REG - Zotefoams PLC - Full Year Trading Update

ZotefoamsAnnouncement

18/01/2024 07:00

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RNS Number : 0600A  Zotefoams PLC  18 January 2024

Zotefoams plc

("Zotefoams" or "Group")

 

Full year trading update

 

Strong performance delivering profitability ahead of market expectations

 

18 January 2024 - Zotefoams, a world leader in cellular materials technology,
today provides a trading update for the Group's financial year ended 31
December 2023 (unaudited).

Consistent with the Group's update of 7 November 2023, the Group expects to
report full year revenue in line with current market expectations and similar
to the previous year at £127.0m (2022: £127.4m).

Adjusted profit before tax(1) for the year is expected to be £13.1m (2022:
£12.5m), which is a Group record and approximately 5% ahead of current market
expectations(2).

This record profit figure, on an adjusted basis, comprises two distinct
elements:

 ·   A 21% increase in the combined segment profitability of polyolefin and HPP
     business units (the "foams business units") to £17.1m (2022: £14.1m), with
     product range management and cost efficiencies delivering improved margins in
     polyolefin foams as well as continued growth in the higher margin HPP business
     unit
 ·   A segment loss of £4.1m in the MuCell Extrusion (MEL) business unit (2022:
     £1.6m loss), as the Group invests in preparation for in-market trials in Q1
     2024 following positive progress in the development of our award-winning
     ReZorce(®) packaging technology.

Year-on-year performance for the specific Group's business units, with
negligible impact from foreign currency movements, were as follows:

 ·   7% growth in High Performance Product (HPP) sales to £58.2m (2022: £54.5m)
 ·   4% decline in AZOTE(®) polyolefin sales to £67.5m (2022: £70.1m)
 ·   57% decline in MEL sales to £1.2m (2022: £2.8m), with most of the business
     unit resources focusing on the development of ReZorce mono-material packaging.

In response to increasing opportunities in the region, the Group has committed
to further development of its USA foam manufacturing site in Kentucky, with
investment in a second low-pressure autoclave and increased warehouse space.
This reflects a significant capital investment of approximately £10m, will be
funded from existing cash resources and is expected to be completed around
mid-2025.

The Group balance sheet remains strong, with significant financial headroom
and a year-end leverage multiple(3) expected to remain unchanged at
approximately 1.2x (2022: 1.2x) affording flexibility to execute on the
Group's strategic plans.

 

Commenting on the update David Stirling, Group CEO of Zotefoams, said:

"We are delighted to close the year with sales in line with market
expectations and record profits ahead of market expectations. The Group has
recovered and stabilised margins in its polyolefin foams business and
continued to grow sales from its higher margin high-performance products.

"The development of ReZorce mono-material packaging is nearing commercial
market trials, with the associated requirement of investment in food-safe
scale up. Successful trials would offer brands, retailers and regulators proof
of a circular-economy solution for aseptic beverage packaging and the route to
a global opportunity for our highly differentiated and sustainable technology.

"Overall, Zotefoams has a clear strategy with a growing range of products, an
increasingly global footprint and strong ESG credentials, meaning it is well
positioned to deliver further profitable growth."

(1) The adjustment to reported numbers, related to amortisation on acquired
intangibles, is £0.3m (2022: £0.3m) and relates exclusively to MuCell
Extrusion LLC.

(2) Current Zotefoams-compiled consensus expectations for adjusted profit
before income tax, for the year ending 31 December 2023 prior to this
announcement, was £12.5m.

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

 

Notice of results

The Company expects to publish its preliminary results for the year ended 31
December 2023 on Tuesday 19 March 2024.

 

Enquiries:

 

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

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

 Tim Metcalfe

 Zach Cohen

 

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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