft production schedules and lower demand for specialised products. The outlook for these segments as we head into 2025 is more positive.
The main polymers used in our Polyolefin Foams business are low-density polyethylene (LDPE) and other similar polyolefins. During the year, the price of LDPE held steady at 2024 levels and in Europe was trending around its long-term average when the turbulence of the COVID years is excluded. LDPE pricing is related to the pricing of its feedstock and ethylene, and the regional supply vs demand balance.
In 2024, profitability was impacted by product mix as well as increased operational costs, particularly in labour and maintenance. Labour costs increased due to inflation, with salary increases averaging 7% in EMEA, and strategic additions to our workforce, where the Group made significant staffing investments in North America to support increased production capabilities, volumes and quality initiatives to ensure we are well placed to capture the growth opportunities in this region.
Manufacturing efficiency continued to be a focus across all facilities. We manufacture polyolefin foams in three facilities, with full-process manufacture in the UK and USA and foam expansion, fabrication and logistics in Poland. An increasing proportion of European business is served through our Polish facility, which is now operating 24 hours, six days per week. In North America, additional production supervisors and fabrication operators were added to support increased demand in specialised segments, and staffing levels at our fabrication facility in Tulsa were increased to support an extension to our service offering, while both UK and US facilities focused on continuous improvement initiatives.
Segment profit for Polyolefin Foams declined by 27% to £5.5m and margin fell from 11.1% to 8.2%. However, several positive developments emerged, including new project wins in the UK that are expected to continue into 2025, strong growth in high-value applications in the Far East, and improved operational capabilities across our manufacturing network.
Looking ahead, our focus remains on optimising our product mix, continuing operational improvements, and capitalising on growth opportunities in emerging applications, particularly in the electric vehicle and specialised industrial segments. The business maintains a strong foundation for future growth, supported by our global manufacturing footprint and diverse market presence. Our new regional operating model will enable better market responsiveness and customer service, whilst our continued investment in manufacturing efficiency positions us well for margin recovery as market conditions improve.
MEL
In December 2024, following a comprehensive strategic review, we made the decision to pause investment in ReZorce circular technology to focus our resources and innovation capabilities on our core supercritical fluid foams business, where we see substantial opportunities for growth and value creation.
During 2024, the Group achieved several important technical milestones with ReZorce and produced an award-winning beverage carton capable of being run at full industrial speed through existing production machinery. Validation that the packaging was food sterile was still pending, but the route to this was clear and considered readily attainable, albeit requiring more time to complete.
This disruptive technology had demonstrated compelling sustainability credentials, including potential carbon footprint reductions of over 50% for commonly packaged foodstuffs. Despite these achievements and an extensive process across the value chain to secure a strategic partner, supported by specialist advisers, we did not identify a partner prepared to advance the technology. Given the capital investment, market access and expertise required to achieve high volume production of finished packaging, the Board had consistently believed that a strategic partner was necessary to realise the commercial potential of the ReZorce technology. Based on the feedback from this process we concluded that the inherently low visibility over factors such as pricing, within the overall evolution of the packaging market, when set against the capital commitments required, was the principal reason why the process had been unsuccessful.
The intellectual property and know-how associated with ReZorce remains well protected and will be retained by the Group in order to preserve its ability to realise the value of the unique technology, should market conditions become more favourable.
Revenue from our MEL business unit remained at £1.2m (2023: £1.2m), while the segment loss before amortisation of acquired intangibles increased to £4.6m (2023: £4.1m). Following this strategic decision, we have recognised a non-cash asset impairment of £13.8m and provided for related closure costs of £1.4m and treated the combined amount of £15.2m as exceptional items in the 2024 financial statements.
Going forward, small revenue streams from royalties at existing customers of MuCell Extrusion LLC will continue, and costs will include those to protect patents considered of value. An agreement with Censco LLC will see MEL equipment assembled and sold globally by Censco, for which royalty payments will be received.
Capacity and Investment
Our manufacturing excellence is built on three core processes: polymer sheet extrusion, high-pressure nitrogen gassing, and controlled expansion. This specialised infrastructure represents a significant competitive advantage, supporting multiple production lines and enabling flexible manufacturing across our product portfolio.
In the UK, our investment strategy is targeted at driving operational excellence through cost reduction and efficiency improvements, directly supporting our sustainability goals. The UK facility remains our centre of excellence for HPP products and serves as a strategic hub for preliminary production of certain polyolefin products, which are then finished in Poland to optimise logistics and reduce environmental impact. A new innovation centre of excellence is being established in the UK to develop platform technologies that can be implemented across industries, providing the next generation of industry solutions; it will work hand-in-hand with the footwear innovation hub in Asia. The UK innovation centre of excellence will protect our know-how and trade secrets, give us access to great talent and will build on a strong legacy of material and process innovation. We will evolve current, and invest in new, technology to reduce the energy of manufacture and improve our sustainable product offering. It will also enable us to design products and processes that significantly reduce waste and emissions along the value chain while delivering even greater performance characteristics.
Activity in our Polish facility increased significantly in 2024, with the capacity being used to support growth in both polyolefin foams and high-performance product lines. In 2025, we will continue to drive up utilisation of this investment and assess how this modern facility with a well-skilled workforce can contribute further to the refreshed Group strategy.
