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 tax1 for the year is expected to be £13.1m (2022: £12.5m), which is a Group record and approximately 5% ahead of current market expectations2.
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.
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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.
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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 multiple3 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 | |
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| IFC Advisory (Financial PR & IR) | +44 (0) 203 934 6630 |
| Graham Herring Tim Metcalfe Zach Cohen
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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).
AZOTE®, ZOTEK®, ReZorce® and T-FIT® are registered trademarks of Zotefoams plc.
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