REG - Zotefoams PLC - Trading Update

ZotefoamsAnnouncement

13/10/2022 07:00

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RNS Number : 7181C  Zotefoams PLC  13 October 2022

Zotefoams plc

("Zotefoams" or "Group")

 

Trading Update

Continued positive momentum through Q3 and full year expectations increased

 

13 October 2022 - Zotefoams, a world leader in cellular materials
technology, today provides a trading update for the nine months ended 30
September 2022 ("year to date") and in respect of its financial year ending 31
December 2022.

Zotefoams is pleased to report a record third quarter sales performance, with
Group revenues approximately 27% ahead of Q3 2021 which was its previous
record third quarter. As a result, year to date Group revenue is approximately
24% ahead of the comparable period last year.

Current trading

Encouragingly, the Group continues to benefit from its broad customer
diversification and has seen continued resilient demand across most of its end
market segments. Both revenues and margins are also seeing an increasing
benefit from pricing actions implemented earlier in the year, in response to
cost inflation, as well as from a weaker Sterling exchange rate, primarily
against the US dollar.

Reflecting this commercial backdrop, each of the Group's three business
segments has delivered solid progress year to date with sales having increased
by approximately:

 •    27% in Polyolefin Foams with volumes increasing by 4%
 •    20% in High-Performance Products (HPP) with growth of:
      o  18% in footwear products
      o  22% in aviation and other non-footwear HPP foams
      o  39% in T-FIT(®) insulation products
 •    11% in MuCell Extrusion, although these sales represented only around 2% of
      Group revenues, with the focus for the business being on the technical and
      commercial development of ReZorce(®) mono-material packaging solutions

Input cost inflation, other than energy prices, has seen some recent
abatement, with commodity polymer prices declining from all-time high levels
experienced late in the first half of this year. Wholesale energy prices
remain volatile but, in the UK, which accounts for the majority of Group
energy consumption, the short-term risk associated with energy pricing has
been reduced due to Government pricing actions.

As described above, the Group has seen some benefit from Sterling weakness,
albeit the impact of exchange rate movements on both sales and costs has been
hedged in accordance with its hedging policy.

Good progress has been made on strategic initiatives, including the
development of ReZorce, as well as the Group's wider ESG focus on reducing
Scope 1 and 2 carbon emissions and launching foams with recycled content.

Outlook

Demand entering the final quarter remains encouraging and we have good
visibility of confirmed orders for the remainder of 2022.

Based on its current sales forecasts and foreign exchange rates, and subject
to there being no material disruption to the business, the Board now expects
adjusted profit before income tax to be significantly ahead of market
expectations*.

Cash generation also continues to be strong and so the better than anticipated
earnings performance should contribute to an appreciable reduction in both net
debt and leverage.

 

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

"I am delighted that Zotefoams is performing well in this volatile market
environment which is a credit to our people, market positioning and strategy.
Our exposure to a wide range of attractive markets has enabled us to deliver
continued volume growth, which has been supported by the pricing actions taken
earlier in the year.

We are mindful of the challenging backdrop but continue to see significant
opportunity for the Group in both the short and longer term."

 

* Current Company-compiled consensus expectations for adjusted profit before
income tax and separately disclosed items, for the year ending 31 December
2022, is £9.3m.

 

 

- Ends -

 

Enquiries:

 

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

 IFC Advisory                 +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 (MuCell
Extrusion) and Jiangsu Province, China (T-FIT).

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

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

 

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