We are executing an expansion strategy in the USA, where market opportunities are compelling. Our £10m investment in a second low-pressure autoclave, alongside upgraded systems and expanded warehousing, is progressing on schedule for early H2 2025 completion. This investment will significantly enhance our capacity and operational resilience in this key market.
As announced on 10 March 2025, the Board has approved strategic investments in Vietnam and Korea to support our growing Footwear business, positioning us closer to key end markets and customers. This investment represents a transformative move to secure our position as Nike’s key, high-end, foam technology partner. Vietnam, a global hub for athletic footwear manufacturing, offers proximity to customers, faster lead times and reduced environmental impact through shortened supply chains and a significant reduction in material waste. Innovation of the Group’s own manufacturing core technology will enable the £24m Vietnam facility to offer additional footwear capacity with improved flexibility, allowing modular increments, faster implementation and a lower cost than previous builds. The investment will create a state-of-the-art manufacturing facility capable of initially producing approximately 10 million pairs of midsole preforms annually. A £2m, cutting-edge innovation centre in South Korea will provide a platform to showcase Zotefoams’ unique technology and enable a more rapid and responsive product development capability in a fast-moving industry. The total investment in these facilities will be spread across 2025 (c.£8m), 2026 (c.£11m) and 2027 (c.£7m) and be funded from the Group’s existing financing facilities and cash flow. These investments secure our Nike partnership and establish a foothold in Asia’s broader manufacturing ecosystem for future growth.
Measuring Strategic Progress
We track five key metrics that drive value creation:
| 1. | Product Mix Enhancement: 2.8% improvement in adjusted average selling price (2023: 2.7%), reflecting success in growing our higher-value portfolio |
| 2. | Asset Optimisation: 5.6% improvement in asset utilisation (2023: 2.6%), supported by a 2.1% increase in effective capacity (2023: 1.5%) through manufacturing efficiency gains |
| 3. | Margin Development: Operating margin before exceptional items, increased 40 bps to 12.3%, supported by HPP growth and manufacturing efficiencies. Operating margin for our core business (excluding MEL) increased 20 bps to 15.7%. Our medium-term ambition for operating margin is to surpass 18%. |
| 4. | Capital Efficiency: Return on average capital employed (ROCE), which excludes the exceptional items, increased to 11.7% (2023: 10.3%). Removing MEL, ROCE increased to 16.0% (2023: 14.2%). Additionally, working capital now represents 33% of net sales, down from 41% in 2023, reflecting enhanced management of receivables, inventory, and supplier terms. Our medium-term ambition for ROCE is to surpass 20%. |
| 5. | Sustainability Leadership: Environmental sustainability remains fundamental to our strategy, with ESG metrics integrated into our financing arrangements and robust internal target |
People
Safety remains our highest priority. While we experienced four reportable incidents in 2024, our overall safety metrics continue to outperform industry benchmarks by approximately 66%. Each incident has been thoroughly analysed, with corrective actions implemented and reviewed at Board level.
We are strengthening our culture through enhanced employee engagement, including the launch of our new corporate values and regular executive leadership team townhalls across all regions. Our ambition to achieve Great Place to Work accreditation underscores our commitment to creating an exceptional workplace environment.
On behalf of the Board and my executive colleagues, I extend sincere thanks to all Zotefoams employees and their families for their dedication and support throughout the year.
Forward-looking Statements
Forward-looking statements have been made by the Directors in good faith using information available up until the date they approved these preliminary results.
Current Trading and Outlook
We have made a positive start overall to 2025, with our Consumer & Lifestyle and Transport & Smart Technology verticals performing well across all regions. Demand in our Construction & Other Industries vertical remains more subdued, as expected, but we continue to anticipate some improvement in conditions as the year progresses.
We have set out, and are executing, a refreshed, focused strategy, prioritising innovation and profitable growth. Our market realignment is progressing well as we transition from a product-centric to an industry-led approach. Our investment in manufacturing excellence is advancing, with continued good progress towards completion of our £10m expansion in the USA, which remains on schedule for early H2 2025 commissioning, and we are commencing with investments in our innovation centre of excellence in the UK, our innovation hub in South Korea, and our new manufacturing facility in Vietnam.
The emerging trade landscape, including recent trade tariffs, creates both challenges and opportunities for Zotefoams. While these may impact global supply chains and market dynamics, our diversified manufacturing footprint across the UK, USA, Poland and, soon, Vietnam positions us well to navigate these uncertainties and potentially capture market share from less adaptable competitors.
Our new regional operating model, launched at the start of 2025, structures our business across EMEA, North America, and Asia. This enables us to better serve our customers’ complete needs through a global commercial team that coordinates decisions worldwide, while execution and delivery happens regionally. This product-agnostic approach creates a platform for accelerated growth. In 2025, we will target inefficiencies in overheads, with identified annualised savings to be in part reinvested in our refreshed strategy.
Polymer and energy input prices remain relatively stable; however, we are monitoring these closely for the impact of tariffs, and our focus on improved asset utilisation, product mix, price increases and operational efficiency continues to be our key driver of margin enhancement.
While we remain mindful of the uncertain economic backdrop and the evolving trade landscape, we are confident in our ability to deliver another year of good progress for Zotefoams. With a refreshed strategy and investment in significant growth enablers underway, we are excited by the potential for the Group to deliver both on its medium-term targets and longer-term ambition.
Ronan Cox
Group CEO
18th March 2025
