TIDMZTF
RNS Number : 4142A
Zotefoams PLC
24 May 2023
Zotefoams plc
("Zotefoams" or "Group")
Trading Update and Chair Succession
24 May 2023 - Zotefoams, a world leader in cellular materials
technology, today provides a trading update for the four months
ended 30 April 2023, ahead of its Annual General Meeting to be held
today at 10am at 675 Mitcham Road, Croydon, CR9 3AL.
At this meeting Steve Good, Chair of Zotefoams, will make the
following statement:
Trading in the four months ended 30 April 2023 was strong, with
the Group delivering continued year-on-year revenue growth and with
margins benefiting from pricing, operational efficiency initiatives
and a stronger US dollar. In addition, levels of input cost
inflation were lower in the period and the Group has also
benefitted from the phasing of planned SG&A spend
increases.
Highlights, against the comparative prior year period, were:
-- Group sales increased by 15%
-- Polyolefin Foams sales increased by 14%:
- Volumes declined by 5%, primarily due to market-specific
factors in continental Europe, which was more than offset
by higher average selling prices as a result of previously
implemented increases, favourable exchange rates and product
mix
-- High-Performance Products (HPP) sales increased by 19%:
- Footwear sales grew strongly, with a 12% increase in volumes
and a higher average selling price, primarily due to the
stronger US dollar but also with a slightly more favourable
product mix
- Sales volumes of ZOTEK(R) F technical foams for aviation
and other markets declined by 13%. A relatively slow start
to the year belies an improved demand environment
- T-FIT (R) insulation products sales were at a similar
level
- In line with the normal seasonality of our business, our
HPP business represents a smaller share of total revenue
at this stage in the year
-- MuCell Extrusion's focus is on the technical and commercial
development of ReZorce(R) mono-material packaging solutions.
In the period, the business unit has:
- Transitioned its initial raw material formulations to
its facility in Denmark in preparation for commercial trials
in Europe for ReZorce cartons
- Made good progress on downstream processing of ReZorce
sheet for cartons using off-the shelf commercial processing
equipment
-- Cash generation and management has been strong in the period,
with the leverage ratio being around 1.1x on a trailing
12-month basis, improved from 1.2x at 31 December 2022.
While the macroeconomic environment remains uncertain, the cost
environment for the Group has improved in the early part of
2023.
Pricing for LDPE (the main material used in polyolefin foams) is
relatively stable and at levels which are significantly lower than
the all-time highs seen in 2022, albeit higher than long-term
historic average pricing. Energy costs have also fallen from recent
highs, but market prices remain volatile and forward prices are
significantly higher than spot price as a result. Other cost
inflation has generally been moderate with the exception of
speciality polymers and wage inflation.
In the previous two years, Zotefoams has reacted to input-price
movements by increasing selling prices and focusing on internal
efficiencies and controllable costs, while proactively implementing
actions to mitigate supply chain risks. In the period, there have
been no major pricing actions and the current focus in Polyolefin
Foams is to align the Group's product offering and pricing with the
value its products deliver across markets globally.
Outlook
The Board anticipates further sales growth in the year to come
primarily from the HPP portfolio, with good opportunities across
all product groups. Prospects for volume growth in the Polyolefin
Foams business unit are more reliant on general industrial market
conditions, which we expect to remain challenging everywhere except
for North America. At current exchange rates, the Board expects
little impact from currency on full-year profit.
Internally, the Group is well-positioned to deliver further
operational improvements and its spending plans are focused on key
deliverables. This includes a significant spend on the ReZorce
mono-material packaging development within the MuCell Extrusion
business unit.
Performance in the early part of the year evidences continued
demand for the Group's products together with its resilient
operating platform. While being mindful of remaining macroeconomic
volatility, the Board's full year expectations remain unchanged and
it is confident about the long-term prospects of the business.
Chair Succession
As previously announced, Steve Good, who has been Chair of
Zotefoams plc since 2016 and a non-executive director since 2014,
will step down from the Board following the conclusion of the 2023
AGM. Steve will be replaced as Chair by Dr Lynn Drummond.
Commenting on the update David Stirling, Group CEO of Zotefoams,
said:
"I am pleased with the business performance in the first four
months of the year and also the progress made on ReZorce carton
development. The business has opportunities for growth in a number
of HPP markets and better margins in Polyolefin Foams reflect
pricing and cost management actions taken over the past year. With
good cash generation and management, the business is well placed
for further growth.
"It has been a pleasure to work with Steve Good as a fellow
Director since 2014 and Chair since 2016, over which time the
business has experienced strong growth and transformational change,
which has included significant investment in global manufacturing
capacity and in new product development. On behalf of the Board of
Zotefoams plc and our management and staff, I thank Steve for his
contribution to our success over the years and wish him all the
best for the future."
Note. The Board understands that current market expectations for
the year ended 31 December 2023 are revenue of GBP135m and adjusted
profit before tax of GBP12.6m.
- Ends -
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(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 and Stilling, Denmark
(microcellular foam technology) and Jiangsu Province, China
(T-FIT).
www.zotefoams.com
AZOTE(R) , ZOTEK(R) , ReZorce(R) and T-FIT(R) are registered
trademarks of Zotefoams plc.
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