Zotefoams PLC on Tuesday reported double-digit profit growth in the first half with the company benefiting from greater demand for footwear.
The London-based cellular material technology provider said in the first half that ended June 30, pretax profit rose 12% to a record £8.3 million from £7.4 million the previous year.
Revenue increased 9.9% to £71.1 million from £64.6 million, as cost of sales grew 9.4% to £47.5 million from £43.4 million.
Zotefoams raised its interim dividend by 4.4% to 2.38 pence per share from 2.28p.
Distribution costs were up 15% to £4.6 million from £4.0 million and Administrative expenses rose 6.5% to £9.3 million from £8.8 million.
Net debt jumped 58% to £44.6 million from £28.3 million.
Cost increases were primarily the result of salary inflation as well as headcount investment in the US and global marketing.
Strong demand for footwear was the driving force behind revenue growth, increasing 40% to £31.1 million. The company attributed this success to its partnership with Nike Inc, the Olympic year, and increased basketball sales.
In May, the company signed a global alliance agreement with Suzhou Shincell New Materials Co Ltd.
The agreement consists of technology licensing from Shincell to Zotefoams, development and market cooperation, as well as regional product distribution agreements.
The distribution agreement will see certain Shincell products using unique technology marketed alongside Zotefoams’ existing and future product range.
Chief Executive Officer Ronan Cox said: ‘We enter the second half with positive momentum and with the expectation that market trends seen in H1 will remain largely consistent going into the latter part of the year. Footwear demand is expected to normalise over the coming months, as some of the near-term factors benefiting H1 work through, which will free up capacity to supply markets in both North America and Europe. We will continue to focus on cost efficiency, supported by a stable outlook for energy and polymer input prices.’
Zotefoams shares were up 3.5% to 511.15 pence each in London on Tuesday morning.
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