TIDMZTF
RNS Number : 0600A
Zotefoams PLC
18 January 2024
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 GBP127.0m (2022:
GBP127.4m).
Adjusted profit before tax(1) for the year is expected to be
GBP13.1m (2022: GBP12.5m), which is a Group record and
approximately 5% ahead of current market expectations(2) .
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 GBP17.1m (2022: GBP14.1m), 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 GBP4.1m in the MuCell Extrusion (MEL)
business unit (2022: GBP1.6m 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(R) packaging technology.
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 GBP58.2m
(2022: GBP54.5m)
-- 4% decline in AZOTE(R) polyolefin sales to GBP67.5m (2022:
GBP70.1m)
-- 57% decline in MEL sales to GBP1.2m (2022: GBP2.8m), with
most of the business unit resources focusing on the development
of ReZorce mono-material packaging.
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 GBP10m, 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 multiple(3) 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 GBP0.3m (2022: GBP0.3m) 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 GBP12.5m.
(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
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, 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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