REG - Zotefoams PLC - Trading Update

ZotefoamsAnnouncement

07/11/2023 07:00

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RNS Number : 3591S  Zotefoams PLC  07 November 2023

Zotefoams plc

("Zotefoams" or "Group")

 

Trading Update

"Delivering on strategy - profit in line with market expectations"

 

7 November 2023 - Zotefoams, a world leader in cellular materials
technology, today provides a trading update for the nine months ended 30
September 2023 ("year to date") and in respect of its financial year ending 31
December 2023.

Notwithstanding the challenging economic backdrop, the Group has continued to
deliver a resilient performance, with year-to-date sales at a similar level to
the comparative period of 2022, benefiting from a modest currency tailwind.

As anticipated, third quarter sales were lower year on year, reflecting
subdued demand in most Polyolefin Foams markets, together with lower economic
activity in China and an inventory adjustment in the supply chain to Nike.
Against this backdrop, the Group continues to take effective pricing, cost and
capacity management actions, which have enabled the business to remain agile
and respond quickly to the volatility in demand dynamics.

The Group has also continued to invest in the development of ReZorce(®)
recyclable barrier packaging technology and, following the signing of a joint
development agreement, has made further progress against the milestones set,
in advance of commercial trials scheduled for early 2024.

Full year expectation

The Group has good visibility of confirmed orders for the remainder of the
year and expects to deliver revenue for 2023 at a similar level to 2022,
albeit with an improved product mix.

Across our two foams business units, profitability for 2023 will see the
positive benefit from an increasing proportion of sales from the HPP division,
as well as the effect of strong pricing and operational efficiencies within
Polyolefin Foams. Together with more favourable raw material and energy
prices, this is expected to drive improved overall profitability, with margins
significantly higher than the previous year.

In our MEL business unit, costs will increase as we further invest in ReZorce
and address some legacy issues in the licensing and equipment business. The
MEL business unit is now predominantly focused on the development of the
ReZorce recyclable barrier packaging solution for beverage cartons.

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 adjusted profit before tax to be in line with current
market expectations*.

 

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

"The Group is delivering on its strategy to drive efficiencies and generate an
enhanced sales mix in its foams business units, and we anticipate a strong
final quarter to the year and good underlying growth in profitability in this
part of the Group, despite lower economic activity and destocking in many
markets recently.

"We are also delivering on our commitment to develop recyclable beverage
cartons. Investment in the high-risk, high-reward ReZorce technology is
tracking in line with management expectations ahead of market trials and
represents a significant proportion of Group costs, which are evaluated
continuously in the context of the wider Group performance and the very
significant opportunity represented by its target markets.

"These are two very different businesses with different organisational and
operational requirements, which we are delivering to a high standard."

 

* Current Zotefoams-compiled consensus expectations for adjusted profit before
income tax and separately disclosed items, for the year ending 31 December
2022, is £12.5m.

 

 - 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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