TIDMZTF
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(R) 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 GBP12.5m.
- 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(R) polyolefin and ZOTEK(R) high-performance
foams, Zotefoams sells to diverse markets worldwide. Zotefoams uses
its own cellular materials to manufacture T-FIT(R) 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(R)
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(R) , ZOTEK(R) , ReZorce(R) and T-FIT(R) are registered
trademarks of Zotefoams plc.
www.zotefoams.com
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END
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